Latvia, a small country on the southeastern shore of the Baltic Sea, officially joined the Eurozone on Jan. 1. The Latvian government had applied the most rigorous austerity policy of any country in Europe. Christine Lagarde, the director of the International Monetary Fund, called Latvia a “model for Greece and Spain.”
For European imperialists and the small Latvian ruling class, it was a time for fireworks, which burst over Riga, the capital, as the first 10 euro note was pulled off the press.
Many others living in Latvia saw the coming of the euro as the coming of higher prices and the ability of the big economies — like Germany’s — to dominate Latvia’s markets. While a few business analysts said that borrowing costs for businesses would decrease, that wasn’t on most minds.
Public opinion polls indicated that adopting the euro had so little popular support that a referendum on it would lose. The government of Prime Minister Valdis Dombrovskis simply imposed the euro.
Iveta Grigule, a deputy in parliament from the Union of Greens and Peasants, tried to force a referendum. Those parroting the government line called her a “clown,” and her effort was brushed off, even by professors who agreed with her. (Le Monde, Dec. 27)
According to the European Union’s statistical agency Eurostat, 36.7 percent of Latvians exist below the poverty line. Median monthly income is around $830, and the minimum monthly wage is $385 in a country where the prices for lodging and food are comparable to those in Western Europe, Germany in particular.
Dombrovkis’ austerity program involved laying off a third of all public employees and cutting the wages of those remaining by 30 to 50 percent. He increased income taxes from 23 to 26 percent and the value added tax — a sales tax — from 18 to 21 percent. He also closed the largest hospital in Latvia, Rigas Prima Slimnca.
One of the “successes” that the IMF and the EU point to is lowering the unemployment rate from 20 percent at the height of Latvia’s financial crisis in 2008-2009 to a little over 11 percent now. Actually, 14 percent is a more accurate figure as it takes into account discouraged workers and involuntary part-time workers.
This reported decline in unemployment also fails to reflect the 13 percent of Latvian workers who have left the country and sought work elsewhere since 2008. The population of the country declined from 2.2 million to 2.0 million. (Latvians Online, Jan. 6)
The economic choice of Latvia’s small bourgeois class is clear. They expect to benefit by accepting Germany’s domination of the European market.
The plaque raised in Bauskas, a town south of Riga, last year to “commemorate Latvian resistance” to “the second Soviet invasion in 1943” clearly shows their political intentions. It was the return of the Soviet Red Army then that liberated Latvia from Nazi Germany.
Even though Latvia lost its independence in the 13th century when it was conquered by a German order of knights, which supplied its landlords for the next 600 years, and was then controlled by Poland, Lithuania, Prussia and Russia, it maintained its national identity.
In 1940, to the great consternation of the Western imperialist powers, the Soviet Union moved troops into the Baltic states — Latvia, Lithuania and Estonia — to try to defend against a German invasion, which went far beyond the Baltics into Russia before being stopped.
In 1944, after the German army had been defeated and was retreating, the Soviet forces reached Bauskas. This was what the current Latvian rulers called the “second Soviet invasion.” The Soviet Red Army had to overcome a unit of the Latvian legion of the Waffen-SS, who were fighting for the Nazis.
The plaque depicts these Latvian-SS troops over a quote from Karlis Ulmanis, the semi-fascist and German puppet who ran Latvia during the 1930s, saying, “Latvia must be for Latvians.”
This commemoration created quite a bit of indignation, both in Russia and among the 38 percent of residents of Latvia who are not ethnically Latvian.