Banking with Chicken Little in Latvia

There are reasons for concern everywhere about the financial system, especially in light of the Eurozone debt crisis, the postponed, but still possible collapse of the euro and other things based on facts, figure, events and rational analysis. But that is not the biggest immediate risk for bank customers in Latvia. The biggest risk is proving to be the customers themselves.

Whatever else banks are, they are institutions based on trust at the customer level. That is, the bank is kept solvent by the fact that depositors a) believe the bank will be there the next day, which depends on b) most of the other depositors being there the next day. If that doesn't happen, whatever else the bank is doing with the money entrusted to it by customers doesn't matter, because, basically, the customers cannot be trusted to stay with the bank and can, for whatever reason, seriously damage it or pull it down.

This is what is starting to happen in Latvia with the initially groundless panic surrounding Swedbank and, to a far lesser extent, SEB. Both parent banks in Sweden are stable, solvent, and there are no signals from any of the many third parties watching the banks (auditors, analysts, shareholders) that anything is wrong (or, for that matter, that the official authorities, which there may be some reason to mistrust, are hiding anything). But now in Latvia, the mass hysteria of bank depositors is itself becoming at least a low intensity threat to Swedbank and the other banks. It at least suggests there is some truth, but little reason behind the saying that in bank panics and runs, the cool and rational will fare the worst, remaining as the “last man not taking everything out of the bank”.

There may be an explanation, but not a justification of public behavior in Latvia in connection with the recent closing of Latvijas Krājbanka. However, that was a relatively small bank in terms of assets (but broad-based in terms of numbers of customers) and its demise was the result of alleged criminal behavior by the owner of its parent Snoras Bank, the Russian millionaire Vladimir Antonov. Also, thousands of customers were compensated to the extent of their deposit insurance coverage very quickly, with some LVL 200 million paid out within days of the collapse.

The fundamental problem is that people in Latvia now have a largely irrational distrust of banking system as a whole, with Swedbank singled out as the market leader, and a far  less irrational mistrust of government authority based on inept initial statements (Krājbanka is OK) by the Financial and Capital Markets Commission (FCMC) in connection with the collapse of Snoras in Lithuania. This mistrust is showing signs of turning into a kind of mind-set of the Middle Ages. What I mean by that is that people see their surroundings as governed by incomprehensible, mainly malevolent and arbitrary forces beyond their control or understanding. Wars, plagues, famines were frequent occurances and to the average illiterate peasant, they simply happened or were acts of God or other mystical forces. It now seems that many Latvians view the financial system and their environment as a whole as a malevolent force to which one can only react in the short term, based on the basic emotions fear and suspicion, putting reason and the checking of emotions against facts on the back burner. It is the kind of mindset that led to numerous panics, delusions, witch-burnings, children's crusades and other acts of mass hysteria in one form or another. This is shocking and baffling to the more rational societies of Europe, in particular, the Swedes.

Another way to put it is that these recent and still ongoing events show that the greatest risk to any Latvian customer of a stable, well capitalized and profitable Swedish-owned bank is the fact the many of his or her fellow customers are like Chicken Little, ready to run about madly shouting that “the sky is falling”. It would almost be reason enough to move one's assets, if possible, to Swedbank in Sweden, where the cohort of bank customers is less excitable and irrational.

Weaponizing the Russian language in Latvia again

When I wrote about the successful signature campaign by Latvian citizens to make Russian the second state language, I got some comments on Twitter and elsewhere that “a language is just a language” and it was somehow wrong to associate demands for Russian as a state language with the Soviet policy of Russification.

This is surprising, except when it comes from the generation that doesn't fully remember what the Soviet Union was like. To be honest, I didn't live in Latvia then, but I participated in many emigre Latvian activities, including demonstrations against the Soviet russification policy, which consisted both of imposing the Russian language on the Baltic populations and massively importing Russian-speaking labor (at least to Estonia and Latvia). The latter means of russification ended with the collapse of the USSR in 1991.

The actions of Balts abroad were based on personal experience (visiting the Baltic States), anecdotal stories and academic research (including a book by the Latvian political scientist and present-day Saeima deputy Rasma Kārkliņa) that characterized policies regarding the use of Russian in non-Russian Soviet republics as part of the policy of russification. It is probably beyond reasonable dispute that the Russian language, during the Soviet era, but also with precedents in Czarist Russia as far as the Baltic were concerned, was used as a weapon of state policy aimed at subjugating and, eventually, assimilating the Baltic nations to some greater, Russian-dominated ethnos.

The Soviets made it clear-- the future belonged to a Russian-speaking new Soviet people that would have erased all traces of the diverse national identities that had been (in some cases forcibly) incorporated into the USSR. Those policies were terminated with the collapse of the USSR, but it is reasonable to say that the widespread post-Soviet knowledge of Russian, whatever merits one can ascribe to it otherwise, could also be described as one of the badges of occupation. In other words, on a “but for” basis, many Latvians would not speak Russian but for the occupation of Latvia for 50 years, a period of time when they were compelled to learn Russian. Above and beyond Russian as a compulsory subject in school, there were also campaigns (proclaimed in the Latvian-language Soviet press) exhorting people to improve their Russian and emphasizing the role of Russian as the basis for the new Soviet nation of the future.

As a language learned by compulsion during the totalitarian occupation of Latvia, Russian can be seen as a weapon that has left its impact on most Latvians (and non-Russians in Latvia, such as Armenians, Poles, Georgians, etc.), even if that impact has entirely benign consquences today (buying a beer at a Moscow bar, watching Russian movies, whatever). However, those consquences are benign only because the regime of Russian domination and compulsory teaching of Russian has ended. If it had not, “Russianspeakingness” would continue to be a sympton of russification and a badge of occupation and dominance by a foreign power.

The successful signature campaign to restore Russian as a state language in an independent Latvian state, reviving, at least formally, the status it had in the Soviet Union, is an effort to make Russian a weaponized language again. Since there is little or no evidence that ethnic Russians in Latvia cannot conduct most of their daily lives speaking Russian, there is no logical need to make Russian a second state language except to make it a weapon again.

To be sure, it is a weak and irrational weapon if, as some suggest, it is aimed at expressing some kind of protest by the “Russian-speaking” (read ethnic Russian) citizenry for not getting a share of political power after the recent election. Unfortunately, their poster-boy, Riga mayor Nils Ušakovs, ran mostly as a populist social democrat, attracting some ethnic Latvian votes. His Harmony Center party (Saskaņas centrs/SC) was acting like a party of Russians, not a Russian party pushing for specific issues relating to Russians as a significant minority in Latvian. As a “Russian” party, SC should have agitated for more adult education in Latvian as a foreign language to make more citzens functionally bi-lingual as well as for home language instruction to keep Russian children form losing their native language (something the USSR never did for minorities living outside their borders). Most non-Russian Latvian citizens would have no issues with that. But those Latvians, who don't see Russian as “just another language”, should object against having a weapon pointed at them again. 

Russian as an official language = re-Sovietization

Riga is a heavily Russian city, always has been since I personally knew it, which is from my first visit in 1980 or so. There appear to be no problems getting by in Russian here, just this morning, as I was buying my copy of the magazine Ir at a Narvesen shop, the clerk smoothly went from telling another customer something in Russian to asking me for my LVL 0,95 in Latvian. As an interesting aside, the girl behind the counter looked to be of Roma (gypsy) ethnicity, a people who, in Latvia, mainly have Latvian as their mother tongue going back for centuries.

There is no lack of Russian culture and media here. There are placards for all sorts of Russian singers and entertainers coming to Riga. The Russian Theater in the Old Town on Līvu Square has been spectacularly renovated and attracts an audience made up of anyone who understands Russian. Contemporary Russian TV series as well as old Soviet films are shown on Latvian TV channels with subtitles, something which (except on some channels) is never done for English language material, where a Latvian voice-over (murmulis) is the standard procedure. Some commercial signeage is both in Latvian and Russian, and Russian foods and canned goods are sold in their Russian-language packaging with small, Latvian-translated labels (in micro-typeface) pasted on.

In short, Riga is a very comfortable town to be Russian in. You can make it through your whole day speaking Russian, because most of the population does, and in a commercial situation, the customer's language is what matters (for making the sale and building the relationship). Even in some hard-line, state-language only institutions, a translator will eventually be called if thats what it takes to get important business done, so that the Russian-speaker will still remain in his/her language sphere.

Given all that, enough ethnic Russian Latvian citizens (so we can forget that other issue that gets brought up whenever “the Russians” are discussed) signed a petition to have a referendum on making Russian a second official state language. To me, that sounds like bringing back the Soviet Union – the bi-lingual signs everywhere that weren't really based on language equality, but rather, we will have your Latvian jazik around until we absorb you, make all the other non-Russian Soviet “nations” part of the “we are Russkie-Borg”. It was prelude to a “soft” destruction of national identity (as opposed to the Siberian alternative), Chapter Two of the Russification policy of Czarist Empire.

The petition campaign, was, or will be, at the end of the day, part of a campaign to resovietize Latvia at an official, day-to-day level. It will be back to when, if a few Russians were present, everyone spoke Russian. In the Soviet era, it was because of fear of political repercussions, but if the second official language is passed, it will be because of the laws and regulations of the independent, democratic Republic of Latvia.

Perversely enough, the whole process may have started with a failed initiative by Latvian nationalists to petition for a referendum to make all state-financed education in Latvian only. But was that enough to trigger the successful counter-petition by the pro-Russians, or was it merely a lucky excuse? It almost didn't get off the ground because two different Russian nationalist groups were at each other's throats for a while as to who would start the signature gathering. Then there was the extraordinary Saeima election and the bizarre attempts by Valdis Zatlers and his Zatlers' Reform Party (ZRP) to get the pro-Russian Harmony Center (SC) into government at all costs.

The ZRP's efforts were a  spectacle, against all political logic on both sides of the attempted coalition. The political programs of the ZRP and SC didn't match – center right parties and self-proclaimed populist social democrats cannot have too many common policies in government. Moreover, the SC, by dropping most of its populist positions in order to get into a government with the ZRP at all costs, proved nothing but that it was a chameleon willing to betray the electorate that believed its own slogans.

The SC apparently took great offense at not being let into government as a “Russian” party that got a few more votes that anyone else (as if “Russian” and not liberal, conservative, social-democratic, centrist was an actual political ideology). Then one of the SC leaders and Riga mayor Nils Ušakovs publically signed the petition, apparently triggering a wave of copy-cat signings by other SC members. This all was in the interests of “national bolshevik” Vladimir Linderman, who was the de-facto leader of the petition signing movement, and “rapped for Russian” in a video along with the semi-monolingual Valerijs Kravcovs, an ex-Saeima deputy, ringing a huge motherfucker of a bell (you were wondering when I would let slip some obscenity, weren't you? :) ). Ušakovs said he was merely asserting his self-esteem (strange, for one of Latvia's most photogenic young politicians), but Linderman and his droogs were dead serious – they want to impose Russian as a second language and will do their best to see that it is enforced.

The unintentional consequences of Nils' wounded self-esteem and his self-proclaimed respect for Latvian as the sole national language (go figure on that one) will be that Latvian will end up back where it was in the Soviet Union, as the language you speak at home, on the street, or in official situations when there are no Russians around to demand that their language be spoken,

I won't go so far as to say that Russian as a second language will be the end of the Latvian nation and all that (even if that is one possible scenario), but it will end up at least as a significant nuisance (if properly resisted). One example is French in Canada, which means that even the Inuit who have never been near Quebec have to pour their milk/lait on their morning cereal. Or the Finns, who have to learn Swedish (to some extent) in school out of respect for a few villages where the ethnic Swedes still speak it (on the island of Åland, the Swedes on this Finnish possession speak English when dealing with the mainland. Then there is Ireland, where the Irish, who all speak English, with the exception of some Leprachaun-infested villages, where some people actually speak Irish, but everyone has to learn and forget Irish in school in any case.

I moved to Latvia in 1995, not Russia, and, while I have visited Russia a couple of times, I have no desire to live there. Being in a virtual Russia was not part of the deal of what I now see (for a number of non-language related reasons) as a dubious choice to live in Latvia (the economy is a wreck, the future bleak). Frankly, I don't want my son (16) to grow up in a Russified country, where the role of Russian goes well beyond the present-day “modus operandi” (described at the start of this post) that seems to work, while presenting a lesser, but nonetheless non-trivial threat to Latvian identity.

Don't get me wrong. I am a pretty multicultural person and can get along/have gotten along elsewhere – Sweden, the US, where I grew up, Germany, where I have worked and know the language. But for me, Russian as a second official language would be a defeat of all that Latvian independence meant, a re-sovietization of conditions in this country. Count me out on that...

How badly did “FukTuk” Fuck Up? If at all?

I just had to use that title. “FukTuk” (with the fuk like some Brits say, well, you know...) is how Latvians often pronounce the acronym for the Financial and Capital Markets Commission, Finanšu un kapitāla tirgus komisija or FKTK, the financial markets supervision and regulatory commission. The agency has been getting a lot of criticism recently after the looting of Latvijas Krājbanka, the Latvian Savings Bank, and its parent bank, Lithuania's Snoras, by their main shareholder, Vladimir Antonov and his lackeys.

On the one hand, it would seem that by offering to resign, the head of FKTK (FCMC is the English acronym) Irēna Krūmane, has admitted that – here we go again – FKTK fucked up. But this is actually a wrong and ignorant interpretation of events, even if mistakes were made. The mistakes didn't concern the direct regulatory and supervisory functions of FKTK. It was more of a public relations problem (Krūmane, who was out of town, may have sent the wrong people with inadequate briefing on what to say, to explain the Krājbanka fiasco) and the problem of having to face down ignorant media and the public, screaming for someone's, anyone's blood.

Strictly speaking, Krūmane's resignation is like a head of the national police resigning because the crime rate isn't zero. Well, almost. To have a crime rate of zero, you would have to have one cop following, say, every one or two citizens (an impossibility) and also have absolutely no corrupt or fallible cops who could be persuaded to join, rather than fight criminals (after all there is a lot of money and excitement in crime).

That is not how the system of criminal justice and law works. It works mostly by self-regulation and a number of other individual and social mechanisms. Most people, for one reason or another, stay within sight of the boundaries set by The Ten Commandments, or at least those, that apply to transitive actions (those affecting the rights of others). That may exclude idolatry – the having of other gods, etc, and another “ultry” reserved for – adults – that goes with the coveting your neighbors' wife and all that. But it certainly covers stealing, slaying, and, to a large extent, bearing false witness. That is because you have to be pretty much of a sorry-ass, evil fucker to do any of that, and most people are not like that, or evolution would have reduced us thousands of years ago to a small, about to be extinct pack of upright apes snarling and fighting with each other for the last bananas in some remote jungle. That's not how things are.

Peer pressure and the need to have the respect of others are also powerful restraints on the urge to do any kind of batshit stuff, whether it harms anyone or not. Driving up to a cloister, blowing your horn in the middle of the night, waking the nuns and then mooning them standing on the roof of your car really doesn't hurt anyone and would make a great and gross teenage movie scene, but it is not what you want on the front page of the newpaper. Nor do you want to make the evening TV news for being shitfaced at the wheel of your car as the cameras show up and then go into a racist rant about Uigurs or some other obscure nationality as the police take you away. Nobody, well, almost nobody, wants that kind of shit.

It is more or less the same with the financial system. Like the police, Krūmane could reasonably go to sleep at night on the assumption that most of those she rides herd on would not simply up and break every rule for the hell of it. In fact, with two layers of checking and regulation provided by the internal controls and risk management of any financial organization, combined with regular checks by independent auditors, there is enough of a self-running system to keep things on the straight and level. Finally, there are the regulators, seeing to it that the others are at least equipped, set up and ready to do their jobs. This means credit committees, risk managers and a lot of double checking and signing off on stuff before any other people's money is utilized. That is what banks are – other people's and enterprises' money entrusted to the bank or other financial actor. One shouldn't fuck with that, nor go unpunished for doing so.

What happened at Krājbanka is that, despite most of the necessary checks, balances and scarecrows (the idea of being jailed in disgrace keeps fingers off the cash like a scarecrow spooks the crows)being in place, the bank's managing board chairman Ivars Priedītis did go batshit and pledge some LVL 100 million in assets as collateral for loans made to Vlad the dude with a sportcar jones and his various projects. Priedītis had been a pretty straight and honest guy before that, but the mo-fo simply went or was pushed over the edge into crime when he agree to sign off on the deals on an adventure of his own. Apparently, the rest of the bank management knew fuck-all about it, or maybe merely suspected something. They certainly didn't suspect Vlad, assuming that several national intelligence agencies could have the dude's past in Russia all wrong. So maybe he found the cash needed to start his bank in paper bag in a Moscow back alley. Hey, those were the days in the Wild, Wild East.

So what failed was not really Krūmane and the system under her. The system is based largely on trust (most information is not submitted by liars). What failed was one guy, perhaps a few more people going rogue. Some financial institutions with some of the best monitoring and internal controls have had traders cut loose and create enormous losses, if not bring the whole motherfucker down if they were unlucky enough. Taking the wrong side of some financial derivative instruments can cause losses big enough to warp spacetime around them, dwarfing anything that Priedītis pulled off. Lucky that that didn't happen in Latvia, which is not to say that it couldn't be done. Just most people in the business won't try it.

You can do all the checks and cross checks you want, but no system is God, and most run themselves adequately, thank you. It is foolish to think anything can or should be designed to be everywhere all at once. Don't blame the overseers for failing to do or be that.

By offering to resign, Krūmane has actually thrown herself on her sword as a PR stunt to restore some trust in the FKTK. The blogger and political scientist Iveta Kažoka made this point about trust in the financial system being undermined by Krūmane's communication style. Her appeal for Krūmane to resign was borderline strident. But for Krūmane it was probably a tactically right move to keep the dogs from tearing apart the institution by thowing herself to them (sword, now dogs is only a sign that it is late and I am tired from pulling all sorts of shit for my employer over the weekend in Stockholm to in order get and do an important interview). When it is all over, whoever takes her place should remember that sitting in that chair, no one will excuse you because sometimes things just happen (“honest Ivars” at Krājbanka went wacko), and they will crucify you for not being god even if you said you couldn't be.

Russian investment in the Baltics -- by "whitelist" only

It's beginning to look like 1995 all over again. That was the year that Banka Baltija, Latvia's largest bank at the time, was destroyed by economic crime. In fact, looking back, the whole bank was the economic crime. It was probably never intended to be anything else. The case with Latvijas Krājbanka or the The Latvian Savings Bank, is not identical. For one thing, Krājbanka has historically been around since 1924. During the Soviet era, it was one of the few institutions where private persons could keep their money on deposit. After Latvian independence, it was privatized in 2003 and in 2005 Krājbanka was acquired by Lithuania's Snoras Bank. Snoras Bank, in turn, was owned by Vladimir Antonov, a Russian “investor” now suspected of looting both Snoras and Krājbanka, who also attempted to buy Sweden's Saab.

Like Banka Baltija, Krājbanka's customers were mostly private persons. On its home page, the bank says it is (was now) one of the largest providers of financial services to private persons. When Banka Baltija crashed, tens of thousands of Latvians lost their often meager savings, which they had been criminally lured into depositing with the bank. Krājbanka's customers entrusted their money in good faith to a bank that had, in fact, worked as some kind of functioning bank for over 80 years. In short, the bank did what it promised its customers, up to some as yet indeterminate point at which Antonov started influencing the operations of Snoras and Krājbanka with criminal intent.

Whatever the sequence of events, the effects of deliberate looting and deception are being felt – thousands of customers have had their savings thrust into limbo (theoretically, they are covered up to EUR 100 000, but the payout will take time) and hundreds of businesses and government and municipal institutions. The total cost to society will be in hundreds of millons of LVL, including businesses ruined by the crash, small municipalities losing most of their funds and further unemployment triggered by all of this.

In some cases, the losses have been staggering. The Latvian State Radio and Television Center had more than LVL 24 million on deposit at Krājbanka, having chosen the bank as offering the best and safest terms for holding this amount of money. This is now lost, especially as Krājbanka is likely to be liquidated. The famous Latvian composer and musician Raimonds Pauls has lost most of his savings of some LVL 700 000 on deposit with Krājbanka. It also looks like significant funds – something like LVL 70 000 may have been put on deposit by the Latvian Filmmaker's Union.

Recriminations are already starting, just as they did when Banka Baltija fell apart. The Financial and Capital Markets Commission, Latvia's banking watchdog, is being blamed for missing the signs (or looking the other way) when it should have seen the shady deal in August that plundered Krājbanka of funds, diverted, it is said, to Antonov's private projects, including his attempts to buy Saab.

All things considered, though, it is impossible for any regulator or watchdog, no matter what resources it commands (such as the Securities Exchange Commission/SEC in the US) to double check on everyone, especially when criminals ar lying. Banka Baltija founder Aleksandrs Lavents and his managers lied systematically to auditors, who had neither the duty nor the capability to test every number and assertion offered by the bank with a lie detector. The Krājbanka case was different, but at some point, most likely due to the actions of Antonov, the bank turned into a fraud against its customer.

Moreover, Antonov's behavior seems to fit into a pattern of criminality and fraud by Russian so-called investors, who have either earned their money by some form of crime at home, investing the spoils of plundering and corrupting Russia into relatively benign Western businesses, or who are simply taking the worst of so-called Russian business practices into the West, like a gang of Wild West bandits riding into town on money bags rather than horses.

Antonov seems to fit into the latter pattern, making destructive “investments” in Lithuania and Latvia, attempting to get a foot in the door at Saab (hindered, at least, by the Swedish authorities who were aware of his possible organized crime connection). Antonov's father Alexander survived a shooting, an incident that casts light on what his lines of business were and possibly still are.

At the end of the day, the impact of the Krājbanka collapse will probably be less dramatic than Banka Baltija and far less than Parex Bank's collapse in 2008, which cost the government around LVL 1 billion in bailout spending and almost made the country an international basket case (when the basket says IMF on it, it is just a temporary resting place until your limbs grow back). Parex Bank's collapse also has elements of criminal sleaze, but it was done by locals and perhaps with a bit more sophistication. There is a difference between getting rich owning a bank that earns money serving shady characters and doing for them (as well as its other customers) what it promises to do, rather than breaching its trust to depositors and customers and simply stealing or squandering their money. In any case, the full story of Parex and various criminal and semi-criminal activities may yet emerge.

What all this suggest that with the Baltic countries being of particular interest to Russian based criminal “investors” such as Antonov, it is time to take targetted action. To be sure, there are examples of Western fraudsters and financial criminals, from the people running Enron to Bernie Madoff. But these guys eventually go to jail in the US and other Western countries, they do not move to London and buy football (soccer) clubs when rival gangs in Russia star breathing down their neck, or when their gang falls out of favor with the Russian political elite and the secret services.

I would suggest that Russian investment in the Baltic countries be allowed on a “whitelist only” basis – that is, to put you money into any project in these countries (and why not the US as a whole), any person whose investment capital was accumulated in Russia (meaning any wealthy Russian citizen) shall be barred from significant investment in any enterprise except if he or she is on a “white list” of investors who have been thoroughly background checked and vetted to be as clean as possible of any criminal or Russian secret service ties.

Whitelisting would be fair to Russians who want to put largely honestly earned funds into legitimate businesses in the Baltics, but it would create a presumption borne out by events, that the Russian post-Soviet super-rich are not to be trusted and probably, by conscious intent or instinct, engage in barbarous business practices. It may be the only way to prevent a Banka Baltija 3.0, now that Krājbanka may prove to be a Banka Baltija 2.0 (Not So ) Lite.

Graffiti, junkies and multi-drug addled mutts as signs of social decay

The center (even officially known as "Centrs") of Riga, where I live and work, is showing signs of profound social decay. If you accept the "broken window that doesn't get fixed" theory of areas spiraling downward into becoming crime ridden slums, then the signs are all over the place in central Riga. It is not broken windows, but spray-painted, artless, incoherent graffiti everywhere. I discovered this by going around on walks and taking photographs, mainly of what I think is "street art" type graffiti and noticing that there was much, much more of the incoherent, quickly daubed squiggles and tags type of stuff. It seems to increase from week-to-week.
Also noticeable is the number of people on the street nodding on heroin or intoxicated on substances other than alcohol (not stoned, but on something that, unlike grass, affects motor functions in a different way than the drunken stagger of alcohol). You see these characters even in the morning, along with drunks, the typical signs of urban social degeneration. As things look, the mutts* are getting the upper hand.
*From the Urban Dictionary:

A Mutt is a person who is a real lowlife, degenerate piece of shit who just never does anything right... The common Mutt can be found in OTB and the local bagel store buying lotto tickets every day of their lives and losing every dollar they have... Another type of Mutt will be high or drunk 247 and try to operate and have a normal life but wind up doing "Mutt" things.

Here are some examples

Basically, just "tags" and scrawls, propagating day to day.
For the record, on addicts: Heroin should be decriminalized and made available to registered addicts along with clean needles. There should be no "accidental death penalty" for being a fuckwit who gets addicted, nor should we be robbed by addicts who need to pay for drugs whose prices are determined by their illegality, not their cost of production.

Latvia: Cobbling together a "kludge" of a government

It looks like Latvia may have managed to cobble together a fragile coalition of Unity/Vienotība (V), the tatters of the Zatlers Reform Party (ZRP), six ZRP defectors and the National Alliance (NA). By now it should be obvious that the bright sun of change some Latvians have expected since the founding of New Era (Jaunais Laiks/JL) almost ten years ago, and that they expected, yet again, with the V alliance in 2010, and yet again with the dismissal of the Saeima and the new elections, has slipped back below the horizon. Another false dawn.

So what can we expect? Valdis Dombrovskis will continue at the helm of a listing ship with six loose cannons on deck (perhaps more, one can't say that the disintegration of the ZRP has ended with the mere loss of 27% of its parliamentary strength). There is already talk that oligarch influenced Green/Farmers Union (Zaļo Zemnieku Savienība/ ZZS, which neither particularly green nor agrarian) could be called out of its political leper colony to boost the coalition should all else fail.

That, of course, would be a symbolic death blow to the ZRP, which was built, overnight in political movement forming terms, on the idea of opposing the “oligarchs” and the practice of state capture. The six loose cannons have indicated this could be fine with them, providing that no direct representatives of Ventspils mayor Aivars Lembergs (from his Ventspils based “sub-party”) are involved. Dombrovskis, too smart not to be aware of the kind of crew he is sailing with, has also hinted that the ZZS might be let in the back door. After all, they are weaker than in the last Saeima, when they did everything to disrupt V's attempts to govern coherently. But then coherent governance has never been and is unlikely to be a Latvian priority in the foreseeable future.

The Harmony Center (Saskaņas Centrs/SC) has forecast – motivated by some bitterness – that the coalition will be lucky to last until next spring. They may be right. They have also indicated that as a harsh and firm opposition, the SC will continue to advocate social democratic policies. When it was offered a chance to govern together with the center-right, the SC quickly abandoned the social democratic populism that got it elected. More evidence that the SC are chameleons, never mind inexperienced (maybe a virtue where “experience” is being part of two decades of misrule) at national government.

After the “Sunday morning surprise” popped on everyone by the chief loose cannoneer Klāvs Olšteins (who burned through two political parties this year so far), it is safe to say that anything can still happen by the time the Saeima has to vote on the new government on October 25. But it seems likely that the present kludge (to use IT slang) of a government will get approved. Then the whole company of 100 merry pranksters will have to pass yet another austerity budget for 2012. How much more will have to be cut, and will the cuts keep up with the deterioration of the tax base due to emigration and the drift of the population into the gray economy is an issue that no one has talked about yet in and depth. Everyone has been watching the political circus or balagāns of the past five weeks. The real horror show may start with the budget. 

Act one of the "balagāns" ends

Act One of the balagāns seems to have ended. At square one, namely, the coalition that most people thought they were voting for – a center-right government consisting of Zatlers' Reform Party (ZRP), Unity (Vienotība/V) and the breath-taking (if you try to say the whole thing in one breath) All for Latvia/Fatherland & Freedom/Latvian National Independent Movement or simply the National Alliance (NA). It took just three weeks of acrimony, betrayal, reconciliation, adultery and the political equivalent of make-up sex to get back to where everyone started – at least everyone who could a) count the Saeima seats won after the September 17 election and b) compare and contrast the party programs of those elected to the Saeima.

Looking at things that way, one can say – good for you, Harmony Center (Saskaņas centrs/SC),you added two seats and became the single largest party in the Saeima! However, your program – at least up until the chameleon hopped up in front of a picture (symbolically speaking) of Valdis Zatlers and Valdis Dombrovskis and started to try to match its background – was completely mismatched with these guys. The ZRP and V are not populist social democrats. Nor is V “pro-Russian” in the same sense that SC appeals to its Russian electorate. Neither is it anti-Russian and much of what it says could appeal to middle-class ethnic Russian voters.

The same goes for the ZRP, which has proposed and may still get ethnic Russian economist Vjačeslavs Dombrovskis appointed to a ministerial position. He would be, technically speaking, at least the third ethnic Russian minister after Vladimirs Makarovs of the nationalist Fatherland & Freedom and Vasilijs Meļņiks (finance minister for five days in 1997). However, the ZRP has, for three weeks, clung to the idea of having the SC as a coalition partner almost like one of those attack dogs whose jaws, once they bite, cannot be opened without cutting off the beast's head. The news that the ZRP has agreed to what was obvious three weeks ago came the night of October 10, so there is still time for surprises before the new Saeima meets.

As for SC, their “exclusion” from government is not a “Russian vs Latvian” thing, at least not in rational terms. The ideology of SC and the other potential coalition partners didn't match. You cannot match shape-shifting “social democrats” who voted to protect an oligarch (Ainārs Šlesers) from the law with centrists, much less with nationalists. The ZRP was crazy trying to do so and persisting in its obsession for three weeks, discrediting (if that is at all possible) the Latvian political system even further.

The potentially loose cannon in the upcoming coalition is the NA, who know that they probably can test how far they roll around on the heaving decks of the coalition without any serious consequences. Unlikely that they will be dumped in favor of the SC, after all, but perhaps they should not tempt fate. On some points of logic, the NA does make sense. No one should accept the facile phrase that Latvia was occupied, but there are no occupiers. To say this, even in 2011, is like going back in time to 1965 (20 years after the war) in Germany and saying : “There was a Holocaust, but there isn't anyone around who shot or gassed Jews.” Of course there were such folks around, and they were found and put on trial.

The expression “there was an occupation, but there are no occupiers” is an illogical way of saying that most, perhaps the vast majority of non-Latvians who arrived during the occupation did not do so with the intent of actively enforcing the totalitarian regime. Clearly, those who were members of the security service (the KGB) and the military (the Soviet army wasn't just visiting Latvia for 50 years for vacation). Soviet army veterans have essentially been blanket pardoned for, technically, being “occupiers” under the treaty that ensured the removal of ex-Soviet Russian troops. There has not been a concerted effort to find and punish ex-KGB, a number have even become businessmen and politicians (such as social democrat Juris Bojārs).

What one really means by saying “there are no occupiers” is that one isn't going to make a big deal of it unless there is a clear case of someone being a “ripper of fingernails” (nagu maucējs in Latvian). Also, there is no point in going after second-generation “occupiers” or those who simply came along for the ride thinking that the “known world” for them was the Soviet Union. The country has already lost some 300 000 people of all ethnicities to emigration, and trying to get even more to leave simply because they are Russian is not going to help things, especially the economy.

Keeping the NA from going off the deep end on these issues is going to be a major concern for the new coalition (if it hasn't already fallen apart as I write this). The other concern is what Zatlers, who has proven himself somewhat of a whackbat (amalgam of wacko and batshit) may do if offended by the NA and tempted to seek solace with his “first love” the SC. Which is not to say that the center-right coalition that has apparently been stapled together couldn't get the support of the SC on some issues. That would almost be like normal European politics. Nice thought. But this is Latvia...

Admitting a wasted vote in a failed state lite

I voted for Zatlers' Reform Party (ZRP) in the September 17 out of a sense of duty to vote for an “electable” political party, also to express my dissatisfaction with Unity (Vienotība/V) for letting their coalition partner, the Green and Farmers' Union (Zaļo un Zemnieku savienība/ZZS) walk all over them. I decided that voting for the party I most sympathized with, the semi-anarchist Last Party (Pēdējā partija) would be a waste of my vote.

It now turns out that voting for the ZRP, even though they came in “second” with 22 seats in the Saeima, was also a waste of my vote. Others may be happy with their choice, I am not. It not seems that the only goal of the ZRP is to bring the Harmony Center (Saskaņas centrs/SC) into government, no matter what other disruptive effects this may have. These may include tearing apart the other parties it is trying to bring into the coalition, including itself.

The idea of making the SC one of the building blocks of a future government with its 31 Saeima seats has freaked out Latvian society in many ways at at many levels. It has also been reflected in the foreign media in distorted and nonsensical ways. For instance, saying that the SC gaining two Saeima seats for itself is a “social-democratic” victory is simply wrong. The SC is not a classic social democratic party, its populism sounds social democratic at first glance. It has voted with the oligarchs, it did not act to let anti-corruption police search the homes of Saeima deputy Ainārs Šleser, suspected of corruption. One of SC's candidates for prime minister, Riga mayor Nils Ušakovs, partnered with Šlesers in running the city until the politician was elected to the Saeima in 2010.

For me, these are reasons enough to be skeptical of bringing the SC into government. I would also be worried about the somewhat chameleonic nature of the SC. Within days of the election, they were ready to abandon their pre-election promises concerning the indexing (raising of pensions)and to soften their skeptical stand on joining the euro (considering what is happening with the European sovereign debt crisis, there was some merit to this view) as well as on attempting to re-negotiate and extend Latvia's arrangements with the IMF and other international lenders (a crackpot idea, IMHO).

Also, the SC is actually an alliance of two parties – the SC and the Socialist Party, which is an unreformed, hard-line Communist organization that justifies the deportations of Latvian citizens under Soviet occupation in 1941 and 1949, and calls the 1991 restoration of Latvian independence as a “ reactionary coup”. In a sudden move after the election and as coalition talks started, the SC said it would disassociate from the Socialists. What were they thinking earlier?

Meanwhile, the other parties in the talks were also showing rifts. Valdis Liepins, a Canadian-Latvian who “defected” from V to enthusiastically join the ZRP has been circulating e-mails expressing his opposition to any deal with the SC. He is a potential defector from his new party, which could bring the SC/ZRP majority to 52 (should both parties try to go it together).

V, meanwhile, has been deciding on-again-off-again that it won't/might go into coalition with the SC or maybe with everyone (except the ZZS, a party consigned to a kind of political leper colony). Except that “everyone” doesn't get along with “everyone” else, and the country is not at war or in any other extreme situation requiring a government of national unity. The National Alliance (NA) has declared it will never join a coalition with SC in it, nor is the SC ready to sit in the same government with the nationalists. V is also showing little unity in that some of its components (the former Citizens' Union) are also threatening to split off if there is a coalition with the SC.

Which means there are really “one and a half” possible combinations – the ZRP, V and the NA in a center-right coalition with programmatic similarities and a ZRP/SC coalition of two inexperienced and programmatically mismatched parties that would satisfy former president Valdis Zatlers' ambition to finally bring some ethnic Russians into government (at all costs, if need be).

As for the “Russian” issue, that has been raised yet again in all of its paranoid glory, with at least some parts of society sincerely believing that the SC will move rapidly toward moving Latvia into Russia's sphere of influence and making Russian an official language. Dampening these views has not been helped by Janis Urbanovics, a ethnic Latvian SC leader and its second candidate for prime minister, hinting that Russians would use “extra-parliamentary” means of protest if the SC was kept out of government.

In short, with President Andris Bērziņš setting a deadline for some kind of resolution of matters this Monday (October 10), there is some pressure for the parties to get their act together. But since this is Latvia, that may not happen. The continued bickering, bumbling, “betrayal” and shape-shifting will only confirm the totally cynical attitude the vast majority of the population has toward politics and politicians in general. While Urbanovics may not succeed in getting people into the streets, the continued failure of Latvian politics will lead to more external and “internal emigration”, in the form of passive resistance to taxes and any dealings with a system of governance much of the population sees as corrupt, incompetent and hostile to their interests. 

Ground control to the majors Valdis...

The political balagāns in Latvia has lifted off into new regions of outer space. Major Valdis Zatlers of the spaceship ZRP (Zatlers' Reform Party) has said it will take Imperial Star Cruisers (main battle tanks in Earth terms) to get him to undock from the Starship Harmony Center (SC). Now the other space major Valdis (Dombrovskis) has joined the orbital circus by proposing that all the spaceships dock and form a nice orbiting “ rainbow” with the Starship Unity (V), the Nationalist Falcon (NA) and even the almost launched into the Phantom Zone interplanetary garbage scow The Green Farmer (ZZS).

Ground control to the majors Valdis – this ain't gonna work, not in orbit, not on Earth.

The whole process of putting together some kind of workable coalition has gone far down the road to a total FUBAR (fucked up beyond all repair, in case you didn't know). It was probably heading there from the very start. Major “Big Wally” as I call him was determined from the start to link up with SC. Nothing was going to stop him, not even a deal with the other, “Little Wally” and V, to form the “core” of any coalition. Core meltdown. Bad in space, worse on earth.

So where does that leave things? The smart thing to do, to keep everything from de-orbiting and burning up, would be to let Major Big Wally remain docked and in orbit with SC. Everyone else stays on the ground, in gentle opposition and sees how many orbits the tandem can do by themselves.

This may be the only way out. Despite the fact that, programmatically, ZRP, V and the NA fit together, actually putting them together into a coalition has proven to be about as easy as the worst case scenario for assembling a piece of IKEA furniture. All the parts are there, just no one can fit them together and all attempts just fail.

ADDING THE LATEST

Well, maybe not. Now it is on again, yes, again, between V and the ZRP, who have, according to the latest news, both agreed to call for a kind of government of national unity minus the Green Farmer spacecraft, to be left in decaying oppositional orbit. That means that both the SC and the National Alliance will agree to sit in the same government. Yeah, right... Where is that cryptic IKEA diagram. Wait, these are parts from a different chair.

It is night, there will be real daybreak some hours from now, but this whole Saeima dismissal process, the referendum, now the latest elections, all point to yet another false dawn. The already totally cynical electorate will give whatever new government is cludged together a single digit rating even before it is formed.

Oh yes, then there is the little matter of the 2012 budget, with more spending cuts and the need to pour resources into what one can neither confirm nor deny is a rathole in the skyways – air Baltic. There, also, some kind of deal has been cobbled together and it will cost the state LVL 57 million in a first installment. Berthold Flick, who may well have been running the company against a merry mare's nest of revenue-suctioning parasite companies under his half-owned Baltijas aviacijas sistēmas (BAS), at least, is out of the picture. Whether he will sell his shares in BAS remains to be seen. In any case, it is starting to look like the biggest minority owner of air Baltic may be from the Russian sleazocracy.

Somehow I don't see the broad rattletrap coalition now being proposed as capable of getting much of anything, never mind the budget, done. Leaving the linked spacecraft of SC and ZRP to do it alone would be the test to quickly see whether they have the stomach (especially SC) to cut at least another LVL 100 million, if that is really the true figure. Just wondering, as 14 000 taxpayers, a record number, rising fast, have left the country this year to work and pay taxes where it actually counts and pays off. So I don't see tax revenues narrowing the budget deficit. Instead, the tax base will shrink by the combination of emigration and increasing tax resistance and evasion.

Let us see what marvels of outer space the next few days bring...

The “nicotine drill”, urban cattle update and a whiff of heroin

I go to work past some kind of vocational high school in Riga, and almost every morning, I see something that reminds me of my high school days in the US-- almost everyone has left the building and is standing around in small to medium-sized groups. Back at Newton North High, this kind of a scene meant there was a fire drill, and this occurred a couple of times during any semester. At the Latvian school, the teenagers are out, standing in clumps, every weekday. And 99% of them are smoking. It is, in other words, a daily “nicotine drill”.

Don't get me wrong. Smoking is an individual choice. I have smoked for periods in my life, but never to the point of addiction (“needing” a cigarette at all costs, feeling “withdrawal” symptoms). If someone wants to smoke, let them do it (with respect for others and non-smokers, a commodity in short supply in Latvia). But the shocking number of smoking teenagers every morning indicates a number of things badly wrong. First, apparently these kids are either not educated about smoking, or whatever they are told falls on deaf ears. Compare this to the relatively low teen smoking rates in Sweden and other European countries. The other thing is that these smokers are the public health problems of the future in a country were there is practically no public health – by the time they are 20 years older, there may well be no tax-funded health care in Latvia (or many of them may be net consumers of health service in countries they have emigrated to).

In other words, the “nicotine drill” is yet another “street level” observation of the failure of societal mechanisms in Latvia and the continued degeneration of everyday life. I can only note that the proportion of the strange, addled and desperate-looking on the streets continues to increase. It is, perhaps, distorted by the fact that I work near the Riga central train station, and train stations are magnets for social outcasts.

Just a few examples – the pathetic, stereotype-boosting hustle by Roma/Gypsies by the train station, involving a few women peddling some kind of cosmetics, supervised by a number of men. It happens every day, with little apparent success by the “salesladies”. Where the goods come from can also be open to question. Certainly, one of the marketing mistakes by this team of street peddlers is that most Latvians automatically think – “Roma=stolen goods”. This may or may not be true. Perhaps they are peddling counterfeit goods. In any case, this activity, day-to-day, propagates the image of Roma as folks who engage in what can charitably be called cheap-ass, sleazy commerce.

A few meters away (one standing with a crutch, one sitting in his wheelchair) are two disabled beggars, who routinely engage in verbal and, sometimes, physical bum fights. The stand right by the pedestrian cross toward the train station (also the Origo shopping center) said to be the busiest in northern Europe. Here we see the phenomenon I have called urban cattle in full flower. Urban cattle are people who simply wander about mindlessly, ignorant of distinctions between sidewalks and road traffic, as well as anyone else engaged in locomotion (on foot, by motor vehicle or bike) around then. Urban cattle operate alone or in small herds. These herds, as a rule, fan out when one approaches and tries to overtake and pass them while walking somewhere in a purposeful manner (the cattle saunter and pause, doing “stop and stares” at nothing in particular).

It has now become routine at the Origo crossing, where pedestrian lights are indicated by digital times, for the urban cattle to jump the gun in considerable numbers at around 10 seconds before the lights actually change. I see this every time I cross there. First the urban cattle, some as early as minus 15, without even breaking stride from whatever hallucinatory or somnambulant hike they are one, then the rest of us

This seems especially dangerous, as the cattle end up in the path of drivers racing past the crossing on yellow. So far, I have not seen anyone hit, which seems almost miraculous. Then one day I noticed a few heavy-eyed cattle walking in a noddy-plodding manner not typical of alcohol drunks, who usually stagger and sometimes are self-aware (with the exception of the glassy-eyed robodrunks marching in their own oblivion).

Which brings us to the next observation. Mr H is definitely here in Riga. Harry the Horse is riding high. People are fucked up on heroin in Riga, not in great numbers, but increasingly noticeable. I have worked or lived in places with junkies on the streets before (New York, Frankfurt) and the eyes half-shrouded by lids, knees bending slowly, then popping back out of the nod thing is pretty obvious. Maybe other recreational chemicals do the same. I don't remember seeing folks on quaaludes back in the day, but those made people who took them into giggly-gumbies (like the stop-motion clay creature Gumby of 1950s and 1960s TV), or so it is said.

Anyway, I run across a few obvious junkies on the street every week, and this should have alerted the media that something is going on. But the Latvian media do not have the time or resources to deal with this issue, or maybe I don't read the right papers. However, it is become clear that heroin use among the underclass (and not only) is an emerging problem in this country.

My solution – decriminalize heroin, set up needle exchanges, clean shooting galleries and offer detox programs (unrealistic in Latvia except with charitable financing) to those who need it. This would reduce the danger of overdoses, get the heroin trade out of the hands of criminals (shifting it to pharmacies for registered addicts), prevent the spread of AIDS and hepatitis, as well as drastically reduce crime related to drug addiction (theft and robberies) as well as emptying the prisons of those “guilty” of victimless crime. 

A new, bizarre act in Latvia's political "balagāns"

The political balagāns (carnival) continues with a wee-hours-of-the night coup by the Zatlers Reform Party (ZRP) to bring Harmony Center (Saskaņas Centrs/SC) into government and offer the post of prime minister to Valdis Dombrovskis of Unity (Vienotība/V). Somehow I don't think this was coordinated between ZRP and V, in accordance with an agreement between both parties forming the “core” of any next coalition that exactly this kind of thing would be done by mutual agreement. For a number of reasons, the ZRP simply decided to screw its potential coalition partner, set off a bombshell in the middle of the night and get the whole country (or that part of it writing comments on internet portals) up in arms.

One reason former president Valdis Zatlers himself mentioned (and this was hinted at when he was forming his barely three-months old party) was to bridge the ethnic gap in Latvia between Latvians and Russians. At least one political scientist, Iveta Kažoka, called this “historic” and a good thing, sorta... In purely logical terms, it makes considerable sense. Latvians and Russians face the same economic challenges – despite some GDP growth, the country is still way below where it was in 2007 or 2008 and will not clamber back until the middle or latter part of the decade. Unemployment hits Latvians and Russians equally hard. Even emigration is an issue if we talk about ethnic Russian voters, which means they have citizenship, a passport and are free to go look for a better life in the rest of the European Union. Ethnic issues are largely historical and it is the future – will Latvia have one or not – that matters. Or so it would seem.

In reality, ethnicity overrides any and all common causes, except in fleeting, temporary situations, like hockey championships, where Russians and Latvians unite behind their (heavily Russian) national team. The issue of occupation and who or what was responsible for it (between 1940 and 1991, twenty years ago) is still emotionally pivotal and the main reason the National Alliance (All for Latvia/Fatherland&Freedom/Latvian National Independence Movement –NA) will see cows flying in formation before it joins any government with the SC in it.

It is not clear what would happen if the SC electorate were all to agree, not only that there was an occupation, but that they all, whether born here or not, are occupiers, including minor children, housepets and lawn statues of dwarfs. The NA, I am sure, would then urge them all to go back to Russia, acting out its deoccupation fantasies. That might have worked in 1991 -1992, but not anymore. Besides, Russia is an increasingly authoritarian bardak of corruption and cronyism that even puts Latvia to “shame”. However, a virtual deoccupation has already occurred in economic and demographic terms – at least 300 000 people, most of them economically active, have left the country, probably never to return (in any permanent sense). Trouble is, only some of them are Russian.

The other reason that Zatlers wants to have a three-party ZRP, SC and V coalition is that it would have more than a two-thirds parliamentary majority needed to change the constitution and allow popular elections for president, as well as granting the new, popularly elected presidency broader powers. Presently, the Latvian president is largely a figurehead. Cynics say the only reason Zatlers dismissed the parliament was in order to run for the new, more powerful office of president a few years down the road. This is probably not true, there was good reason to dismiss the Saeima with 94% of the electorate approving Zatlers' move in July.

As far as V and the coalition offer from the Zatlerites goes, it looks like the party will fulfill a cynical name I gave it back during the summer – izjuceklis or something that will tear itself apart. The former Citizens' Union (Pilsoniskā Savienība) has declared its opposition to forming a government with SC and there is talk of some V members of parliament quitting the party. This would leave ZRP with the other option of forming a bare-majority government with the SC, resting on 53 votes in the Saeima. It would also leave two inexperienced parties running the country, at least one of which has a dubious record on being law-abiding (voting against a search of the oligarch and Saeima deputy Ainars Slesers' residences) and of keeping promises to its own voters and internal partners (Nils Ušakovs has said he will boot the crackpot neo-Communist Latvian Socialist Party out of the SC if that is what it takes to get into the coalition).

So the balagāns is far from over and Latvia probably faces more years of acrimonious, bumbling government for the next few years, perhaps followed by a possible nationalist backlash in the regular Saeima elections in 2014. 

One "balagāns" is over, the next one starts

And so the big balagāns (slighty tawdry carnival) of the extraordinary Saeima elections is over and the outcome is much as could be expected. The only thing that did not happen is that Harmony Center (SC) didn't get the big gain in seats that some pollsters predicted, and that would have allowed it to make a coalition wih the severely depleted Green and Farmers' Union (ZZS) of the “oligarch” Aivars Lembergs. The SC, which has been called both “ pro-Russian” and “social democratic”, gained only two seats for a total of 31. The ZZS was cut down to 13 seats in the Saeima, but with the SC failing to make the gains that some had predicted for it, there is no way that the two of them together can make the populist, corruption-tolerant coalition that would have been possible if the list led by Riga mayor Nils Ušakovs had gained at least 38 seats (for a bare majority together with ZZS).

What is possible now is a number of unstable coalitions. One is to put together 51 seats with prime minister Valdis Dombrovskis' Unity (V) and SC, which would need a good reason for excluding the Zatlers' Reform Party (ZRP). It would also put the strongest member, SC, in a technically dominant role against the more politically experienced, but “defeated” V. A strong coalition in terms of numbers would put the top three winners together and gather 73 seats, making it possible to pass almost any “reforms”, including changes to the constitution (Satversme).

In such a coalition, the two centrist-liberal parties with 42 votes among them would be dominant, though perhaps as a two-headed alpha dog. If one “discounts” the SC, then the ZRP has good reason to consider itself the real “winner” of the election, having come from nothing to 22 seats in the Saeima, ahead of V with its depleted 20 seats. Vienotība, itself an amalgam of three parties, can still consider itself most experienced at government (which ZRP is not), and besides, ZRP is just an accidental clone of itself, isn't it? Seeing things that way, the real winner is the center-liberal block, the unintentional seeming twins V and ZRP, with 42 votes, just a few short of a majority.

That is where the Nationalist Alliance (NA) with is long title of All for Latvia!-For Fatherland & Freedom/Latvian National Independence Movement could fit very nicely to make a government backed by 56 votes in the Saeima. There is just one problem – the NA knows they are the keystone that holds together the edifice of a “non-Russian” and nominally non-leftist (the NA actually supports protectionism and state ownership, but nevermind...). This gives the nationalists undue leverage, which would be problematic enough if the NA could keep some of its loose cannon from rolling around the deck and firing at the wrong time.

For a while it looked like one of the cannon, a young lawyer named Jānis Iesalnieks, had been lashed down after stating in social media that multiculturalism in Norway was really to blame for the bombing and massacre staged in July by Anders Breivik. Iesalnieks agreed not to run for the Saeima on the NA ticket, something he and All for Latvia (VL) had intended. But just after the election, Iesalnieks resurfaced and engaged SC's candidate for prime minister, Riga mayor Nils Ušakovs, in a duel on Twitter, saying that most of the people who voted for SC (as Latvian citizens) were really an illegitimate colonial population. Ušakovs wrote to VL's leader Raivis Dzintars, who was elected to the new Saeima, demanding an explanation. Dzintars responded that Iesalnieks arguments, based on the Geneva Convention articles about settlers in occupied territories were sound, but that VL and the NA did not support acrimony between the Latvians and Russians on an everyday level. This was a position that could effectively exclude the NA from any coalition with V and the ZRP, especially as the latter has said one of its purposes was to bridge the ethnic rift in Latvian society.

While the NA is unyielding in its hard-line position, the SC has apparently show readiness to retreat from its contrarian, populist or as some politely called it – social democratic policies. In order to join a possible grand coalition, the SC has indicated it will go along with a 2012 budget deficit that will get Latvia into the eurozone under the Maastricht criteria in 2014. It also has, by implication, backed off from suggesting that it wants to extend repayment (by refinancing on the market) of Latvia's loans from the International Monetary Fund (IMF) and other lenders. Ušakovs also made a low-key concession over the weekend, telling a conference that he considered Latvia to have been an occupied country during the Soviet era, but that no one today should be considered an occupier (Latvians use the term okupants or “occupant” – the biggest single addressee for junk mail in the US until /not-so/ sophisticated computer mailing systems personalized each letter). If you ask me, you will see cows dancing ballet on their hind legs by the Freedom Monument in Riga before Nils Ušakovs statement on “occupation” gets the NA to join any government with the SC in it. The reason for this was more likely to make a gesture toward the ZRP and V, who are also sensitive to anyone treating 50 years of totalitarian rule as some kind of mistake in international affairs or an “annexation” agreed to by a government in 1940 terrified by thousands of Soviet tanks and soldiers at (and to a great deal, within) its borders.

Having said that, the quick retreat from apparent “principles” (pasted to the backs of half of the busses in Riga) does not bode well for the SC as a reliable partner to the ZRP and V. Shapeshifters never are. As one former Riga hand said recently over a beer while visiting town, it's all about getting into power for the SC, never about any principles. That makes it a very much “Latvian” and old-style party, much like the sordidly defeated ZZS.

Oh yes – Vienotība and the ZRP are already kicking each other under the table while still trying to smile, because ZRP apparently went to a meeting with the SC without taking its slightly smaller twin along. And already during election eve, a carrot-topped iron lady from V was ranting that Zatlers was a liar because he had extended feelers to the SC even as the ballot boxes were being being sealed and taken away to be counted and exit polls were hitting the newswires showing who would be boss.

A merry few weeks are ahead for all. Book your Ryanair seats now for the opening of parliament (air Baltic may well have gone to the dogs by then, the government may just dump it on the mysterious minority shareholders rather than put up to LVL 60 million, maybe more, into a rathole in the skies).

Latvia Heading for a populruppted or corruplistic government?

The Latvian affiliate of the German-based market research and polling company GfK has published a poll indicating that the Harmony Center (Saskaņas centrs/SC) will get 41 seats in the extraordinary Saeima elections to be held in less than a week. In the last elections to the 10^th Saeim,, GfK accurately predicted that SC would get 29 seats, which gives considerable credibility to their latest forecast.

The poll also sees the Green and Farmers Union (Zaļu un zemnieku savienība/ZZS) getting 13 seats down from 22, Unity (Vienotiba/V) would get 21 seats (down from 33), Zatlers' Reform Party (ZRP) would get 18 seats (as a new party, no prior presence), and the nationalist National Alliance (Visu Latvija-Tēvzeme un Brīviba-LNNK /NA) -seven seats.

The only combination that “works” from these forecast results is a coalition of SC and ZZS, easily getting 53 votes (or more, if support for the ZZS is stronger than anticipated). The resulting government will be populist – with the SC advocating more spending for pensions and social programs (even at the risk of expanding the budget deficit) and “corruption-tolerant” with the ZZS still holding out hopes that its backer and “eminence grise”, Ventspils mayor Aivars Lembergs, who face criminal charges for economic crimes, will someday be prime minister. Hence the idea that the government will be populruppted or corruplistic, combining the words populist and corrupted.

The SC and Lembergs have both entertained the idea of renegotiating Latvia's deal with the International Monetary Fund (IMF) in the vain hope of extending Latvia's very favorable credit terms (never mind that the IMF has not given any new loans at the same low rates) rather than re-financing the loans and going back to the market. Even if it worked, it would mean continued austerity, something at odds with the SC's attempts to be social-democratic.

The ZZS, a party ready to go in bed with almost anyone in order to stay in government, will continue to shield state-capture and corruption, though perhaps with less vigor since the SC will want to keep a relatively “clean” image. Indeed, one of the reasons people will probably vote for this party and forget the battles over “acknowledging the occupation” is that the SC has not, so far, been involved in any major corruption scandals (probably because it has been kept away from the trough by the bigger pigs).

Interestingly, Latvia will probably be praised for getting a government with its first ethnic Russian PM, Nils Ušakovs, a kind of Latvian version of Arnold Schwartzenegger – a politician of national scale who spoke the official language with a slight accent. There will also be well-grounded fears that an EU member state has been drawn further into Russia's sphere of influence, although the same could have been said about Germany and its pro-Russian policies some years back, for instance, regarding the Nordstream gas pipeline.

So, if the GfK poll and forecast are right, Latvia is heading for a change, putting the present government party in opposition, a different party and possibly an ethnic Russian prime minister in charge, and, after some years of slight progress in breaking away from corruption and free-spending, pedal-to-the metal government, a partial back-to-the future with populist spending and tolerance of, to put it mildly, politico-economic hanky-panky.

On violence..and futility

I am reviving something I was writing in Latvian for a closed reading list. It started with looking at the government and ruling elite as an unknown creature from which we try to elicit some kind of response. First we make sounds at the creature. Nothing happens. Then we flash colored lights at the creature (this is getting to be like the film Close Encounters of the Third Kind). Finally, (and this is not to be tried lightly with a real alien or unknown beastie), we poke the thing (a minor act of violence) and it finally responds.

It seems to have been the same with the Latvian government. Peaceful public protests were dismissed as “yapping” by angry little dogs by the government of Aigars Kalvītis. The protests involved both audible (chanted slogans) and visual (signs and placards) cues. There was no response. On January 13, 2009, a mob “poked” the creature of government by stoning the parliament (Saeima) and other buildings, trashing some storefronts, fighting the police and overturning some of their vehicles.

Boy did that get a response! Ivars Godmanis, prime minister at the time, appeared on national television the next morning, stone-faced and speaking in a voice almost from beyond the grave. “We have awoken in another Latvia”, he intoned. Well, good fucking morning, as if this shit hadn't happened in other countries, in some, like Greece, just weeks before!. Right after that, then president Valdis Zatlers also gave the Saeima an ultimatum – to pass amendments to the Latvian constitution allowing popular initiatives to dismiss the Saeima, to change the election laws to prevent powerful candidates or “locomotives” from running in more than one electoral district as well as other measures by March 31 of the year. Some of what Zatlers requested actually got done and he never acted on that ultimatum.

The quick and simple, maybe oversimplified conclusion is – a bit of violence is the only communication that elicits a response from the ruling elite in Latvia. Paving stones and smashed glass are “heard”, words and protests, ignored.

But that is about the end of it. There was needless and senseless collateral damage from January 13, such as the stoning of a library building near the Saeima, the ransacking of a liquor store and serious injuries to a teenager hit in the eye by a rubber bullet. It also became clear that the “political” stone throwers were joined by a rabble out for the thrill of destruction and looting.

Even the political stone throwers represented no one beyond themselves and their personal anger with politics and politicians. Even their violence was “senseless” because it had no agenda and no organizational back-up in society. In other words, these guys were not the vanguard or fighting unit of a well-organized and defined revolutionary movement.

I started writing this before the rioting in the UK, which puts a different angle on things. Those events gave an entirely new meaning to the idea of politically (and economically)senseless violence. One may be able to better examine things once data are collected on the more than 1600 persons arrested in the wake of the UK disorders, but it now looks like what happened was an outbreak of theft, violence and destruction by the British equivalent of what are called urlas in Latvia. These are uneducated, unemployed (though not always) purposeless, substance-abusing, petty criminal rabble. They are apolitical except to the extent that some commentators on events try to interpret the formation of the UK lumpenproletariat in political terms. It is likely that the Brit-urlas have no political agenda and little or no political consciousness.

Before anyone starts drawing conclusions from what I have written so far, I am not building up to advocating terrorism in Latvia. Suffice it to say that in earlier times, somewhat better organized Latvians did turn to anarchism and/or revolutionary violence, such as in the uprising in 1905. Terrorism is merely the other side of extremely poor and often oppressive governance, it is a reaction to the action or inaction of the state – at least in simple terms, discounting the terrorist movements based on shared misperceptions of reality and bizarre ideologies.

One can safely say that there is little basis for domestic terrorism in Latvia, mainly because those dissatisfied with the state of affairs have taken the much easier step of emigrating and see no sense in staying behind to fight a political battle. Latvia's citizens have seen all to often that when “political battles” (elections) are won, the spoils are divided among some of the winners at the expense of taxpayers, or, at best, literally despoiled and wasted in attempts at governance by incompetent fools. Electing a few “good people” merely thickens the brake linings on some wheels of a what has been a runaway train of corruption, incompetence, cluelessness and folly that has characterized much of Latvian politics over the past 20 years. That is what the reform movements of recent years have accomplished, thickened the brake linings without stopping and just slightly slowing the train. I refer to the Jaunais Laiks (New Era) experiment, the re-try of the same formula with Vienotība, the work of “good people” (no irony intended) such as Valdis Dombrovskis, the “new kids in the Saeima” or the former exile Latvians and some of their allies.

Tax resistance?

Maybe I am misinterpreting some socio-economic phenomena too optimistically or politically, but some parts of the population have reacted to this pattern of failure of governance by simply withdrawing from economic engagement with the state. That is another way of saying – not paying taxes. Again, at the risk of overpoliticizing what is happening and projecting a consciousness into this behavior that isn't there, I would argue that this form of effective “secession from the state” is, at least, a minimally effective form of resistance.

Undeniably, the lack of tax revenues is (and we have heard this song before) deprives pensioners, the health system, the police, the schools, the roads etc. of funding that would have made these government services better. But it also says, from the de-facto tax-refusers' point of view – that I am also depriving one of the world's most expensive bridges of my money. I am not paying for borderline-poor medical services so that characters like Mr. Golden Hands (New Era's first Minister of Health Āris Auders), the surgeon, can take my money that was earmarked for his treatment of patients, and then hit these patients again for a hefty envelope payment.

In what may be an idealistic fantasy, I think that at least a few Latvian businesses are paying in envelopes not to enrich the boss at the expense of depriving the state of tax revenues, but simply because envelope payments instead of withholding social tax are actually a form of direct-action social welfare. An example I often use is that if a small business has monthly labor costs of say, LVL 10 000, the owner takes some LVL 3000 or whatever the social tax rate is, and pays it to the state. Month after month, those LVL 3000 have no visible impact on the miserable looking pensioners, the beggars (at least those who are not professionals), the local hospital about to close with its “fat-years” MRI unit that gets used twice a month, etc. etc.

Now take those LVL 3000 and pad the envelopes of employees that one knows personally – Jānis, who looks after his infirm mother, Anna, who is paying for her daughter's university, Sergejs, who can now afford a private day-care center for his son and needs elective surgery himself. The extra money, taken away from the rathole of paying the state with a negative return on taxation now becomes a tangible, here and now (or in the foreseeable future) benefit for a small circle of people who need it and use it wisely.

It is, of course, pure political science fiction to imagine that, having experienced a degree of state failure for 20 years (minus the attributes of real failed states, gunmen in the streets, three hours of electricity, the whole Somalia scene), Latvian society would self-organize into communities of resistance as it did, to some extent, when forming the Peoples' Front (Tautas Fronte) in the late 1980s. Having exhausted the possibilities of getting a response from the present political system, such communities of resistance could at least improvise local solutions to problems the state is unable to solve.

Electronic civil disobedience?

For example – shutting down a hospital to cut costs (after deranged, shambolic spending on health during the “fat years”)? The community simply occupies it, organizes that some work is done voluntarily in exchange for care, local business puts in some funds to benefit the town's citizens, the MRI units services are offered, on the internet, to patients across the country (or even from abroad).

Elsewhere, people can take non-violent, disciplined direct action against the state –occupying ministries or government buildings, at least for a short, symbolic period, or organizing electronic political actions, including the limited “hacking” (a note on a home page – this agency is run by thieving or wastrel fools). Such actions would involve technically illegal behavior and would require backing by legal defense and public relations teams, to do everything to hinder (by legal means) the prosecution of persons involved in resistance activities, and to explain to society and the media (with social media, everyone is media) the reason that activists were being made, in effect, political prisoners.

Back to Gewalt gegen Sachen?

At some point, there would have to be symbolic violence against the state, targeted trashing of state property, but if this was done against the background of a mass civil resistance and direct-action movement, it would be a small price to pay for finally breaking the grip of a political ruling elite that has, by the “experiment” described above, shown that violence is the only language that it hears.

Having said that, I have to emphasize that this is an impossible scenario and there are no signs that anyone is trying to execute it. The human capital needed for something like that has been dispersed abroad by the consequences of 20 years of the political elite's behavior. Those who remain are too disorganized, drawn to crackpot ideologies, übermother political movements or simply given up on the whole mess, often based on a rational assessment of the situation. I think I can count myself among the latter.

We will have yet another election, triggered by good intentions to throw the bastards out, but I suspect the result, at best will be another deceptively bright false dawn, and, more likely, a typically Latvian political bardaks where the sleazy but untainted-by-being-in-government Harmony Center (Saskaņas Centrs/SC) will be the biggest winner. Then, no one among the “good guys” will want to play with them. So they may end up with a “worser” if not worst case scenario of SC aligning with the Green and Farmers' Union (Zaļo un Zemnieku Savienībā/ZZS) to put one of the oligarchs (and a popular one among the large ignorant and populist-manipulated part of the electorate), Aivars Lembergs, in de-facto control of the state.

More nothing special..

So the coming election battle, triggered by the drama of dismissing the Saeima and the subsequent referendum, may yet again amount to nothing – nothing special. The referendum showed that almost 95% of the electorate rejecting the present political elite and the antics of the parliament up to now. One could almost say it was a reflexive vote against two decades of state underperformance, if not what I call state failure light. But that is it. There will be no second Awakening/Atmoda. There will be no powerful popular movement of resistance and direct action, no one is there to lead it, and the very few, probably too few good people able to change much of anything, are running again for what I call the Big Monkey House (disrespectful? Check those referendum results again).

Maybe, just maybe, the 2020s may be a time when the last hard-core homo postsovieticus retires from political life or dies off, and then the 1,6 or 1,8 million left in a marginal, stagnant little European country may, at last perk up and find that they can at least adequately govern themselves. But is there any point for someone like me, of advanced youth but with a few good years left (working and writing)to linger here and wait to see where the chips fall in ten or fifteen years?