Latvia implodes

It had to happen, and now it has,

Amid widespread public protest and President Zatlers´ recommendation that the Government step down, Prime Minister Kalvitis ("People´s party", EPP-ED) and his four party coalition* have agreed last week to resign on the 5 December. The government had stayed on to in order to ensure the adoption of the surplus budget. Any new government is unlikely to change the broad-based support for the Reform treaty.

A series of self-acknowledged mistakes and questionable ethical decisions have badly harmed public trust in the current government. The resignation of the Greens´ Speaker of the parliament after providing false testimony and a book revealing conversations documenting manipulations of judicial decisions have been followed by an unsuccessful attempt to sack Latvia´s Anti-corruption chief.

These are just some of the events that have led Latvia´s largest labour confederation and leading academics to call for dismissal of the Saeima and new elections. The coalition-leading "People´s party" has fallen to 5% support in public opinion polls. MEP Georgs ANDREJEVS (ALDE) has stated that in some respects the situation is akin to Soviet times, where party members are afraid to speak out against their leadership, fearing retribution, while privately admitting that many changes need to take place.

A budget surplus has been adopted to begin to lower inflation after reaching a monthly high of 13%. The government previously has been accused of inaction on the inflation front by MEP Valdis DOMBROVSKIS ("New Era", EPP-ED) and others. The reform-oriented, opposition "New Era party" (EPP-ED) has nominated MEP DOMBROVSKIS as its prime ministerial candidate. They see the need to redirect taxation from wages to property and capital. "New Era" has also joined calls for new elections to be held.

Three of the coaltion parties have yet to name any new candidate for Prime Minister, while the coalition´s Greens/"Farmers´ Union´s" (EP unaffiliated) candidate remains Venstpils Mayor Lembergs. Lembergs, however, is under house arrest in Latvia on charges of bribery and misuse of his elected position and is now also under investigation in Luxembourg for money laundering.

The unusual timetable for resignation was set after the task of adopting the 2008 one percent surplus budget had been achieved. PM Kalvitis asserted that important, unfinished business remains to be done before the Cabinet can agree to step down. Many experts speculate that the four party coalition will revamp its team of ministers while keeping the coalition intact. "For Fatherland and Freedom/LNNK" (UEN) chairman MEP Roberts ZILE (UEN) has announced that his party will continue to support the current coalition to form a new government.

Some politicians have suggested inviting non-political ministers while others have proposed a rainbow coalition of all parties. Some media commentators maintain that any real change necessitates the inclusion of "New Era" in any new coalition.

According to Transparency International, the coalition´s "People´s party" and the "First party"/"Latvian Way" may soon be faced with a request to pay over € 1 million in penalties due to massive campaign finance law violations deriving from a previous decision of Latvia´s Supreme Court.