Despite widespread cynicism about their leaders, Latvian protest is low-key, writes Daniel McLaughlinin Riga
FLAMES FLICKER on Riga’s main boulevard and smoke curls up through a blizzard quietly blanketing the Latvian capital.
A few men huddle around a crackling log fire as snow settles on the tents they have erected outside Latvia’s government headquarters, defying the elements and officialdom to ask why the economic crisis has hit this small Baltic state harder than any other European country.
“Our leaders are doing everything to save the banks and nothing to help the people. They cut money from everywhere – education, pensions, welfare – to help the financial system. It’s criminal,” said Anrijs Rancans (24) a theology student in the three-month-old protest camp.
Between 2005 and 2008 Latvian salaries doubled, and household borrowing grew by more than 60 per cent every year from 2002 to 2006, fuelling a massive bubble that saw the country of 2.3 million people dubbed a “Baltic Tiger” reminiscent of Ireland.
Its change in fortunes has been brutal. Since going into recession in 2008, Latvia’s economy is thought to have shrunk by more than one-quarter, the sharpest two-year decline on record. Unemployment has surged to 23 per cent, the worst such figure in the entire EU.
When the bubble burst, soaring property prices went into reverse and consumer spending shrivelled as people struggled to repay loans. Tax revenue collapsed, foreign investment dried up and previously profitable export markets disappeared.
Last year, to avert economic meltdown, Latvia secured a €7.5 billion emergency loan from the EU and the International Monetary Fund. In return, the government agreed to impose austerity measures, slashing public spending and raising taxes.
“They’re giving the money to the banks and it’s disappearing into a black hole,” said Gints Berneckis (33), another member of the tent protest, who worked in sales before the crisis struck.
“Latvia has no industry, no jobs, but only shops and clubs – how are we ever going to pay back this loan?” he added as Rancans threw another log on the fire.
“It is the nation’s fault, too,” said Rancans. “We believed this illusion that things just get better and better and wages go up and up forever. All those luxuries were built on borrowed money.”
For many Latvians, and people from the neighbouring Baltic states of Lithuania and Estonia, the boom time at home also fuelled confidence to seek fortunes abroad. Statistics show that Latvian applications for an Irish Personal Public Service Number (PPSN) peaked at 9,328 for 2005, when unemployment in Latvia was about 9 per cent and its economy led the way in the EU, growing by more than 10 per cent.
The crisis appears to have blunted Latvians’ desire for foreign adventure, and increased their reliance on friends and family at home: Latvian PPSN applications were down to 3,916 last year. There is also no sign that its citizens are flooding home as Ireland’s economy suffers.
Arunas Teiserkis, a Lithuanian community leader in Dublin, said there was relatively little movement in either direction between his homeland and Ireland, as people became averse to risks and sought to sit out the crisis wherever they were.
In Lithuania’s capital, Vilnius, charities provide food parcels for poor families after the economy shrank by 15 per cent last year and joblessness rose to 16 per cent. “I had a good job in construction before the crisis but there’s nothing out there now,” said Gabriel Tsinkevich (37), begging outside a church in central Vilnius.
“I have four children. I get some state benefits for them but hardly any for myself. I would probably go abroad if I could but I have to stay for the kids. So I do this – I can make 60 litas (€17) on a good day begging.”
In these former Soviet states, where corruption is rife and faith in politicians scarce, there is widespread suspicion that an elite is looking after itself at the expense of ordinary people.
But that disquiet has not sparked the kind of huge protests seen in Greece, and Baltic leaders insist that slashing spending and raising taxes will prove more effective than raising yet more debt for stimulus spending.
They have also refused to devalue local currencies pegged to the euro, claiming that this measure will foster investor confidence, help prepare the countries to adopt the single currency, and prevent a default on many loans denominated in euro.
Critics urge the region’s leaders to break the euro peg, which would reduce the value of the nations’ currencies and make exports more competitive. But the subsequent loan defaults could do massive damage to the major foreign banks that rushed to the Baltic states in the good times.
Lithuanian president Dalia Grybauskaite said she would not seek foreign aid. “We think we have been through the worst and expect a return to growth this year, but it will be 2012 before people really feel that impact,” she said. “The crisis has pushed the standard of living back to 2006 to 2007 levels, not to that of the 1990s. But psychologically the impact has been harder after 10 years of growth.”
Ms Grybauskaite said she did not want her country “bailed out”.
“I want her to manage on own, not with an extended hand asking for help.”