Sunday, September 13, 2009

The last days/weeks of Dombrovskis the fall guy?

Valdis Dombrovskis, like the summer weather in mid-September in Latvia, is on borrowed time. It is hard not to see and hear that the knives are out for him. Both his own coalition partner, the People’s Party (Tautas partija/TP), and the loyal opposition (no ministers, but hitherto behind the government) of Latvia’s First Party/Latvian Way (Latvijas pirmā partija/Latvijas ceļš LPP/LC) are shaking the coalition so hard that pieces are sure to fly off.

The LPP/LC said at a recent party leadership conference that they would not support Dombrovskis’ government. with Riga vice-mayor Ainārs Šlesers calling for the Prime Minister to step down in so many words.

Guess who will step up?

Not even a few months had passed since the June municipal elections put the twins Nils Ušakovs (of the pro-Russian Harmony Center/Saskaņas centrs/SC) and Šlesers in charge of the Latvian capital when the “alpha twin” Šlesers started talking of taking up the call to head a government after the 2010 elections. Now, it seems, the trumpet is sounding in his ears a bit earlier.

The People’s Party has been quarreling with Dombrovskis on economy policy and accusing the government (here one must agree with Latvia’s most unpopular party in voter polls) of poor communication both within the government and with the general public. It looks like they are ready to jump as well, but hoping that the 2010 elections will boost their ratings significantly beyond the present 1.5 to 1.7 % the TP has gotten in recent polls (one thinks that given the historical ignorance of some young people plus the spin that he is actually a nice guy from Purvciems could get Vjaceslav Molotov an higher rating than the TP).

The TP wants to draft “ businessman” and ordinary rank-and-file member Andris Šķēle to make a come-back as Prime Minister (unless he trips and falls under the Bulldozer -- one of Šlesers’ municipal election symbols). Interestingly, when asked what business Šķēle had been doing on a TV talk show, Vineta Muižniece, the TP parliamentary faction leader, said that it was a private matter for Šķēle.

Certainly, whatever it is he has been doing has gotten little publicity compared to other business figures, such as Mārtiņš Bondars, ex-chairman of Latvijas Krājbanka (The Latvian Savings Bank), who have hinted at entering politics. We can read the bank’s annual reports. We can look at the track records in private business of people such as Vitālijs Gavrilovs, who ran the brewery Aldaris for many years. Other than peripheral involvement in some windpower project and alleged involvement in the failed first attempt to start digital terrestrial television, I really don’t know what Škele has been doing as a businessman these past few years. Does anyone else?

I don’t believe the “Šķēle factor” will revive the TP, which is widely and accurately blamed for its blind and deaf belief that the “fat years” would continue forever. What is more worrisome is that if fall guy Dombrovskis falls, “pedal to the metal” Šlesers may step up to the Prime Minister’s chair even ahead of the 2010 elections (it is anybody’s guess what may happen to the economy and the social fabric of the country over the next year, but it won’t be anything good). The LPP/LC, to my mind, is a cryptofascist party backed by religious fanatics who have repeatedly attempted to restrict the free speech rights of sexual minorities in Latvia. The authoritarian mind set of these people may then treat other dissidents -- such as angry spontaneous demonstrators -- no differently.

Another sign that Dombrovskis has expended his usefulness is the fact that the ink is dry on a number of critical international lending agreements and the cash is rolling into Latvia’s state coffers. There is no need to have guys hanging around whose party leadership (Dombrovskis is from the New Era/Jaunais laiks/JL) pledged in church to be committed to clean and honest government (many saw this as a balagāns/cheap show, but maybe not the Main Man up there). The international loans (and the lenders will not have armed auditors standing next to every bureaucrat) are the biggest opportunity for corruption and state capture, dwarfing the infamous G-24 credits of the early 1990s, where mere tens of millions vanished down the rathole.

Knowing what a Charlie Foxtrot (cluster f**k) the Latvian government (any Latvian government) can be, there was a substantial risk that the whole international borrowing process could have been bungled, leaving Latvia at least temporarily insolvent. Better to have had Dombrovskis and the JL guys at the wheel for that. Since it didn’t happen, we can clear the bridge and put a real pirate crew on deck now that the ship didn’t sink.

However, that doesn’t change the fact that another LVL 500 million will have to be cut from the 2010 budget in the next few weeks, with equally much coming out of the 2011 budget. So even if he gets a premature shot at the Prime Minister’s chair, Šlesers will face some real challenges as well as likely social unrest and a noticeable bleed-off of the potential workforce as economies recover in countries that Latvians can easily emigrate to.


Mr.Key said...

I just can mention that there was a lot of ovations on Tautas Partija yearly congress when somebody suggested that Latvia must find a way how not to pay back the international loans. I hope the IMF and the EU knows that, doesn't want that and will act.. Maybe no other hope left, nation is not able to fight against those political Parties. But what we think about Slesers, Godmanis and the whole Tautas Partija - we can see by reading the comments on internet. And every day there is at least one talk on the street, in a shop or other place, where I can hear how really angry people are about them. We simply hate them. Why journalist can't make a honor to the nation and do not cite what do they say? For example, why we have to read what Godmanis think?

Anonymous said...

Slesers and Skele in charge, with a little help from Saskanas Centrs and Lembergs.

Devaluation, default, corruption as an institutional norm, liquidation of Valsts Kontrol, KNAB etc.

Bye-bye Latvia, it was nice knowing you.

Anonymous said...

It appears that any changes in the government right now will be akin to changing chairs on the deck of Titanic. The only reason to get into the government is to have access to the "trough", to control the money streams coming from EU, IMF and WB. I would assume everybody knows by now that the future and fate of Latvia will be decided in Brussels raikom (EU) and Washington obkom (IMF, WB and WH). I have no doubt Latvia will survive economic and financial crisis. No economic cycle lasts forever. Crisis will come to an end. However, it's far from clear in what shape the country is going to emerge from this crisis. NOBODY is answering the question of HOW the country is going to REPAY its debts. WHERE are the money going to come from and how the industial and agricultural base can be restored and further developed. Every country needs to MAKE things!Where is Latvian Nokia going to come from? I laughed when I read an article about the party congress where an ECONOMIST(!!!) suggested to find an "elegant way" to avoid repaying foreign debts and everybody applauded. Those are grown people for heaven's sake. This is mind boggling. That would be an interesting topic for a blog though. I don't know if Juris knows any influential officials and/or economists in Riga. If he does it would be interesting to know their opinions on the subject. Where the heck are the money going to come from????