Latvia: Left bloc wins huge vote amid austerity

[Baluarte]

Lefty source: - See more at: http://www.greenleft.org.au/node/542....Lw7lZvYj.dpuf

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The Harmony Centre, a coalition of left-wing parties, won 59% of popular vote in the municipal elections held in this Eastern European country on June 1.

The coalition is made up of the social-democratic party Harmony and the Socialist Party of Latvia (heir of the Communist Party, which was declared illegal in 1994).

The coalition belongs to the all-European Union (EU) political bloc European United Left-Nordic Green Left, which includes the major communist-leaning coalitions and parties, such as Greece's Syriza, Germany's Die Linke, France's Left Front, Spain's United Left and Ireland's Sinn Fein, among others.

While the EU and the International Monetary Fund insist that Latvia is an example of the “success” of the draconian policies of “austerity for the poor, huge profits for the rich” that they sponsor and dictate all around, the reality is that Latvia has been ravaged by such policies.

Latvians know better, and voted for change in these elections. The election implies that Latvia, which should hold national elections before the end of 2014, will most likely not enter the Eurozone, as the European Commission and the current government planned to do.

It is also a setback for the United States and its imperial extension: NATO.

The “cablegate” (to which we must thank WikiLeaks and Bradley Manning) showed that the US diplomats were already on their toes before 2011 because of the increased popular support for the Harmony Centre in Latvia, which is not just left-leaning but also sympathetic to the plea of Russian descendants (excluded from automatic nationality rights but representing a third of the country's population) and clearly opposed to EU's impositions and determined to exit NATO.

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Hard-line lefties are not really the solution to any problem, but it's good to at least see the Latvian people showing their discontent and opposing the EU.

It's also very positive that 1) They point out NATO as a source of imperialism, and 2) They are friendly to the sizable Russian minority. Very well done


Why oh why are Latvians unhappy, let's see a fun cartoon about it

GREAT LATVIAN SUCCESS STORY:

[Pure ja]

I spot a lot of misconceptions.

1. Municipal elections have very little to do with EURO decisions.

2. IMF and EU per se are not promoting “austerity for the poor, huge profits for the rich”. In fact, EU is not promoting austerity at all, since EU members on average have a 6% annual budget deficit and the cumulative deficit is about 90% of GDP - those are not signs of austerity. As to the "huge profits to the rich", sure, that is what all politicians almost everywhere vote for - it is the reason for their (well)being.

3. IMF and EU "dictate" only to the extent that they lend money to states hopelessly in debt. Those debt states can always find other ways out. In fact, one of the truest austerity paths would be to decline any loans from IMF and EU and manage on its own. I don't see anyone promoting that kind of austerity any more, I wonder why (well, actually I don't).

4. NATO membership has enabled Latvia to cut (to chop-chop-chop-chop until there is nothing left and nothing right) its defense budget. Were Latvia still part of the Russian Empire (formally known as a Federation), Latvian citizens (and non-citizens!) would have to endure military budget of 3% of GDP, instead of the current 1%. Were Latvia independent outside of NATO and Russia, it would have suffered the fate of Georgia by now (Georgia actually had an army, the same can not be said of Latvia).

5. As to the video, it is shamefully basing the comparison on top of the inflated bubble economy and on the trough of the exploded bubble. Oh, and the jobless rate in Spain and Greece are much MUCH worse than that in Latvia.

6. The actual mistakes made in Latvia were: too lax banking regulations which allowed Russian shadow money to inflitrate a certain Latvian bank which went belly up during the crisis and had to be bought out by the Latvian state - the real reason why Latvia needed foreign financial aid in the first place. Perhaps Latvia should have considered the path of Iceland instead, but it was Russia's mob money not Picadilly Circus or Rotterdam. So maybe Latvian government decided that the NATO protection would not have been such a sure deal at all and decided to play it safe.

So you see, what irritates me most, is that you have tried to play up the Russian card, while the Russian card was instrumental in crashing Latvia in the first place. It was not a coincidence, that Latvia was the hardest hit during the last crisis - because Latvia had the strongest economic ties with Russia, and the largest population of soviet-colonists.

[Citizen]

I spot a lot of misconceptions.
1. Municipal elections have very little to do with EURO decisions.

I can assure you it had everything to do with it, the majority of people, both Russian and Latvian are against euro, the people who actually strongly support euro are less than 10%, the statistics are manipulated so it looks like 38% are for it but that includes all the people who don't care or have no opinion. The whole idea to introduce euro and then we will magically get rich and happy that the so called right wing parties are trying to sell is just repulsive for the people, nobody belives that anymore, we heard that BS when we entered EU. Their whole campaign in Riga was indirectly based on this. If we enter monetary union we will have to pay our share in ESM and thats not small money at all, not to mention the loss of sovereignty. Some other reasons why there is so much support for Harmony Center/Honor to serve Riga party is that it actually did a lot of work for the citizens of Riga while the central government was talking about austerity and slashing everyones salary and they managed to do it without taking an IMF loan that put the deficit from 10% of GDP to 40%. Unlike rest of Latvia, Riga is a multicultural city and people don't care if the mayor is Russian or Latvian as long as he does his job, it has nothing to do with NATO or geopolitics, its like your Center party in Tallinn with Savisar.

2. IMF and EU per se are not promoting “austerity for the poor, huge profits for the rich”. In fact, EU is not promoting austerity at all, since EU members on average have a 6% annual budget deficit and the cumulative deficit is about 90% of GDP - those are not signs of austerity. As to the "huge profits to the rich", sure, that is what all politicians almost everywhere vote for - it is the reason for their (well)being.

So there is no fiscal treaty that all EU member states approved capping annual deficit? This is beneficial for developed economies.

3. IMF and EU "dictate" only to the extent that they lend money to states hopelessly in debt. Those debt states can always find other ways out. In fact, one of the truest austerity paths would be to decline any loans from IMF and EU and manage on its own. I don't see anyone promoting that kind of austerity any more, I wonder why (well, actually I don't).

Actually that was what Lithuania did during crisis, they borrowed from markets for a higher interest rate to avoid IMF/EU bailout and austerity conditions which just hurt the economy. EU is all about saving Germany and some other big players, they have no problem sacrificing Greece, Cyprus or Latvia to save their sorry ass.

4. NATO membership has enabled Latvia to cut (to chop-chop-chop-chop until there is nothing left and nothing right) its defense budget. Were Latvia still part of the Russian Empire (formally known as a Federation), Latvian citizens (and non-citizens!) would have to endure military budget of 3% of GDP, instead of the current 1%. Were Latvia independent outside of NATO and Russia, it would have suffered the fate of Georgia by now (Georgia actually had an army, the same can not be said of Latvia).

True, I have nothing against our membership there, unlike EU that is mutually benificial. We spent, I think, 0,5% of GDP I think. In case of Georgia, I have no idea why they want to be in "west"/NATO so much, whats the benefit, the cause of their 2008 war was exactly this, if they stayed neuntral with the Russians they would have no war, there is no economic benefit for a country that is geographically in east to try to make enemies with it, they should take example from Armenia.

5. As to the video, it is shamefully basing the comparison on top of the inflated bubble economy and on the trough of the exploded bubble. Oh, and the jobless rate in Spain and Greece are much MUCH worse than that in Latvia.

I think that video is excellent, the jobless rate is even less in Latvia, most of people work in the shadow economy and pay no taxes so they are counted as jobless. But the minimal salary in Latvia is 280$, most people make 600- 800$ and the price level for general consumables is high, I have studied abroad a lot and in Vienna shops food is pretty much the same price, my mom makes 2200$ (this is considered a high income in Latvia ) and we barely managed during the crisis. After the crisis we have poverty rate of 40%, second highest infant mortality, 10% population loss and so on, real success story. Id better take Greece or Spain with its unemployment then.

6. The actual mistakes made in Latvia were: too lax banking regulations which allowed Russian shadow money to inflitrate a certain Latvian bank which went belly up during the crisis and had to be bought out by the Latvian state - the real reason why Latvia needed foreign financial aid in the first place. Perhaps Latvia should have considered the path of Iceland instead, but it was Russia's mob money not Picadilly Circus or Rotterdam. So maybe Latvian government decided that the NATO protection would not have been such a sure deal at all and decided to play it safe.

You are mixing up Parex bank with Krājbanka. Parex bank was owned by Latvian nationals, it had money from both west and east. It was not involved with Russia but with Latvian government, all the gov. workers had its cards, a lot of money was circulated trough it. The political elite (Latvian one) was benefiting from Parex and construction bubble and allowed it, it has nothing to do with NATO and its protection. Krājbanka was owned by Russian con man/businessman and they actually let it fail.

So you see, what irritates me most, is that you have tried to play up the Russian card, while the Russian card was instrumental in crashing Latvia in the first place. It was not a coincidence, that Latvia was the hardest hit during the last crisis - because Latvia had the strongest economic ties with Russia, and the largest population of soviet-colonists.

It had nothing to do with Russia, all those decisions that lead to crisis where made by the same politicians that try to sell us the bright future of eurozone, if you look at Cyprus, eurozone is what might attract more Russian deposits not less. Those Russian colonists never really had any power in government so I cant see how they have any involvment in crisis. It was the politicians in 90's like Godmanis who decided to create this banking industry for personal benefits of himself and his friends, not the general economy of Latvia.

[Baluarte]

It had nothing to do with Russia, all those decisions that lead to crisis where made by the same politicians that try to sell us the bright future of eurozone, if you look at Cyprus, eurozone is what might attract more Russian deposits not less. Those Russian colonists never really had any power in government so I cant see how they have any involvment in crisis. It was the politicians in 90's like Godmanis who decided to create this banking industry for personal benefits of himself and his friends, not the general economy of Latvia.

I agree.

Seems like textbook unfounded. Russophobia

[Citizen]

I agree.

Seems like textbook unfounded. Russophobia

Don't get me wrong, we and Eesti, have very good historical reasons to have animosity towards Russia. This is exploited by the local politicians in Baltics but that kind of thinking has no future, it has been used by the local "elites" to stay in power no matter how much deeper down they drag the rest of population while enriching themselfs. Thinking that the collapse of Baltic economies was some master ploy by Russia is just what the local politicians love to spread, so they don't have to answer for their own misbehavior. In truth the crisis was everywhere and originated in US, Latvia was the hardest hit country with -25% GDP drop because of our 20 years of economic fuckup.

[Petros Houhoulis]

10% of the population fled the country, and they were all young people. Now who's gonna pay the pensions of the older ones?

Crappy austerity doesn't really work anywhere.

[Pure ja]

I can assure you it had everything to do with it, the majority of people, both Russian and Latvian are against euro, the people who actually strongly support euro are less than 10%, the statistics are manipulated so it looks like 38% are for it but that includes all the people who don't care or have no opinion.

Your assurances are not enough.
I was not talking about public sentiment towards EURO.
I was hinting that local governments do not make currency decisions, unless Valka decides to adopt Estonian kroon.
How is the local elections results going to influence the EURO decision? By forcing premature state elections?

In Estonia, local and state elections have consistently produced very different results. Partly because in state elections only citizens can participate while in local elections permanent residents are allowed as well.

The whole idea to introduce euro and then we will magically get rich and happy that the so called right wing parties are trying to sell is just repulsive for the people, nobody belives that anymore, we heard that BS when we entered EU. Their whole campaign in Riga was indirectly based on this.

You should have concentrated on local government issues, not on state currency issues.
Of course, I understand the need to punish ruling parties.

Some other reasons why there is so much support for Harmony Center/Honor to serve Riga party is that it actually did a lot of work for the citizens of Riga while the central government was talking about austerity and slashing everyones salary and they managed to do it without taking an IMF loan that put the deficit from 10% of GDP to 40%.

Let me guess.
The Riga government managed to get a loan from some other financial institution, but because state budget balance also includes local government budgets (at least in some accounting), then the state government had to slash budget in order to balance the spending of local governments. That is what happened also in Estonia - Tallinn spended lavishly and thoughtlessly, while Estonia had to cut the state budget because of that.

Unlike rest of Latvia, Riga is a multicultural city and people don't care if the mayor is Russian or Latvian as long as he does his job, it has nothing to do with NATO or geopolitics, its like your Center party in Tallinn with Savisar.

I don't know what goes on in Riga, but Savisaar does not promote a multicultural city. Savisaar promotes a bicultural city - in russian and in estonian (in that order).

So there is no fiscal treaty that all EU member states approved capping annual deficit? This is beneficial for developed economies.

Capping annual deficits to 3% is NOT austerity by any stretch of imagination.
Austerity means having cumulative budget surplus. Estonia doesn't have it. None of the EU members have it. Norway has it and that's it.

Actually that was what Lithuania did during crisis, they borrowed from markets for a higher interest rate to avoid IMF/EU bailout and austerity conditions which just hurt the economy.

So which option did hurt the economy? Borrowing from the markets? Or borrowing from the IMF?
I was actually suggesting NOT borrowing at all.

EU is all about saving Germany and some other big players, they have no problem sacrificing Greece, Cyprus or Latvia to save their sorry ass.

Greece is a failed state, get over it.
You can't sacrifice a failed state - there is nothing to sacrifice.

Greece citizens do not pay taxes. No taxes - no state - no sacrifice.

In case of Georgia, I have no idea why they want to be in "west"/NATO so much, whats the benefit, the cause of their 2008 war was exactly this, if they stayed neuntral with the Russians they would have no war, there is no economic benefit for a country that is geographically in east to try to make enemies with it, they should take example from Armenia.

For Georgia to benefit from behaving like Armenia, there would also have to be a second Aserbaijan.
Just as there is no room for a second Finland in Russia's politics, there is no room for a second Armenia. And there is no room for a united NATO.

Divide and conquer.

I think that video is excellent, the jobless rate is even less in Latvia, most of people work in the shadow economy and pay no taxes so they are counted as jobless.

So there you have it - no taxes, no state.

But the minimal salary in Latvia is 280$, most people make 600- 800$ and the price level for general consumables is high, I have studied abroad a lot and in Vienna shops food is pretty much the same price, my mom makes 2200$ (this is considered a high income in Latvia ) and we barely managed during the crisis. After the crisis we have poverty rate of 40%, second highest infant mortality, 10% population loss and so on, real success story.

The loss of population is due to the relatively easy EU mobility. Leave the EU, pluck the holes in the border - problem solved.
You can only partly blame it on the crisis, if at all. On average, people now live much better off than they did in 1990-91. But in 1990 it was impossible for the 10% to migrate to rich western European countries.

Id better take Greece or Spain with its unemployment then.

Sure, but the paying parties (think of Germany) wouldn't.

You are mixing up Parex bank with Krājbanka. Parex bank was owned by Latvian nationals, it had money from both west and east. It was not involved with Russia but with Latvian government, all the gov. workers had its cards, a lot of money was circulated trough it. The political elite (Latvian one) was benefiting from Parex and construction bubble and allowed it, it has nothing to do with NATO and its protection. Krājbanka was owned by Russian con man/businessman and they actually let it fail.

Whatever, I have read that at least some Russian banking money was pulled out before the failure and some were compensated afterwards. The fact that "nationals" were involved does not negate the involvement of Russian money (especially in Latvia).

It had nothing to do with Russia

I disagree.

all those decisions that lead to crisis where made by the same politicians that try to sell us the bright future of eurozone, if you look at Cyprus, eurozone is what might attract more Russian deposits not less.

Proper financial regulations and oversight would diminish such shoddy practices.

Those Russian colonists never really had any power in government so I cant see how they have any involvment in crisis.

Of course they had power in the Latvian government.
Those Russian colonists have had power in four of the largest parties of Estonia - all the parties in the current parliament.
There is more Russian money circulating Latvia than there is in Estonia.

It was the politicians in 90's like Godmanis who decided to create this banking industry for personal benefits of himself and his friends, not the general economy of Latvia.

That does not negate the influence of Russian money.

[Pure ja]

Thinking that the collapse of Baltic economies was some master ploy by Russia is just what the local politicians love to spread, so they don't have to answer for their own misbehavior.

There is even no need to surrect any master ploy. Mere existence of Russia and an abundance of Russian money is enough.
Of the three Baltic states, Latvia has the closest ties with Russia. Latvia has more Russian money. Latvia is the strategic center of the Baltic states. And yet (or rather because of all that) Latvia has suffered the most. And will continue to suffer more if Latvians do not restrict Russia's influence.

[Citizen]

There is even no need to surrect any master ploy. Mere existence of Russia and an abundance of Russian money is enough.
Of the three Baltic states, Latvia has the closest ties with Russia. Latvia has more Russian money. Latvia is the strategic center of the Baltic states. And yet (or rather because of all that) Latvia has suffered the most. And will continue to suffer more if Latvians do not restrict Russia's influence.

So the Banks in USA and around the world went bankrupt in 2008 because of Russian money as well? Or Cyprus problems more recently, was it because Greek haircut deal ensured that Cyprus banks didnt get all of their money of Greek gov. bonds and vent insolvent or was it the Russian depositors, that magically made the banks fail, also insuring major losses on themselfs? I can assure you, I have no big love for Russian involvment in Latvian affairs but it had nothing to do with economic crisis at all. Our own gov. made the real estate bubble, they ensured there is no tax on real estate deals, basically people bought up property just to later sell it off for a higher price, this is a piramid scheme 101, it was not sustainable and was mostly fueled by Scandinavian banks (with Scandinavian money) not Russians, you know the same big players as in Estonia - Swedbank, DNB, Nordea. Parex was just one of many, it was a local bank so it fell on us to save it, which was wrong if you ask me. Im sorry, I just fail to see where Russian money comes into all of this? Can you give me a chain of events please and enlighten me, because so far you sound like some of our blame shifting cockroach politicians who made the crisis possible with the credit boom.

[Citizen]

Your assurances are not enough.
I was not talking about public sentiment towards EURO.
I was hinting that local governments do not make currency decisions, unless Valka decides to adopt Estonian kroon.
How is the local elections results going to influence the EURO decision? By forcing premature state elections?

When giving its verdict on eurozone accession EC takes public opinion and latest elections in account, if you read their statements about Latvia, its clear they fallow this up and are well informed about it. On the other hand, they need some foolish country to demonstrate that Euro is still something states want to have.

In Estonia, local and state elections have consistently produced very different results. Partly because in state elections only citizens can participate while in local elections permanent residents are allowed as well.

We dont have this, EU citizens can vote in municipalities if they live for a certain period but Latvian aliens (nonecitizens) cant.

You should have concentrated on local government issues, not on state currency issues.
Of course, I understand the need to punish ruling parties.

Im not saying they didnt but getting back on the people in central gov. played a big part too.

Let me guess.
The Riga government managed to get a loan from some other financial institution, but because state budget balance also includes local government budgets (at least in some accounting), then the state government had to slash budget in order to balance the spending of local governments. That is what happened also in Estonia - Tallinn spended lavishly and thoughtlessly, while Estonia had to cut the state budget because of that.

No, that is not how it works here. Municipalities have their own budget, if they have debt it goes into "central government debt" but usually people are talking about "central government debt" which is also one of Maastricht criteria. The revenue for municipalities comes mostly from taxes, mainly individual income tax, where 80% goes into municipality and 20% to the central gov. During crisis this was actually changed in favor for the central gov. I dont recall what where the numbers before 85% to municipality I think. So basically central gov. was the one which went bankrupt and took money off Riga and other cities. Of course Riga gers subsidies from central gov. but all of those where heavily slashed during crisis. So saying that Riga was living rich because it got the money from central. gov is just ridicilous in this case.

I don't know what goes on in Riga, but Savisaar does not promote a multicultural city. Savisaar promotes a bicultural city - in russian and in estonian (in that order).

Nothing special goes on, you should come and visit, Riga is fun.

Capping annual deficits to 3% is NOT austerity by any stretch of imagination.
Austerity means having cumulative budget surplus. Estonia doesn't have it. None of the EU members have it. Norway has it and that's it.

I think treaty like that is a reduction of states sovereignty.

So which option did hurt the economy? Borrowing from the markets? Or borrowing from the IMF?
I was actually suggesting NOT borrowing at all.

Thats like suggesting to buy a house with cash in hand or start a business without taking a loan. There is no problem with borrowing money if you invest it wisely and in the end it turns in more profit than original loan + interest.

Greece is a failed state, get over it.
You can't sacrifice a failed state - there is nothing to sacrifice.

Was it a failed state prior to the crisis? I think the EU failed it. Being in eurozone seriously restricted its maneuvering during the crisis.

Greece citizens do not pay taxes. No taxes - no state - no sacrifice.

I bet there is pretty big shadow economy in Estonia as well. Might be just as big as Greece. Some people always pay taxes, Everyone in my family pays them. But dont you have any friend who works illegaly, say in construction, gets a minimal salary and something extra under the table?

For Georgia to benefit from behaving like Armenia, there would also have to be a second Aserbaijan.
Just as there is no room for a second Finland in Russia's politics, there is no room for a second Armenia. And there is no room for a united NATO.

I dont fallow, I understand that Russia is a military backer for Armenia, which prevents any conflict between Armenia and Azarbaijan over Nagorni-Karabah area, but what it has to do with it. Russia clearly has good bilateral relations with both Azarbaijan and Armenia, they both are even part of CIS, Georgia used to be part of CIS too. I can give some other examples, Belarus, Kazahstan and so on.

The loss of population is due to the relatively easy EU mobility. Leave the EU, pluck the holes in the border - problem solved.
You can only partly blame it on the crisis, if at all. On average, people now live much better off than they did in 1990-91. But in 1990 it was impossible for the 10% to migrate to rich western European countries.

I recall late 90's and early 2000 as much better period than 2004 onwards with EU crap.

Whatever, I have read that at least some Russian banking money was pulled out before the failure and some were compensated afterwards. The fact that "nationals" were involved does not negate the involvement of Russian money (especially in Latvia).

Mind sharing it? I have no such information.

I disagree.

Gimme some arguments.

Proper financial regulations and oversight would diminish such shoddy practices.

Agree.