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Saturday, June 13, 2009

Lost In The Latvian Translation?

According to reports in the Baltic Course newspaper, Latvian Finance Minister Einars Repse (of the New Era party) is not against the strikes and rallies that are being organised in response to the proposed state budget cuts, he is, however, opposed to any violent protests and subsequent civil unrest.

Rallies and strikes are a good thing, but disturbances will not solve anything," Repse pointed out after a meeting with Latvian Free Trade Unions Association representatives today. As the finance minister explains, he realizes that "people are really concerned and desperate", however, damaging government buildings will not contribute to improving the situation in any way as repairing the buildings would have to be paid for with state budget money anyway.

I'm sure he can't have quite put it like this - if he did then a Finance Minister actually supporting strikes against his own measures would be a first, I think (what is happening in Latvia is surreal, but not this surreal, surely) - and that the question is a translation one, but still. It does illustrate the difficult position local politicians are being put in when it comes to defending the EU Commission and IMF inspired measures in the face of their own voters - as I already forecast it would be in my post The Long And Difficult Road To Wage Cuts As An Alternative To Devaluation back in January. More to the point is this, which is real enough:
Working pensioners' pensions will be slashed 70%, all other pensioners will see their pensions shrink by 10%. Also maternity and child care benefits will be cut by 10%.

Now, I know the aim is to bring prices down, but how can a country which is effectively dying for lack of children (post coming on this later) be actually cutting child allowances. Frankly I find this even harder to believe than the idea of a Finance Minister supporting strikes against his own policies. It is nevertheless true. Everything, I see, is possibile in Latvia, except, of course, devaluation.


Guillaume said...

could not agree more with your post!

Edward Hugh said...

"Fading out? Just one of those panics then."

Well, not quite, but something like that. Nerves, lets say. But the thing will come back, possibly in the autumn, possibly next spring, depending on how things evolve.

I think there is now a clear consensus outside the Baltics that a Latvian devaluation is only a matter of time.

It is only a matter of time because there is a limit to how much the population can take.

Basically though, given the amount of the credibility the EC have spent on this, my greatest worry is that the contagion risk is no longer restricted to the east, I fear that when it happens it could easily spread to the south of Europe.

Anonymous said...


There's nothing lost in translation, but it might seem strange when taken out of context.

The exact quote is indeed "Protesti un streiki ir laba lieta, bet iziešana ielās un sociālās nekārtības neko neatrisinās" - "Protests and strikes are a good thing, but going to streats or any other sort of social unrest is solution to any of our problems."

Considering political discourse in Latvian mass media over the last few days, this would seem to be merely a reference to strikes and protests being a legitimate means for nation to express it's opinion in any democratic society. It would also aid to dismiss concern over possible activation of 62nd clause of constitution - proclamation of state of emergency.

PDR Vet said...


I think your complaints about the conditions and timing of the next IMF disbursement show a misunderstanding of how the Fund works or, at least, fail to recognize the downside of the Fund being more explicit. You seem to want the Fund to be prescriptive in its conditions even though that approach has been heavily criticized and blamed for past Fund failures including in Asia in the 1990s. It also belies the fact that implementation tends to reflect a negotiations between the Fund and borrowing country. There is an agreement on the fiscal deficit target and the country must show how it can achieve that target in a sustainable fashion. That gives the government much greater flexibility and political accountability.

You could argue that the whole approach to fiscal is wrongheaded but calling on the Fund and/or EU to lay explicit conditions publicly seems naive, even dangerous as it would mean dictating on subjects such as social spending, etc. which are best left to governments and their citizens.