October 2009
Letter addressed to:
Mr. Dominique Strauss-Kahn
Managing Director
International Monetary Fund
Dear Mr. Strauss-Kahn,
You are contemplating giving the next tranche of funds to the Republic of Latvia.
I am a professor at the University of Latvia, a businessman in the country and have had dealings at all levels of government and in the banking system. I am strongly opposed to any further lending for the following reasons,
• Most funds will be stolen by corrupt government officials that realize this is their last chance before they are rejected by voters next fall.
• You will not better the lives of everyday people in the country.
• You will hasten the downfall of the country as more people will emigrate, leaving gangs of Russian youths that will be strategically used by Moscow to create social unrest leading to Russian control of the country directly or indirectly.
• You will ensure the handful of people that block competitive market functions and have a stranglehold on government for their own benefit stay in power.
I understand that you wish to do something to help the situation and I am certainly in favor of your help.
I have the following positive recommendations of how you may help:
1. Do nothing in this regard or, perhaps, cut a check to every citizen resident in the country now and in six months, 2 checks in total, as a survival subsidy.
2. Fund building of a nuclear power plant by a company such as Areva. The EU and France will certainly support this. Local contractors found through open tenders managed by Areva can provide sub-construction work, decreasing the unemployment rate in the country. The end result will be an asset that produces income and decreases dependence on Russian energy.
The current government structures must collapse and be restructured. Your payment at this time is a very bad idea.
By not extending the loan you will cause a forced reduction in structural government costs and you will free administrative burden, allowing private enterprise to flourish. This is what the people want and is what is best for the country. Lithuania is re-emerging without external financial support, so Latvia will be just fine as well.
If you do extend the money, you are complicit in;
• Keeping a corrupt few in power.
• Extending an environment of monopolies and oligopolies that lead to consumer prices 30 percent to 700 percent higher than in other countries, hurting consumers. (example: natural gas monopoly in Latvia charges 700 percent more than in some other countries).
• Theft of funds. You are reasonably aware funds will be stolen and, still extend the funds to the detriment of the Latvian people (on the bill of the Latvian people).
• Creating a collapsed state that will be controlled by Russia.
Further, should you lend, there is definitely a case for the Latvian people to reject a claim by the IMF for repayment, given the negligence of the lending practice.
Dr. Karlis Sarkans
Dr. Sarkans is a global macro fund manager that in 2008 was the top global macro manager as recognized by The Wall Street Journal. In academic research work his specialty is macroeconomics of emerging market countries. He has twenty years of experience in investment and finance.
