Latvia’s State of the Nation address

  • 2014-02-26
  • by Agnese Kalnina, economist

The year 2013 was fairly good for Latvia. GDPgrew remarkably. Industrial and agricultural production grew just as well and unemployment went down.


But the country as a whole is mismanaged. Many state services are provided at a failed state level. The potholes in the roads are getting wider and deeper. Many roads outside Rigahave been in a state of disrepair for years, subjecting motorists to probable accidents, or forcing them into unsafe driving to avoid the potholes. Other state institutions are avoiding solving problems in order to save themselves from extra work, and the correspondence with them shows this very clearly.


Complaints to the police department regarding crimes against property are being ignored, or deliberately being discouraged and a pointless correspondence between the police and the victim is being created until the victim gives up, or the police close the case. The police refuse to undertake on itself an investigation, even if the criminal is known to them, and has confessed to the crime. The Ministry of Interior claims in writing that they do not subordinate the police and do not evaluate their work quality.


Apparently this situation leads to lawlessness, especially in the countryside.


The rationing of services has led to a saving of 270 million euros, which were invested into a single building to store second-hand books.


300,000 Latvian citizens, in their prime working age were not very impressed and left the country. The dwindling population has led to an acute shortage of taxpayers to share the burden of the national budget and new ideas had to be created. The best idea ever was recently created. From May 1, there will be a new law which will restrict the sale of land. This law will make farmers and other land owners very poor. They will not be able to sell their land and the only option they will have is to work on it to death, regardless of market and price conditions.

The new law will create negative investment sentiments in the country. It can cause banks to become illiquid and outflow of capital from the country, which will end up in a new cycle of recession, punishing hundreds of thousands of Latvians again below the poverty line. A European bailout will be unavoidable, and salaries in the public sector will plummet again.


Members of the Latvian Parliament are regarding other European nationals as ‘foreigners,’ and economic decisions are being voted for without hesitation, as long as there is a nationalistic agenda behind it. This, regardless of the fact that Latviais a full member of the European Union and a user of its currency.


Mr. Valdis Dombrovskis, who was prime minister until almost the end 2013, is seeking now the position of president of the European Commission, and he will bring these new economic ideas with him.


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