Latvia 2011 The Year of troubles

The year 2011 will certainly go down in history as one of the most intense years in history. The Japanese Disaster, Arab Spring, US debt crisis and Euro zone problems. But, also in Latvia the year 2011 was time of important decisions, political and national collisions and even newer economic problems. This post is about the main events in Latvia in 2011.

1. The Decree Nr.2

Since 2008, Latvia have been deeply affected by economic crisis. In late 2008, state on the brink of bankruptcy. A deal with International Monetary Fund was signed. Since then all previous governments have done a large effort to consolidate the state budget. The consolidation means drastic cuts in all state sectors, high taxes and lot of unpopular decisions.  And that surely means a large public dissatisfaction with the government and the Saeima (Parliament). Calls for dismissal of the parliament has been popular since 2006. The 9. Saeima was met with protest because of the so-called Positivism campaign that allowed the wining Peoples Party to fund the election campaign by surpassing the official election funding limits. In result the prime minister Aigars Kalvītis kept its seat for another 4 years. But, his second term was unsuccessful and sparked calls for dismissal of Saeima. The acting president Valdis Zatlers who only had such rights hesitated to take this step. In 2009. he was actually threatening to do that, but again hesitated.

But in May 28, he suddenly lost any hesitation and issued Decree Nr. 2. The Latvian constitution allows the President to call referendum to dismiss the parliament. If the people vote yes the parliament is dissolved if no – president must step down. But why Valdis Zatlers choose to dissolve parliament only nine months old when he was asked to do this many times earlier.

The official reason was the vote in the parliament that prohibited the state anti-corruption service to make search in deputies Ainārs Šlesers home. Šlesers is well-known political player and oligarch and he was accused for corruption schemes. However, since he was an elected deputy, he had to be handed over by deputy vote. And his party voted no along with quarter of deputies abstaining. So his handover failed.  The ballot was hidden. Those who were abstaining were members of Green Farmers Union and the Harmony Center. By this the parliament got involved in conflict with the juridical power. Valdis Zatlers saw this as a important breach by the parliament and called to dismiss it.

But that was just the official reason. First, Valdis Zatlers was on the finish of his presidential therm and seek re-election. But, he must be elected by the parliament. And he got pretty unclear promises from elected parties. And then alternative candidate appeared. His name was Andris Bērziņš and he was elected deputy of Green Farmers Union fraction. In past he was director of Unibank or Seb Bank and he a shadowy figure that appeared from nowhere. Before 28, May Valdis Zatlers was more and more aware that he may not be elected. So he may decided to dismiss the parliament to punish it for not supporting him and form his own party to continue his political career.

Another reason may have been his sympathy for the Russian party Harmony Center. There are speculations that before his decision he had conversation with the Saeima speaker Solvita Aboltiņa and Prime Minister Valdis Dombrovskis  where he demanded to form new government with Harmony Center that was in opposition at that time.

The very first result of his decision was that he was punished by dismissed parliament. He was not elected and instead with 50 votes for and 48 against Andris Bērziņš was elected. He is the oldest president in Latvian history with 67 years. Numerous controversies were associated with him. First that he was a henchman of the oligarch Aivars Lembergs, second that he hacked money from EU Development funds and the last that he may have more children that he claims. When he left the parliament house as newly elected president he was met by angry crowd that supported Zatlers. Zatlers suddenly became so popular, because he fulfilled the Latvian people’s dream to punish the parliament they elected themselves. In his first months as president Andris Berzins has shown itself as conservative and neutral president. He said no to many presidential privileges, like private residence, escort with sirens and even presidential salary. The last should not be problem since he is the wealthiest senior citizen in Latvia.

 The election campaign

The referendum to dissolve the parliament was met with great support and 94% of voters voted for. So again in few months a new election campaign was issued. A reminder that the last parliament begun work only in November 2010. The main question was the next move by Valdis Zatlers. The ruling party Unity asked him to join them. But, instead Zatlers formed new party called Zatlers Reform Party. He wanted to make new wining party from scratch and get as many people as possible. The initial outcome was dubious,  all popular members of Latvian intellectual elite declined to join his party. So his party was formed from amateurs and ex members from other parties.

The main slogan of the election campaign was to finally crush the so-called oligarch parties. The three main known oligarchs Ainārs Šlesers, Andris Šķēle and Aivars Lembergs were the main targets. In one way Zatlers really succeeded to crush them. Andris Šķēle  dissolved his Peoples Party that had to pay million lats to state for breaking election funding limits. The same happened with Ainārs Šlesers, who took part in elections, but failed to surpass 5% barrier. He also put the end to his Latvian First Party/Latvian Way, that he had just renamed as Šlesers Reform Party to tackle Zatlers. In meanwhile Aivars Lembergs Green Farmers Union made it to new Saeima but with only 13 seats and remain in opposition.

Two main gainers from Zatlers Decree Nr. 2 were two opposite parties that each gained more prominence in the new elections. The pro-Russian party union The Harmony Center nearly won the elections of the 1o. Saeima, but failed to enter the parliament. By the years the Harmony Center has been the main supporter of Latvian Russian speaking population. However, also it has tried to gather enough Latvian support. Latvians who support Harmony Center are mostly nostalgic about Soviet times and has deep connection with Russian culture. Others, are moved by the social democratic ideology of the party. The Harmony Center was ready to win the emergency elections and finally to enter the government.

The opposite force against leftist Russian force financed by Moscow was the National Alliance, a force formed from two conservative parties For Fatherland and Freedom/LNNK and All for Latvia!. The main ideology of this party was to defend Latvian rights in Latvia and preserve the Latvian language.  In November 2010, they were excluded from the government now because of the growing support for nationalist ideas they also hoped to enter the government.

The election outcome and troubled government formation

The emergency elections took place in 16. September. As many expected or feared the Harmony Center won by 26%. Zatlers Reform Party came second, Unity third and National Union fourth. The Green Farmers were the last to score above 5% barrier.

By the tradition the wining party should form the new government coalition. But the scored majority of the Harmony Center was not so great to make free moves so they had to relay on support from Latvian parties. And the movement to keep Harmony Center into opposition was stronger than ever. The leader of Harmony Center Nils Ušakovs made many concessions, first he recognized the occupation of Latvia at NATO meeting before the election night. The party that for years was denying that Latvia was occupied in 1940, by Soviet Union no came out with slogan: “There was an occupation, but there are no occupants!”, and asked to include this phrase in new governmental declaration. This phrase actually means that thousands of Soviet immigrants and occupation force members who still live in Latvia are not accountable for the actions of the Soviet Union and are legalized to live her further without worry. Such position made a lot of opposition against Harmony Center to taken in government.

 However, Valdis Zatlers threw a rock in to the pound, when he issued that Harmony Center must be taken in government. He made this decision in middle of the night, and angered people even more when he said this decision can only be changed with use of tanks. The analogy with 17, June 1940, when Soviet tanks rolled into Riga was bad for Zatlers and suddenly the peoples hero who dismissed the parliament became the national traitor in the eyes of many.

Two other contestants for the government the Unity and National Alliance allied against Zatlers, and forced him to make government without Harmony Center. In the end Valdis Dombrovskis kept his prime minister seat and the Latvian right-wing government was formed. Zatlers however got double shot in the feet in the very first day of the parliament session. He was again turned down by the parliament when his bid to take parliament speaker seat failed. Solvita Āboltiņa kept her parliament speaker seat. If that was not enough, six deputies from Zatlers party fraction left his party putting the coalition to a danger. Zatlers was speaking about traitors and worms, but Dombrovskis arranged deal with the six independent deputies to support the government.

The start of the national confrontation

The decision not to take Harmony Center into government started a large stir within the Russian population. The leader of the party Jānis Urbanovičs again threatened to use a “non – parliamentary activities” to enter the government. Russians hold a 28% of the population along with other minorities that mostly speak Russian. Why the Harmony Center was not taken into government? The very first answer that the Harmony Center have large disagreements with many Latvian parties and their ideology is against the interests of the Latvian state. They were against many economical policies, they wanted to cancel the deal with International Monetary Fund and wanted more cooperation with Russia. In national issues they wanted more rights for Russian language and they always questioned the historical issues of Latvia. If that was not enough they have signed a cooperation agreement with Vladimir Putin party United Russia and China Communist Party. Many sources state that the party is financed by the Kremlin.

 These events made Russian national radicals to organize a referendum for Russian language as the second official language.  The leader of this movement is the member of Russian neobolshevik  party Vladimir Linderman who was in past accused of terrorist activities and was deported from Russia. The idea of the referendum first came out in spring, when Linderman issued the petition for the referendum as the answer to National Alliance  petition signing to give lessons only in Latvian in schools. The National Alliance was intending to put the end to state funded Russian schools that still work in Latvia. That could be good move to end self-imposed school segregation in Latvia. While many Russians came to study in Latvian schools, many stays in Russian school and most probably finish them with bad Latvian language skills.  The petition failed as they failed to gather the required number of sing- ins for the referendum. Latvian population did not saw the issue important enough.

However, the Russian initiative was more successful since the question of Russian language as the official language was important for many nationalistic minded Russians. People who support this motion, are nostalgic for Soviet times, when Russian language was the main language and many were free from using Latvian. Many of them see Russia as their homeland. Others simply vote to protest against the existing state order that associate with Latvians and Europe. In so the referendum will take place in 18, February 2012. The prognosis of the outcome shows that the  motion will fail. To make such important change in the  constitution more than 60% of voters must vote yes. And this more than Harmony Center gathered in the elections. Russian speakers cannot gather more votes than the actually live in Latvia. And not all Russian speakers will vote for the motion. Meanwhile Latvian parties have asked all Latvians to take part in the referendum and vote no, to show Latvian unity.

The referendum issue sparks interesting question of what will be the future of the Harmony Center? At first Harmony Center was against the referendum, but actually it was secretly supporting it from the start. Then after staying in opposition the major of Riga and the leader of the party Nils Ušakovs singed for the referendum. To explained that he voted because of his conscience, but he was still in favor of one state language. Then other members of the Harmony Center also took part. In seems that Harmony Center took part in risky game to keep their voter sympathy. To enter the government they gave a lot of their demands and even recognized the occupation, but still remained in opposition. To rehabilitate themselves to Russian voters they again turned to national moves. Also it was important for Ušakovs to keep enough support to win in Riga Municipal elections, because the municipality has financial problems and their allies from Šlesers party have failed. But, by this move the Harmony Center has alienated the Latvian voters and made even better arguments for Latvian parties not include the Harmony Center into government.

Many liberals blame Latvian parties and Latvian nationalists for this situation. They say if the Harmony Center would be given a chance to take part into the parliament no referendum would not took place. Others blame National Alliance for their proposed referendum that provoked Russian radicals. But, in reality that is not the case. The petition would have happened even if Harmony Center would be in the government. That also would give good boost to gather necessary sing-ins. Also similar schemes happened in Ukraine and South Ossetia  where there no Latvian nationalists. The Linderman’s referendum is part of global politics of the Russian Federation to stir up Russians in the neighboring countries in the wake of the presidential elections.

More financial and economic troubles

At the end of the year the IMF mission in Latvia was finished. Latvia no more had to take more loans from IMF and organize the budget according to IMF demands. But, before it Latvia faced crisis in Air line and Bank sector. Latvian national Air Line Air Baltic nearly crushed, if had not be saved by the government and bank Latvijas Krājbanka went bankrupt because of forgery made by its owners.

Air Baltic was suffering from spending deficit already in 2011. At that time it was led by German businessman Bertold Flik  who got himself involved in corruption and conflicts with the government. After Minister of the economy Artis Kampars warned about possible bankruptcy of the airline, Fliks in fear from the anti-corruption service moved to Germany. Then later the government removed Fliks from office. After bank crush in Lithuania, whole Air Baltic was nationalized because Lithuanian Snoras bank had large share of Air Baltic stock actions.

Next big hit was in November, when the Lithuanian government nationalized the Snoras bank owned by Russian banker Vladimir Antonov. He and his associates was accused of looting the bank resources. The Snoras bank was in control of Latvian based Latvijas Krājbanka. Few days after the events in Lithuania the Latvian Financial Capital Trade commission came to conclusion that also  about 100 millions of Lats had been looted from Latvijas Krājbanka also. So also the Latvijas Krājbanka went bankrupt. Many thousand people had problems with their bank accounts and pensions. In rural areas where there was only one Latvijas Krājbanka ATM problems were severe.

In December, a rumors on social circles, Twitter, Draugiem Lv, spread out that also Swedish Swedbank has problems. That lead to bank customer panic and in one night more than 20 million of Lats were taken out by panicked customers. Soon it was clear that the rumors were spread out in purpose. No actual Swedbank problems were known and this was an intended scheme to make loss for Swedbank and Latvian economy. The Latvian security police has stated that the perpetrators may come from foreign country.

These were the main political and economical events in Latvia in 2011. It was the time of new political crisis, ethnic division and financial problems.  The next year will no be no less intense. As the astrologers say the 2011 and 2012 is the time of increased solar activity so its time of worldwide changes. Plus 2012. will be the year of the dragoon. Last time when I wrote report about Latvia in 2010, I expressed hope that this year would be much peaceful and wiser than the last. It however turned that the year 2011 was the year of troubles for whole the world. Next year will be the year of changes and I wish the Latvian people to be strong enough to survive these changes.

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