Strike two

After Iceland, now Latvia.

The Finacial crisis has taken down a second government, this time the ruling four party coalition in Latvia.

economy is set to drop 12 percent this year, the Finance Ministry has
forecast.

Yesterday Vaclav Klaus was barraked by the Parliament, for amongst other things pointing out how the economy was not working as planned, indeed was not working because it was increasingly planned.

He said,

We must say openly that the present economic system of the EU is a system of a suppressed market, a system of a permanently strengthening centrally controlled economy. Although history has more than clearly proven that this is a dead end, we find ourselves walking the same path once again. This results in a constant rise in both the extent of government masterminding and constraining of spontaneity of the market processes. In recent months, this trend has been further reinforced by incorrect interpretation of the causes of the present economic and financial crisis, as if it was caused by free market, while in reality it is just the contrary – caused by political manipulation of the market. It is again necessary to point out to the historical experience of our part of Europe and to the lessons we learned from it.

Well I suspect that there ought to be a few red faces around, but I won't hold my breath.

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.

Latvia continues to add chaos to confusion

In the latest in a series on the constitutional goings on in Latvia, I again bring you an annotated version of the information sent out by the European Parliament office in Riga. This whole saga is beginning to really bring Latvia into disrepute and is now causing serious friction here in Brussels.

Latvian President recommends government step down

A series of events has led to several calls for Prime Minister Kalvitis´ ("People´s party", EPP-ED) Cabinet to resign.

1. Contrary to the Cabinet´s request, the Latvian parliament, the Saeima, refused to vote to remove the Head of the Anti-corruption bureau.

2. Two "People´s Party" (EPP-ED) ministers have resigned or been forced resign. Foreign Minister Artis Pabriks resigned and criticised PM Kalvitis´ decision to remove the Anti-corruption head and to expel Regional Development Minister Stokenbergs from the "People´s Party" for sowing disunity.

3. A "Fatherland and Freedom/LNNK" candidate for Economics Minister refused his post due to the turmoil surrounding the Prime Minister´s request to remove the Anti-corruption head A. Loskutovs. Loskutovs has been continuing investigations into widespread "People´s Party" and "First Party/Latvian Way" campaign financing violations that have already been acknowledged by Latvia´s Supreme Court.

4. Veteran "People´s Party" MP Dz. Abikis has recommended Prime Minister Kalvitis resign the premiership and leadership of the party. MEP R. PIKS (EPP-ED) countered that the Prime Minister should continue his work but should more rigorously evaluate important decisions.

5. President Zatlers has recommended that once the 2008 budget is approved this week a new Cabinet should be formed.

6. Currently there are four vacancies in Cabinet positions.

7. "People´s Party" MP V. Paegle, chair of the European Affairs committee, has recommended that "People´s Party" founder Andris Skele resign from the party. Skele, whose wife is the chairman of the party board, is widely presumed by media to be a "power behind the throne" as one of Latvia´s "political oligarchs".

Culminating these events, the largest political protest demonstration since independence took place Saturday. "People´s Party" fraction head M. Kucinskis announced that, "It is only a question of time (until the cabinet will resign)". President Zatlers, in a TV interview this morning, stated that Prime Minister Kalvitis no longer has the trust of the people and should not head the next government.

MEPs Girts KRISTOVSKIS (UEN) and Georgs ANDREJEVS have been prominent critics of recent government decisions. MEP Roberts ZILE (UEN), also chairman of his "Fatherland and Freedom/LNNK" party, has said that "Fatherland and Freedom/LNNK" will not leave the current government.

MEPs Valdis DOMBROVSKIS and Aldis KUSKIS (EPP-ED) represent the opposition "New Era" party and have called for change.

No ruling coalition party politicians have announced a willingness to assume the Prime Minister´s post. Commentator´s speculate that any new leader will have an unenviable task in regaining the public trust. Moreover, the Greens/Farmers" coalition prime ministerial candidate A. Lembergs is still under house arrest on corruption charges, and their recent Speaker of the House, I. Emsis, has been found guilty of providing false testimony to the General Prosecutor´s office and has resigned as an MP.

So fun all round for the Baltic state. Seems like a perfect European partner.

Corruption crisis in Latvia

Whilst all eyes are on Lisbon and the Constitutional Treaty, some constitutional problems are again raising their heads in Riga. The problems in the small but perfectly formed Baltic state of Latvia have come about because head of the country's anti-corruption chief, Aleksejs Loskutovs has been fired. This is an edited version of the report that we have recieved from the European Parliament office in Riga, and follows previous reports on the unfolding crisis that I have posted here.

Latvia´s Cabinet* yesterday recommended the dismissal of Latvia´s Anti-Corruption Bureau head Aleksejs Loskutovs who has avidly pursued investigations tied to persons connected with the ruling coalition. An ad hoc investigative committee composed of Cabinet members, the National Security Council chairman and headed by the General Prosecutor had not made an official recommendation, according to leading daily Diena. Moreover, the General Prosecutor´s office termed the temporary dismissal by Prime Minister Kalvitis ("People´s party", EPP-ED) as "unwarranted" and "illegal", as the law relegates the authority to dismiss the Anti-Corruption chief solely to the General Prosecutor. Prime Minister Kalvitis defended his initial, unilateral 24 September dismissal based upon a State Audit report of accounting violations, describing the General Prosecutor´s office´s position as just "another legal interpretation".

Tensions between the Anti-Corruption Bureau and leading ruling coalition parties have been brewing for well over a year. The Prime minister was earlier forced to retract a new security law after widespread public disapproval. According to past-President Vike-Freiberga, the proposed law would have compromised Anti-Corruption Bureau investigations into the affairs of Latvian "oligarchs" tied to political parties.

Other events have included the arrest of the Greens/Farmers Party prime ministerial candidate Aivars Lembergs the dismissal of an Anti-Corruption Bureau official I. Bode after the official had been reinstated by Prime Minister Kalvitis and investigations that may have connections to prominent members of ruling coalition parties.

These events in Latvia have elicited the intervention of the US Ambassador, Catherine Bailey, who yesterday encouraged Latvians to maintain their recently won democratic values and questioned, "Whether (people will) allow the state to become a plaything of a few individuals, who allow decisions to be made so that their friends can stuff their pockets". She intimated that Latvian poltiticans were taking their directions from Latvian oligarchs rather than making their own decisions.

- Georgs ANDREJEVS MEP (ALDE): "It´s clear that this (above) statement has been coordinated with the US government (...) the United States and Russia may be more closely following events in Latvia than European institutions that are engrossed in the Reform treaty".
- Latvia´s President Zatlers: Latvia must be "capable to act without external advice" but thanked the US Ambassador for the "critical viewpoint of a friend"
- Rihards PIKS MEP ("People´s party", EPP-ED): "The Anti-Corruption Bureau must have a spotless reputation."
- Girts KRISTOVSKIS MEP (UEN ): This move will "diminish the fight against corruption in Latvia" and is "a significant threat to the rule of law in Latvia."

Prime Minister Kalvitis´ 24 September initiative was based on a June report by the State Audit. The audit noted accounting irregularities at the Anti-Corruption Bureau. Kalvitis stated that these may have led to "the loss of over a hundred thousand lats (€140,000)". Although the report is secret, the Head of the State Audit announced that the irregularities were not significant enough to warrant dismissal. The Chief Prosecutor concurred that the irregularities were insufficient to warrant dismissal. The Chief Prosecutor´s office contended that the dismissal of Loskutovs by the Prime Minister during the period of investigation was illegal.

The conflict over the Anti-Corruption Bureau comes on the heels of several revelations indicating possible cronysim that may have cost taxpayers millions of lats:

A lease (without tender) of the central post office for a sum considerably lower than was previously offered by companies.
Possible privatisation at the expense of higher market value prices for lucrative Riga port-area territories, etc.
Finally, Transparency International has estimated that an expected Anti-Corruption Bureau decision will fine leading coalition parties, including the "People´s Party" and the "First Party/Latvian Way", "up to two million lats" for illegal campaign expenses following a decision by Latvia´s Supreme Court that decreed many campaign expenses as illegal.

Members of the opposition "New Era" party (EPP-ED) maintain that the dismissal is illegal and solely politically-motivated.

The national parliament, the Saeima, will soon hold a vote on the Cabinet´s recommendation.

* Latvia´s ruling coalition is composed of:

"People´s Party" (EPP-ED)
"Greens/Farmers party" coalition (unaffiliated)
"First party/Latvian Way" (ALDE MEP)
"Fatherland and Freedom/LNNK" (UEN) - one minister reportedly abstained from the vote

This I suspect will run and run. I will speak to a Latvian diplomat friend and see if I can find out some more

Arresting movement in Latvian crisis

Following my post a couple of days ago about the shenanigans going on in Riga, I can now provide an update. It appears things are getting very messy over there.

Prime Minister seeks to withdraw controversial Security law revisions

Prime Minister Kalvitis has responded to President Vike Freiberga´s step to delay publication of Security Law revisions that in her words, "threatened" the external and internal security of Latvia. The President maintained that NATO secrets could be compromised and that internal criminal investigations could be held up if outside advisors and Cabinet Information Analysis Agency staff gained access to secret files without current clearance procedures.

The Prime Minister (People´s party) has said that all the changes should be withdrawn and that "we should start from zero". Head of the Judiciary Committee, Mareks Seglins (People´s Party) head, announced that, "Perhaps we made a mistake in (first) adopting the measures by emergency decree." Seglins believes that the President perhaps was not "fully informed" or had misunderstood the legislation. (dailies "Diena", "Latvijas Avize")

The new positions signal a reluctance to have the legislation put up for a national referendum as the President´s refusal to publish the law for two months would demand according to the Constitution. People´s Party spokesmen have asserted that if the measures are withdrawn or revised, then there is nothing to have a referendum about. However, the Saeima´s chief judicial expert Gunars Kusins states that it is not entirely clear if the process toward a referendum can be stopped. Consultations are taking place with Cabinet and Presidential legal staff to outline options.

Meanwhile, opposition "New Era" party representatives have stated that a referendum is necessary to prevent the government from backtracking once President Vike-Freiberga leaves office in June. Many experts say that such a referendum would in fact be a vote of confidence on the government. First, 10% of voters must sign a petition to have a referendum.

Influential Latvian "oligarch" Ventspils Mayor Aivars Lembergs arrested

Mr. Lembergs, one of the presumed "oligarchs" accused by the President of possibly benefiting from recently adopted changes to Latvia´s Security law, was arrested today. Swiss documents reportedly received by the General Prosecutor´s office may have confirmed that: "Since 1994 Lembergs has been a secret shareholder of (Ventspils company)´Kalija Parks´." (www.delfi.lv, 14.03.07) Mr. Lembergs is also reported to have allegedly accepted the shares as a bribe. The Prosecutor´s office has refused to comment as of now.

Mr. Lembergs was the Prime ministerial candidate of the Latvian Farmers´/Greens electoral union. Although not a candidate for parliament, Mr. Lembergs´ supported party gained 18% of seats in the Saeima. Mr. Lembergs has regularly attended meetings of the four party government coalition council (People´s party, Farmers/Greens Union, First Party/Latvian Way, Fatherland and Freedom/LNNK). Prime Minister Kalvitis has denied any knowledge of "oligarch" interference in government decision-making. "I am the guarantor of stability", said Mr. Kalvitis, stating that decisions are made solely within the government while he is the Prime Minister.

President Vike-Freiberga today stated that the arrest creates "very serious consequences" and has discussed the matter with Prime Minister Kalvitis. Mr. Kalvitis has responded that: "Of course, if the situation is serious Lembergs will not participate in coalition council meetings".

This briefing was produced bythe European Parliament's office in Riga.

Constitutional Crisis in Latvia

According to a report being circulated in the European Parliament some serious stuff is going on in Riga.

A surprise Saturday press conference by President Vaira Vike-Freiberga, was called to "sound a serious alarm" to the nation regarding a "hastily adopted law" increasing centralisation of intelligence and covert operations oversight for the Cabinet and expanding access to security information to Cabinet appointees. The President used her powers to delay publication of the law for two months and has initiated the process for collecting signatures for a national referendum.

In the words of the respected former Chief Justice of the Constitutional Court Aivars Endzins, "The government is attempting to grasp control of all security (and intelligence) institutions.(...) Everything points toward the fact that a large majority of (Saeima) deputies have in fact been well-bought" (11.03.07."Diena" newspaper).

New Cabinet regulations also permit a recently created Cabinet Information Analysis Department to give top security clearance to external ‘advisors’, thereby allowing access to criminal investigation information and other covert operation material. The proposed norms also allow a four minister panel to review intelligence matters without the involvement of the President or the parliament as until now.

The security legislation was first adopted by the government as an emergency measure without parliamentary confirmation and without consultation with the National Security Council as required by law. The President's veto of the legislation was later rejected by the parliament with virtually no debate.

The President asserts that the law will allow ‘oligarchs’ and political party sponsors to interfere with covert (including criminal) investigations. National security – as well as internal security – will be threatened by the new law, according to the President. The traditional inter-institutional checks and balances are ignored in the new law, she maintains.

Prime Minister Kalvitis (EPP-ED) has responded that he has "no information" regarding the role of oligarchs in government and said that the new law simply increases parliamentary oversight.

The opposition "New Era" party (EPP-ED) has called for the government to step down.

Although a parliamentary committee has subsequently agreed to begin revising the legislation to exclude security information relating to NATO and the European Union, the President maintained that the changes were only cosmetic.

When asked to name the "oligarchs" referred to by the President, Endzins named the widely presumed "powers behind the throne" of two coalition parties, Andris Skele, founder of the People's party (EPP-ED), Ventspils mayor Aivars Lembergs, prime ministerial candidate of the Farmers/Greens Union, as well as the head of the coalition partner First Party, Ainars Slesers (in electoral block with Latvian Way, ALDE). Endzins hailed the President’s speech as ‘a serious warning to the Cabinet and to the parliament’.

Background:

Mr. Skele contributed over 500 000 EUR to an ‘independent’ election campaign group that supported the People's Party (EPP-ED), thereby violating the campaign finance law according to Transparency International (‘Delna’) and many academics. Legal challenges are still being resolved. Mayor Lembergs is being tried for criminal misuse of the powers of his office and is under criminal investigation for illegal receipt of funds. Mr. Slesers and Mr. Skele were involved in telephone conversations discussing alleged vote-buying in the voting for the Jurmala mayoralty.

Considerable tension has been brewing between the Government coalition members and Latvia’s Anti-Corruption Bureau and the Chief Prosecutor’s Office. Prime Minister Kalvitis has had several differences of opinion with the Head of the Anti-Corruption Bureau and Mayor Lembergs has denounced the ‘aggressive methods’ of the Bureau that is investigating businesses associated with the mayor..

Much political discussion has addressed a possible centralisation of power by the Cabinet’s executive branch. Commentators have raised fears that the imminent end of term for the Chief Prosecutor J. Maizitis and the Anti-Corruption Bureau Head A. Loskutovs may result in the appointment of considerably less independent officials, thereby hindering investigations against persons associated with the governing coalition parties.

Many observers have already sharply criticised the appointment of two new Constitutional Court justices as indicating a move to create a Constitutional Court with inadequate professional credentials, subservient to ruling coalition parties (People’s Party, EPP-ED, Latvia’s Farmers/Greens Union, the "First Party", Latvian Way/ALDE and "Fatherland and Freedom/LNNK" (UEN).

The President’s term ends in June. Governing coalition parties have refused to name any candidates for the position. Parliament Speaker Emsis has stated that an early announcement is only likely to lead to public criticism and withdrawal of the candidacy, while critics have called for a more open process prior to the parliament’s vote in June.

A new term for J. Kazocins, head of the top intelligence gathering institution, "The Constitution Protection Agency", also is to be reviewed within the next year.

And we think we have constitutional issues?

As an aside I note that Jānis Kažociņš, is a British subject, a Brigadier in the Army with an OBE no less. He was granted Latvian nationality on taking up the job, he maintains his British nationality and his wife and children still live in the UK.
His job includes, "intelligence, counterintelligence, protection of the Secret(sic) of State as well as protection of classified information of the European Union and NATO". Interesting chap.