The euro implementation vote is only the start

Latvia’s parliament, the Saeima, passed a law setting out the technical procedures for switching from its national currency the lat to the euro on January 1, 2014, assuming that it succeeds in getting the green light for admission to the Eurozone from the European Commission and the European Central Bank. 

The vote was a bare majority of 52 to 40, with one parliamentarian from the National Alliance, part of the governing coalition, Jānis Dombrava, voting against in what was permitted as a “vote based on conscience”. Just late last year, the National Alliance shook the coalition by suggesting it could oppose the euro (backing off from its early official position in favor of joining the eurozone). 

However, there could still be obstacles to a smooth entry. There is a less than trivial possibility that opposition Harmony Center will get three more parliamentarians (in addition to their own 31) to get the necessary 34 votes to request President Andris Bērziņš to initiate a referendum on whether Latvia should adopt the euro.

Saeima deputy Iveta Grigule of the opposition Green/Farmers’ Alliance (ZZS) said she would urge the other 12 members of her party in the Saeima to sign. ZZS faction leader Augusts Brigmanis had earlier said no one from the ZZS would sign.

Once the referendum ball gets rolling, Latvia would, like an airline unsure of its estimated time of arrival, lose the January 1, 2014 “slot” for joining the Eurozone. While Latvia has missed opportunities before in 2008 and 2011, when it did not fully meet the Maastricht criteria, it could also lose the current “window” of Maastricht compliant economic indicators. As Morten Hansen, an economist who teaches at the Stockholm School of Economics recently pointed out; Latvia’s export-driven economic growth could soon boost inflation above Maastricht limits. Assuming the country maintains steady, non-credit fueled high growth and moderate wage and price rises, this could have the paradoxical effect of shutting the Maastricht window on an otherwise sound economy.

This is what is at stake – indefinite postponement of euro adoption while still keeping the lat as a “virtual euro” pegged at 0.702 santims per euro unless someone comes up with a better idea. Indeed, if the idea of the parliamentary opposition is to back away from the Eurozone indefinitely, it might be wise to consider an alternative managed float for the lat, but this is not being discussed. Mostly, the debate has been framed in terms of avoiding various economic “cataclysms” such as a post-adoption jump in consumer prices, poor competitiveness that can no longer be counteracted by monetary policy (not that it could before, with no room for devaluation under the present very tight corridor) and demands to “pay the bills” of other wealthier, but economically more troubled Eurozone countries (the example is made that unemployed Greeks collect far more in benefits than a Latvian can earn working at a normal job).

A strong undercurrent of the anti-euro arguments is nationalism – the lat, launched in the 1920s from a menagerie of interim currencies and World War I occupation scrip – was replaced by the Soviet ruble in 1940 and reappeared again in 1993. Between the time Latvia regained its independence in 1991 and the re-launch of the lat, Latvian rubles were used and given the nickname of “repshies” after the then Governor of the Bank of Latvia Einārs Repše. For many Latvians the currency is a symbol of national sovereignty, like the red-white-red flag, also repressed under the Soviet occupation and carried out into the light again by some daring individuals during the perestroika period of the late 1980s. Latvians still recall the emotional raising of the red-white-red standard over what is now the Presidential Palace in 1988, on November 11, a pre-war day of remembrance for those who died in Latvia’s war for independence from 1918-1920.

If the opposition parliamentarians fail to get the referendum ball rolling, they can try to collect 30 000 signatures to initiate a referendum from below. Here they may get some sinister allies – among them, the “Antiglobalists” demanding Latvia re-instate the death penalty for “economic crimes” and, by the way, calling most of what has happened over the past 20 years a string of such crimes.

Point two of the Antiglobalists 2010 program calls for “starting a Nuremburg trial against those persons, by whose action or inaction over the past 20 years, the economic destruction and looting of Latvia took place and for political decisions, that harmed the Latvian state and nation.”

In other parts of the manifesto, the Antiglobalists call for a protectionist, autarkic and state-controlled economic system that, of necessity, implies Latvia’s exit from the European Union (EU) and, probably, from several international trade treaties.

Another bizarre addition to the extraparliamentary opposition to the euro is the “Gustavs Celmiņš Center”, which is a revived inter-war Latvian fascist movement under the name of its founder and leader Gustavs Celmiņš, who despite his sympathies for the Italian and German dictatorships of the 1930s, ended up in a German concentration camp. Celmiņš was liberated by US troops from another camp in Austria where he was held at the end of the war. Thereafter, according to Wikipedia, in 1949 he emigrated to the United States. From 1950 to 1952 he was an instructor at Syracuse University's Armed Forces school in New York State, and beginning in 1951 he was also the director of the Foreign Language program for the US Air Force, and a television lecturer about the USSR and communism. From 1954 to 1956 he worked as a manufacturer in Mexico. Between 1956 and 1958 he was a librarian at Trinity University in San Antonio, Texas. In 1959 he became a professor of Russian studies at St. Mary's University in San Antonio, Texas. He died on 10 April 1968 in San Antonio, Texas.

As far as is known, Celmiņš steered clear of neo-Nazis in the US and actually began sabotaging the recruitment of Latvian Auxiliary Police that he was entrusted to do  during the German occupation, when it became clear some of these units would be used against civilians, including Jews.  Celmiņš modern-day fan club is openly anti-Semitic and its present leader Igors Šiškins (a Latvian despite his Slavic name), has served time for attempting to blow up the Soviet-era victory monument in Riga (the blast failed to seriously damage the monument).

Also forming a group within the Saeima to defend the lat are several deputies, led by Nikolajs Kabanovs of Harmony Center, whom many see as unsympathetic to “Latvian” causes. In effect, a strange informal alliance has formed between “pro-Russian” (an ethnic Russian) Kabanovs and the “renegade” nationalist Dombrava (Prime Minister Valdis Dombrovskis Unity Party has demanded an explanation and, possibly, sanctions for the young nationalist’s breach with coalition discipline).

My take is that if the parliamentarians don’t trigger a referendum, the loonazoids of the broader anti-euro movement are unlikely to be the ones on the front lines of gathering 30 000 signatures. Sociological studies show that Latvian society is conservative, politically authoritarian and economically statist/socialist, but most ordinary people would draw the line at throwing their signatures in with Šiškins or Kabanovs. The Antiglobalists ….perhaps.

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. 

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.