Latvian election a reversal of fortune for oligarchs

RIGA LETTER:AMONG LATVIANS selling Baltic Sea amber in Riga's old town, there was little excitement ahead of an election that some of their compatriots were calling "historic".

They were, after all, well used to such ballots, having seen governments collapse with dismal regularity since Latvia regained independence from the Soviet Union 20 years ago.

And, like most of Latvia’s two million residents, the souvenir-sellers had had their fill of politicians’ promises, having endured the European Union’s deepest recession and then a bout of ferocious cutbacks.

“I don’t think I’ll vote, I don’t see much point,” said one stall attendant who declined to give her name. “I thought we should have kept the last lot – another election won’t change anything.”

The way the “last lot” was ousted had fuelled talk of a defining political moment for Latvia.

In May, then-president Valdis Zatlers dissolved parliament over its refusal to allow an investigation into an allegedly corrupt MP. Irked by Mr Zatlers’ tough approach, MPs promptly replaced him as head of state. Their victory was short lived, however: in a July referendum, some 95 per cent of voters backed Mr Zatlers’ decision to break up parliament and trigger snap elections.

Mr Zatlers formed a new party and, along with prime minister Valdis Dombrovskis and his Unity bloc, he declared this month’s ballot a vital opportunity to purge Latvian politics of the “oligarchs” – rich tycoons who allegedly control certain parties through venal MPs.

The vote also had the potential to make history by delivering power to the party backed by Latvia’s 30 per cent Russian-speaking minority, Harmony Centre, which has sought to woo ethnic-Latvians recently by promising to soften austerity and boost social spending.

In the event, the so-called oligarch parties were trounced, with one failing to secure any seats and another limping home in fifth place with strength greatly diminished.

And, for the first time, Harmony Centre won the ballot, claiming 31 seats ahead of Mr Zatlers’ party with 22, Mr Dombrovskis’ bloc with 20 and a nationalist group with 14 seats.

It will take more than that, however, to make Harmony Centre’s leader Nils Usakovs the new prime minister.

Many ethnic Latvians are troubled by Harmony Centre’s close ties to the United Russia party of Vladimir Putin, and its role as political home for everyone from Soviet nostalgists to young moderates like Mr Usakovs, who is a popular mayor of Riga.

Mr Zatlers and Mr Dombrovskis quickly opened coalition talks after the election, and may seek to form a majority with the nationalists who came fourth in the vote.

Harmony Centre insists it deserves a place in government however, and will trim its spending plans to meet the other main parties’ demand that Latvia shrink its budget deficit further to prepare to adopt the euro in 2014.

Mr Usakovs has also offered to shelve divisive issues such as whether Russian should be made Latvia’s second official state language, and he says his party is not “allergic” to calling the 1940-91 period of Soviet rule in Latvia an “occupation”. But he wants the other parties to formally acknowledge that Russophones living in Latvia today are not “occupiers”, a taunt often aimed at them by Latvian nationalists.

“There is no official or any kind of Kremlin role in our party. We are a Latvian party,” insisted Mr Usakovs (35).

Of his push for a role in government, he added: “It is not a question of ethnicity or the language of voters, it is a question about regions, cities, the representation of a huge amount of Latvian voters.”

The creation of a grand coalition would be truly historic for Latvia, and could provide the political stability that has been elusive for two decades. It could also help unite the country as it recovers from a crisis that shrank the economy by 18 per cent in 2009 and sent unemployment soaring to about 20 per cent, driving more than 100,000 Latvians abroad.

Mr Dombrovskis – who is praised internationally for administering austerity, sticking to the terms of a €7.5 billion emergency bailout and returning Latvia to predicted growth of 4.5 per cent this year – wants to remain as prime minister.

If he does, he hopes not only to improve the lot of poor Latvians like the trinket-sellers of old Riga, but to beckon Latvians home from Ireland and elsewhere.

“We are very much interested in getting our people back,” Mr Dombrovskis told The Irish Times.

“We want to be able to tell Latvians abroad that there are job opportunities here, that there is growth.

“When the economic conditions are right we will work actively to get them back. And we hope that time is coming soon.”