What is the political context of the Eurozone crisis period in Latvia? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?
Before the economic crisis the last parliamentary elections were held in 2006. During the crisis there were two elections – ordinary elections in 2010 and emergency elections in 2011. There are 100 places in the Parliament of Latvia and elections are held every four years and the MPs are elected by proportional representation with a 5% threshold. Latvia has a multi-party system.
On 13 January 2009 big demonstrations took place asking the President to dismiss the Parliament due to the general dissatisfaction with the way the Government was dealing with the crisis (around 10 000 people participated); but these demonstrations remained without results. However on 20 February 2009 then Prime Minister Ivars Godmanis resigned. As the reason he mentioned the lack of cooperation from the coalition members TP and ZZS. On 12 March 2009 Valdis Dombrovskis became the new Prime Minister. He established an unsteady and not very comfortable coalition. In general he benefited from being outside the Government before and from having opposed the stabilisation programme before for it being insufficient. He managed to achieve an almost symbolic meaning of being a ‘new figure’ capable of dealing with the mistakes of previous governments. Therefore he enjoyed a broad mandate to act and this allowed him to successfully carry out austerity measures without significant opposition.
In 2010 a new political alliance consisting of National Party (Tautas partija) withdrew from the coalition leaving prime minster at the time, Valdis Dombrovskis, in a minority coalition. The minority coalition continued working comparatively successfully but there of course were problems with getting political support for new legislation, inter alia the draft laws implementing austerity measures.
On 2 October 2010 the next parliamentary elections took place. The spectrum of political parties noticeably changed. One of the previously main political forces National Party (Tautas partija) which had 23 places in Parliament after the 2006 elections was liquidated before the 2010 elections due to the negative response to this party expressed by the society and in the press. Three parties together established a political union called the Unity (Vienotība) with Valdis Dombrovskis as a candidate for the position of Prime Minister and this union included some of the previous members of the National Party. The Unity provided a counterweight to the left-wing Harmony Centre (Saskaņas centrs) mostly representing Russian voters. The Unity won the elections and Valdis Dombrovskis became the Prime Minister again. Regarding the re-election of “Latvia’s tough-minded governing coalition” Bideleux argues that this means that the chosen strategy of the government enjoyed strong popular backing. This is questionable when such issues as unwillingness of the people to vote for either pro-Russian parties or parties associated with oligarchs are taken into account. Even during the crisis at the end of the day the main reasons for and against voting for a particular political force were national considerations and divide between political parties mostly went along the lines of ‘Russian’ and ‘Latvian’.
In 2011 the President of Latvia (Valdis Zatlers) decided to initiate a referendum to dismiss the Parliament after one of the MPs (Ainārs Šlesers, associated with oligarchs) was not subjected to prosecutions due to his immunity (the Parliament voted against his extradition). One of the reasons mentioned was also the inability of the government to deal with the crisis in the present situation. However, true reasons seemed to be political because the political situation was shaky and with the help of emergency elections Valdis Zatlers might have seen a chance to avoid losing his position as a President and a possibility to successfully enter the political scene, since at the time it was clear that he would not be re-elected for a second term.
After the referendum, where the population voted in favour of dismissing the Parliament, the previous president (Valdis Zatlers) established a political party, which together with the party of Valdis Dombrovskis (Vienotība) gained considerable support. The only party which advertises itself as being left-wing, even though its policies at most could be considered centric, and which is considered to be representing the interests of the Russian-speaking part of the country, Saskaņas Centrs (SC), won the elections but was not able to build a coalition. This party to this day has never been in the governing coalition in the Parliament. Valdis Dombrovskis was able to unite three parties (Vienotība, ZRP and NA) in the coalition. Therefore he remained Prime Minister also after the emergency elections.
The reasons behind the emergency elections were mainly political and the results were representative of the divide between Latvian and Russian votes as well as illustrated some resentment towards some personalities considered to be ‘oligarchs’. Partly, at least due to the lack of truly socially oriented parties in Latvia, the results of the emergency elections did not represent the dissatisfaction with the social situation. However the social considerations served at least to some extent as an excuse behind initiating emergency elections and it was also behind the phenomenon of ‘empty votes’ as a type of protest about the lack of political parties offering socially oriented politics.
Frederiks Ozols has rightly argued that local peculiarities have to be taken into account when the election results in Latvia during the times of crisis are considered. The descriptions of left- and right- or centric-oriented are particular in Latvia – Russian speaking parties are considered to be more left and Latvian speaking ones – right and centrist. During the 2010 Parliamentary elections, the media claimed that the people have voted for the austerity policy implemented by Valdis Dombrovskis because the alliance Unity won the vote and Prime Minister Valdis Dombrovskis was one of its main leaders. This led to a conclusion by the media (especially foreign) that support is given for even more austerity measures. This conclusion is incomplete because there were more reasons behind this victory. The protest votes against Russia-linked political forces thought to be influenced by the Kremlin, the phenomenon ‘voting with an empty envelope’, the fact that many citizens had left the country to find work abroad and the successfully chosen slogan by Unity – ‘stability’ – to which people were responding very well, also played a role.
It has been argued that “Latvians have given their backing to more tough austerity measures, re-electing the country’s centre-right government in the first vote since the Baltic state received a €7.5bn bail-out from the International Monetary Fund”. However, this is doubtful at least. The vote was quite nationalist (as it has been the case since regaining the independence) and since there are no (Latvian) political forces taking a more social position, voters really have no choice. Prime Minister Valdis Dombrovskis after the elections said that the “Voters have quite clearly voted for stability”. It is rather argued that voters simply did not vote for parties associated with oligarchs and for pro-Russian parties and had no possibility to choose political parties which would aim to protect social rights and stand up for social matters.
In Latvia there has been only one significant demonstration concerning matters of the economic crisis. It took place on 13 January 2009 and was organised by a recently established political party “Sabiedrība citai politikai” which later was one of the parties establishing the political alliance Unity (Vienotība). It was organised against the deteriorating economic situation in the country and during it the President was asked to dismiss the Parliament on the basis of general dissatisfaction with the changes to legislation introduced by the Parliament. Around 10 000 people took part in the demonstration and it was definitely the biggest since Latvia regained independence in 1991. Also the Free Trade Union Confederation actively took part by demanding immunity for labour law from measures during the crisis. During the crisis the Free Trade Union Confederation disagreed with many of the austerity measures. Additionally, shortly after 13 January 2009 farmers’ protests were organized on January 27, 2009. Moreover, other actions coordinated through the Internet like flash mobs and special websites took place.
There have also been some smaller demonstrations, however, they did not gather significant support of people and have remained almost without any consequences or resonance in the press. For example, on 24 July 2009 about a hundred of employees of state institutions were demonstrating against wage reductions in the State Social Insurance Agency, the State Employment Agency and the State Revenue Service. The demonstration was organised by the Trade Union of Employees of State Institutions, Self-governments and Finance Sector. This is exemplary of the type and extent of the demonstration culture in Latvia. Similar protests were organised by the pensioners when the pension cuts were introduced.
Instead the social mobilisation in Latvia normally happens via more individualised means, for example, litigation (see information on cases decided by the Constitutional court during the economic crisis) or the sending of petitions and letters to institutions, Government and individual MPs. Rajevska and Romanovska have argued that already the demonstrations on 13 January 2009 and the following dismissal of government and postponing of the most important austerity measures to after the European Parliament and local government elections were very atypical for the Latvian political culture. Indeed one could almost agree with the pessimistic view that “When these protests failed to bring about change, the public’s response was to vote with their feet and exit the country”. It is more characteristic for Latvians to deal with the crisis on their own in individual ways.
It is true that “unconventional participation forms like demonstrations, boycotts are not common in Latvia after the renewal of independence. Even during crisis the population chose not to demonstrate but simply emigrate from the country.” Bideleaux has argued that “the present-day adult populations of Europe’s post-communist states were for the most part poor, disillusioned, demoralized, atomized, weakly unionized, worn down by ‘transition fatigue’, somewhat inured to seemingly endless hardship and upheaval and disinclined to join political parties, social movements and public protests.” As a consequence he stated that the normal response to the economic crisis is “to grit their teeth, keep their heads down and work even harder than before, in the hope or expectation that this crisis would (like previous ones) eventually blow itself out and allow people to get on with their lives.” To at least some extent one could agree with this statement. Besides since the demonstrations taking place on 13 January 2009 did not have the intended effect on the Government and the Parliament, it seemed that demonstrations do not lead to any socially better solutions.
In general, the bailout itself is considered a success story, at least by the politicians. However, the general public might have a rather different opinion. Latvians tend to ‘protest with their feet’ by leaving the country which together with a low birth-rate might deepen and aggravate the consequences of the crisis. The social consequences have not been fully evaluated yet and it might be true that they turn out to be worse than predicted. The central issue faced by the country at the moment and in the upcoming years will be how to keep people in the country where wages are lower than the European average and as well social protection does not seem alluring at all. The biggest fear is that the loss of young people who are the most flexible and most likely to leave will rapidly worsen the demographic situation and inevitably cause more economic problems in the future.
For example a research carried out by marketing and public opinion research centre “SKDS” shows that 76.8% of respondents do not believe that the state is able to ensure a sufficient pension and 18.7% have chosen the answer “I rather would not believe”. Just 0.5% believes in the ability of the state to ensure this.
Approximately 20% of SKDS’s respondents have been in the situation when an employer does not pay the severance pay and other compensations. Even a higher number of respondents (21%) has written the resignation “of one’s own will” or “as agreed by both sides” due to the influence by the employer. 15% of respondents have received a notice of termination of employment relationship without due procedure and in violation of the notice period foreseen by law.
During and since the crisis the fear of unemployment has played an increasingly important role in facilitating breaches of labour laws (e.g. undeclared employment, ‘wages in envelopes’). The SKDS’s research show that in fear of losing their job more than half of respondents (52%) would agree to the breach of their own labour rights and to receive ‘wage in envelope’, if the employer suggested it. Only half (50%) in a situation when their labour rights were breached would try to convince the management of the company to observe their rights, 28% would submit a complaint to institutions responsible for dealing with these issues, 11% would hand in resignation, 6% would not react at all and 18% would not know what to do.
A research carried out by the Baltic Institute of Social Sciences shows that two problems are dominant – overtime work without pay and ‘wages in envelopes’ (22% of respondents have faced such situations). In the construction industry almost half of respondents indicate two additional problems – delays of pay and employment without a contract in written form. More rare are the breaches of labour rights in the public sector; however, some before unseen problems have been indicated as well here – unpaid overtime work, worsening of working environment, use of personal means for carrying out work and abusive treatment by colleagues (might be caused by stress concerning employment cuts).
Interesting might be that the EU has not been strongly blamed for the crisis in Latvia. It has even been argued that the EU has nothing to do with the situation when its competences are considered and the social responsibility has to be taken by the government and, in general, by the country itself.
While the Prime Minister has stated that the main indication for overcoming the crisis will be a decrease in unemployment levels and not the increase of GDP, it rather seems that the situation is more complicated and the indication of overcoming the crisis in the long-term will rather be the stabilisation of the demographic situation.
A survey carried out in December 2010 (number of respondents 1004) showed that only 23.1% of respondents “feel safe about their future in Latvia”. More than half (56.7%) said that they did not and one fifth of respondents had difficulties to evaluate the feeling of safety concerning their future in Latvia. This shows a high degree of uncertainty and insecurity.
No surveys seem to have been carried out considering how successful the bailout is in the opinion of Latvians. However, it seems that the overall bleak prognoses and perspectives taken by the Latvians indicate that they do not consider it to be a complete success story. One issue is the financial crisis in a fiscal sense but a completely other is the social crisis and the following deepening of the demographic crisis. Until these will be solved, there is no ground to consider the overcoming of the crisis in Latvia a success story.
1. Short overview concerning the main political parties which played a role during the crisis.
The main political parties represented in the Parliament during the crisis:
1) TP – Tautas partija (People’s Party) was a conservative right wing party, founded on 2 May 1998. It was part of the 7th, 8th, 9th and 10th Parliament. It has led several Governments (the one led by A. Kalvītis was blamed for excessive spending and for leading Latvia towards the crisis by following Governments and as well by part of the people). On 9 July 2011 a decision was taken to liquidate the TP.
2) LPP/LC – Latvijas Pirmā partija/Latvijas Ceļš (Latvia’s First Part/Latvian Way) was a centric political party in Latvia, created by merging the Christian democratic Latvia’s First Party (LPP), the liberal Latvian Way (LC) and a couple of regional parties.
On 12 June 2010 the TP and LPP/LC by uniting several smaller political forces established PLL (Par Labu Latviju (For Good Latvia) which participated in the 10th Parliament Elections but got only 8 MPs.
3) ZZS – Zaļo un Zemnieku Savienība (Union of Greens and Farmers) is a centre oriented green and agrarian political party alliance founded in 2002.
4) JL – Jaunais Laiks (New Era Party) was a centre-right political party which was represented in 8th, 9th and 10th Parliament. It was founded in 2002 and in 2011 by merging with PS and SCP formed Vienotība.
5) PS – Pilsoniskā Savienība (Civic Union) was a liberal conservative party founded in 2008. It has also been described as right-wing or centre-right.The PS in 2011 by merging with JL and SCP formed Vienotība.
6) SCP – Sabiedrība Citai Politikai (Society for Political Change) was a social liberal political party, founded on 6 September 2008. In the 10th Elections it ran as part of the alliance Vienotība. The SCP after the elections demanded the exclusion of TB/LNNK from the new Government. The SCP in 2011 by merging with JL and PS formed Vienotība.
7) Vienotība (Unity) – This is a liberal-conservative or center-right political party. It was founded as political alliance of the PS, SCP and JL in March 2010. It was formed to provide a counterweight to the left-wing SC. On 6 August 2011 the alliance was transformed into a single political party.
8) TB/LNNK – Tēvzmei un Brīvībai/LNNK (For Fatherland and Freedom/LNNK) was a free market national conservative political party. It was founded in 1993. Initially belonging to the nationalist right the party become more moderate and shifted emphasis from supporting economic interventionism to the free market. For the 10th Elections it formed an alliance (NA) with far right nationalist VL (Visu Latvijai (All For Latvia). In July 2011 both parties transformed into a single political party under the name NA (Nacionālā Apvienība (National Alliance).
9) NA – Nacionālā Apvienība (National Alliance) is a right-wing political party. The party is formed by conservatives, Latvian ethnonationalists and economic liberals. It was first formed as an electoral alliance in 2010 by TB/LNNK and VL and in July 2011 it transformed into a unitary political party.
10) PCTVL – Par Cilvēktiesībām Vienotā Latvijā (For Human Rights in United Latvia) is a left-wing political party, supported mainly by ethnic Russians and ethnic minorities. It was established in 1998. In recent years its voters have switched allegiance to SC and in the 10th Elections it lost its representation in the Latvian Parliament. The political party has never been in a government coalition.
11) SC – Saskaņas Centrs (Harmony Center) is a center-left political party founded in 2005 mainly supported by ethnic Russians. It positions itself in favour of social democracy and one of its emphases is on good relationships with Russia. It also supports increased social spending in order to boost the economy and increase the general welfare. The political party has never been in a government coalition.
12) ZRP – Zatlera Reformu Partija (Zatler’s Reform Party) is a centre-right political party founded by the former President Valdis Zatlers on 23 July 2011. It was founded on the same day when the referendum for Parliamentary dissolution took place. One of its main claims was that it will not cooperate with ‘oligarch parties’ – ZZS, LPP/LC and TP. In April 2012 the party changed its name to Reformu Partija (RP, Reform Party).
2. Short overview (timeline) concerning changes in the political situation (changes of Government, political parties, coalition/opposition division etc.) during the crisis.
There are 100 MPs in the Parliament of the Republic of Latvia.
7 Oct 2006 – 9th Elections of the Parliament:
– TP – 23 MPs
– ZZS – 18 MPs
– JL – 18 MPs
– SC – 17 MPs
– LPP/LC – 10 MPs
– TB/LNNK – 8 MPs
– PCTVL – 6 MPs
7 Nov 2006 – A. Kalvītis establishes a Government and becomes Prime Minister. The Coalition consists of TP, ZZS, LPP/LC, TB/LNNK
5 Dec 2007 – the Government of A. Kalvītis resigns
20 Dec 2007 – I. Godmanis establishes a Government and becomes Prime Minister. The Coalition consists of LPP/LC, TP, ZZS, TB/LNNK
20 Feb 2009 – the Government of I. Godmanis resigns
12 Mar 2009 – V. Dombrovskis establishes his First Government and becomes Prime Minister. The Coalition consists of JL, TP, ZZS, TB/LNNK, PS
2 Oct 2010 – 10th Elections of the Parliament:
– Vienotība – 33 MPs
– SC – 29 MPs
– ZZS – 22 MPs
– NA – 8 MPs
– PLL – 8 MPs
3 Nov 2010 – the First Government of V. Dombrovskis finishes its work
3 Nov 2010 – V. Dombrovskis establishes his Second Government and becomes Prime Minister again. The Coalition consists of Vienotība and ZZS
17 Sep 2011 – 11th Elections of the Parliament (Emergency Elections)
– SC – 31 MPs
– ZRP – 22 MPs
– Vienotība – 20 MPs
– NA – 14 MPs
– ZZS – 13 MPs
25 Oct 2011 – the Second Government of V. Dombrovskis finishes its work
25 Oct 2011 – V. Dombrovskis establishes his Third Government and becomes Prime Minister again. The Coalition consists of Vienotība, ZRP and NA