All About Latvia

Lai veicas, Valdi!

Mar 02

AleksParliament, Politics, The Dombrovskis government 1 Comment

RIGA – When Valdis Dombrovskis walked out of the presidential palace last week, he looked as if he had a world on his shoulders.

“Are you going to celebrate with a glass of champagne,” one Latvian journalist asked Dombrovskis.

“I won’t be celebrating with a glass of champagne because there is no reason – I’m sorry – to celebrate,” he said. “The situation in the country is very serious.”

The 37-year-old center-right member of the European Parliament was charged to fix the economic mess known as Latvia. And the situation is indeed very serious. The economy will shrink to the 2005 levels by the end of this year; the unemployment will rise; the budget will have to be cut; people will continue on their way to poverty. And no one wants to lead the government at this time. Even Dombrovskis made appearances to his party comrades with a young grim face, as if thinking, “what have I done?”

Latvian President Valdis Zatlers tapped Dombrovskis, the ex-finance minister from the New Era Party to form the 15th government since Latvia regained independence in 1991.

Dombrovskis will continue coalition talks this week, which will revolve around who will get what ministry in the new government (Suddenly the image of the outgoing PM Ivars Godmanis as the minister of agriculture appeared in my mind). The Civil Union, the Green Farmers, the People’s Party, the Fatherlanders along with a two-member Society for Different Politics appear to be on board, giving the new coalition 67 votes in the 100-member parliament.

In a line of predecessors, Dombrovskis stands out. He is the youngest appointee to the post in the post-Soviet Latvia. He has a sense of reaching out to voters. He would become the first prime minister who even has had his own Web page.

The government must be formed as quickly as possible because the time is running out. We have one important date that is not too far off.

It’s March 31.

First, the parliament has to pass the austerity measures worth of 5 percent of gross domestic product, touching practically every sphere of the budget. That means teachers, doctors, and even government support for mothers will get some cuts. Dombrovskis mentioned the only untouchables – the pensions. That is a lot of painful cuts of the budgetary flesh to be made in a short period of time by the young government. It’s bound to be unpopular unless Dombrovskis will be able to explain it to the people: why those cuts and not others. The new government also has an incentive to cut the budget quickly. It’s the next installment of the IMF-led 7.5 billion euro loan.

Without the loan, Dombrovskis said, the country is on the verge of bankruptcy with enough money to fund the work of the government until the middle of April.

March 31 also marks the deadline for the president’s ultimatum. With the new government, one could already make a case that the president now has a leeway enforcing his deadline. Forming the new government takes time. Delaying on the ultimatum also buys time for the president to make sure the referendum on snap elections – if such was to happen – falls on the same day as the June 6 municipal and euro parliament elections.

But for now, all we could wish Valdis Dombrovskis is the best of luck (and not the Irish kind). We’ll be watching the relatively-young educated European forming a new government that could possibly regain the public trust even without the snap elections.