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In search of Europe: Latvia

Latvia is in shock after going from boom to bust, the BBC's Jonny Dymond reports, as he tours the continent ahead of next month's European elections.

In a small village school in the middle of nowhere, about 100km (60 miles) from Riga, the day is about to begin.

JONNY DYMOND
BBC correspondent Jonny Dymond

I'm Jonny Dymond and I've said goodbye to the BBC Brussels bureau for the next few weeks. I'll be taking the temperature in nine EU member states before the European Parliament elections on 4-7 June. I'm going to ask voters what they think of the EU and what their priorities are. Join me on the trip!

A bell rings, a gaggle of children mill around a well-decorated but gently decaying building and then make their way to lessons.

Watching them is Ilga Cera, 61, snowy-haired, plump and wrinkled. Her father attended the school in Zalve, as did she, as did her children. But this term will be her last, and the school's.

It is a victim of both falling enrolment and the crisis in the Latvian state's finances. Hard times have come to a country that up until late last year was one of the Booming Baltics.

"The closure is very painful for me," she says "Four teachers will lose their jobs. It is very hard to lose these jobs now. Because all those teachers who lose their jobs have families and some of them are the only ones who earn money in the family.

"These are very difficult times."

Ilga Cera
Ilga Cera has a long attachment to the local school - but it is now ending

That's an understatement. These are terrible times for Latvia, all the more terrible because they follow years of double-digit growth, when one of the poorest of the EU's new member states looked as if it might leapfrog ahead of slower neighbours.

Construction boomed. Credit flooded in. Unemployment dropped to its lowest ever level.

And then, the screeching crash. In a year unemployment doubled to 13.9%. Output is expected to fall by at least 16% in 2009.

Money appeared to flow like water in the good years. The streets of Riga are still thick with BMWs, Mercedes and Audis. But don't try selling them at anything less than firesale prices.

"You like to say that we spent a lot of money in the past five years," says Zanete Jaunzeme-Grende, head of the Latvian Chamber of Commerce and Industry.

Zanete Jaunzeme-Grende
Ms Jaunzeme-Grende is sceptical about some Western business values

"Yes, but I want to say that we want to live in the same level of life as Sweden, Germany and France."

Ms Jaunzeme-Grende calls Latvia a "mirror" to the West, accusing parts of Europe, and the US, of warped values that places a higher value on venture capitalists than teachers. She compares, only half-joking, the EU to the USSR, laughing a little hysterically as she does so.

Latvia, she says, is suffering under a burden of EU regulations and directives it can do little or nothing to influence. And if there is no more help from the International Monetary Fund, she suggests, international debt default beckons.

Down in Riga's main job centre - redecorated courtesy of the European taxpayer - there is more criticism of the EU.

The main room is overflowing with new claimants, chairs spilling out into the corridor. And amongst the men and women waiting, there is an ill-defined resentment of the EU, for somehow allowing to the country to boom out of control after membership was granted.

As for the elections, well, don't hold your breath waiting for debate on European issues. The vote in Latvia will be about nothing but domestic issues.

"Politicians don't care about these [European] elections," says Filips Rejevskis, a political analyst.

"People are thinking that this is an election not for representing them in the European Parliament but more we are choosing eight people who will have a good life for the next four years, very good, very well paid, very comfortable life."

Young woman watching ice hockey game
Ice hockey is a welcome diversion from Latvia's economic woes

As the evening draws in, a small crowd gathers at the ice rink at the town of Jelgava, about 40km (25 miles) out of Riga.

Hulking 4x4s and top-of-the-range German imports line the car park.

Either the pain of this crisis is very unevenly spread or there are some big debts still to be paid amongst the drivers.

Inside, two amateur ice hockey players swish and slam across the ice, sending the puck hammering up and down the rink. Ice hockey is a national passion in Latvia, and gives some clue to the feisty national character.

Watching her husband play is Svetlana Batorina, 40, a businesswoman. Her baby Bozhena, somewhat remarkably, sleeps through the crashes and bangs, whoops and cheers. Svetlana is thoroughly hard-headed about the crisis

"As an employer," she says, "I keep explaining that there is a decrease in manufacturing in our company, and our incomes are lower as well, but people still have the same mindset as they did before the crisis."

It didn't seem like that at the school, in the morning, or at the job centre at lunchtime.

But one thing is very clear. Latvia today is entering waters uncharted since independence in 1991. It suddenly seems very much on the edge of Europe, in need of help as it pitches and tosses on the rough seas of the turbulent global economy.

Jonny Dymond's route across Europe
4 May - France
8 May - Ireland
12 May - UK
16 May - Sweden
21 May - Latvia
25 May - Poland
29 May - Austria
2 June - Italy
5 June - Germany


Jonny's response to your comments:

First, an apology - in the original version of this piece I got the distance between Riga and the soon-to-be-closed school wrong. It's now been corrected, 1984-style, so no trace of my error remains. But it was a sloppy mistake and I'll do my best to make sure it doesn't happen again.

That mistakes were made in the boom-times seems inescapable. Latvians are clearly aggrieved at a political class that appears to have failed in the good years to put the economy on a sounder footing. There's an interesting question about the EU and expectations; clearly, entering the Union gives some people the idea that parity with EU living standards is a legitimate expectation. Maybe this is no bad thing? There does seem to be an urgent question as to what to do now. As people in Latvia said to me time and time again, it's a small country with some big (and one rather scary) neighbours. Is Europe really all talk when it comes to solidarity?

Johan Kocur in Belgium asks why I didn't visit the country that I live in for its thoughts about the EU. I can't plead driving fatigue on this one. But I didn't come up with the itinerary on the back of a pub napkin after a long night of bieres blanches. Look at the itinerary from the point of a view of balance and stories: you want large countries and small, new members and old, rich and poor, east and west, each major region represented. Arguably I am skimping on the Southern countries, although I am slipping into northern Italy. But without wanting to sound rude about my host country, which I like very much, I'm not sure that I am missing a big EU story or region by failing to cover it.

Thank you as always for your time, and onwards to the elections!


Here are some of your comments on Jonny's feature:

Riga has boomed and grown at a fierce pace but aligned itself too closely with other economies that have relied on shaky foundations of property investments to build an economy.

Why have you overlooked Finland on your tour? This country is due to hit rock-bottom this autumn! according to PM Vanhanen.
alex, huittinen, finland

I fully agree with Daniel's thought, Western Europe did not achieve its wealth in 10 years. Most of them got it over 200 years by colonising and plundering India, Africa, and other countries.
Nirupam, Boston, USA, expat-India

I travelled to Latvia with my wife whose mother came from Latvia in 2005. My wife although born in Russia had spent several years in Latvia before she came to Israel.

In 2006 we again went to Latvia, and I was struck then by the change in the people in the course of just one year. In 2005 the people were full of hope that just one year after joining the EU everything was going to be great. They were slowly throwing off the old drabness of the Soviet years. The women were dressed very well, tourists were coming, the future looked bright.

In 2006 the change was very noticeable in the people's attitude. It's as if they had a foreboding that things were not going to be as they had dreamed. The older people, and some of the younger ones were already talking of the "good days" of the Soviet era, when they had full employment, reliable pensions, and were not stressed. So Jonny Dymond's report does not surprise me.
Leon Aarons, Israel

A fifty-year occupation by Soviet masters surely changed Latvia's culture and mindset - even as they heroically resisted. Then the sudden introduction of democracy and capitalism. One doesn't simply push a button and expect smooth transitions. Give the Baltic states their due and some patience. (Others to the East would like to see them fail.) Did not Ireland face challenges over many decades post-independence?
Vince, Ohio, USA

Latvian culture is enduring. I learned that first-hand living in Latvia during their first decade of independence. Yet in those years there was more of an effort to quickly 'catch up' with the west, and why not? They were oppressed under communist rule for 50 years.

With the opening of Latvia's doors, I feel the west was all too eager to oblige with massive investment capital and easy credit. Can you blame a POW for overeating when a feast is placed in front of him? Especially when the world demands of him that he quickly gain back all the weight he lost? The blame goes both ways, but one thing I know about Latvia is that they will endure. Don't forget that as a democracy they are just 18 years old. Much of their history has yet to be written.
Aaron, Boston, USA

I am not in Europe but am married to a European who has lived in Russia and Estonia. I have also traveled a route similar to Johnny's as part of my academic training, so please accept my comments as a 'qualified' outsider.

Bringing the East into the EU was the right choice. These countries and peoples progressed into the western sphere far more quickly than they would have had they been left out. One cannot fault speculators and developers for overheating the Eastern economies. If you wish to see waste, mismanagement and stupidity closer to home, take a look at all of the development spurred by foreigners along the Costa del Sol (I don't need to mention who was responsible for this). It would surprise me if that real estate has not dropped by 50% from the peak, so blasting Latvia for a similarly robust construction boom is rather cynical.

Construction-driven economies always boom and bust. Having friends in Poland, we have seen the country rocket into the 21st century extremely quickly. I believe Poland is managed better than Latvia, but can't believe similar leaps forward were not made throughout the East over the past decade. This recession will be a distant memory by 2011 so all efforts should be put into planning the future, rather than blaming those in the past and present.
Patrick Mitchell, Dryden, Canada

I can NOT understand how on Earth Latvian people are to achieve the same standard of living like the French or Swedish or British by just joining the EU. They need to read history and live within the real world and NOT just sit down as a daydreamer and expecting money to come to their pockets.. wake up please.
Tristan, Windsor

It sounds as if the Eastern European countries were running before they could walk.

Western countries, such as Sweden and Germany mentioned in the report, seem to have saved money during the good times in order to spend it during the bad ones. In contrast, Latvia and Eastern Europe with their extreme economic growth seem to have spent every penny they had on, for example, luxurious commodities for their citizens, and when in need of funds call for the IMF and EU to pick up the bill! In addition, the taxes seem fairly low in these new capitalistic countries, enabling some of their citizens to drive expensive German cars, while others work in a field by the help of a horse or other medieval means.

It makes me wonder if these Eastern countries were ready or mature enough to join the EU in the first place, and if we (the West) were ready to welcome them. Perhaps their economy and standard of living should have been improved before allowing them to join. A Western standard of living did not happen over a 10-year period in eg Sweden, Germany and France.

The global economic crisis was perhaps a bit of a surprise but a country with a 10% yearly growth could have played its cards slightly better and saved a penny or two. No complaints were heard from the East during the boom years and I do believe countries such as Latvia need to take some responsibility for their own economy as well and not just blame it on the EU.
Daniel, London

Strange. You started in Brussels, but you did't make the effort to ask Belgian people about their opinions in this series of articles.
Johan Kocur, Genk/Belgium

Having lived in Latvia for ten years, I can say that this crisis was inevitable - whether or not there had been a worldwide recession. Latvia, since its independence, has been run (for the most part) by a group of short-sighted, corrupt businessmen who had no interest in the long-term financial health of the country by encouraging responsible international business development, tourism or even a sound infrastructure for local businesses. This country has been under one type of occupation after another - the most recent being irresponsible government. The few honest politicians (ie people of integrity) who have tried to turn things around have been silenced. I hope the hard-working, wonderful Latvian people take advantage of this crisis to take their country back!
H, Riga, Latvia

Read your article and I must say you have really hit the mood here. People have lost faith in politics, seeing countless examples of elected people exploiting the law (for the good of selected groups: relatives, business partners and themselves) and taxpayers' money. And all the changes in the local laws in regards to EU regulations (EU recommendations being made law, even if older EU members are moving slowly to accept them), no wonder some people say that our country tries to be the first to spend and regulate, but is very lazy to care for its people. For my own account I can say I have witnessed enough examples of "one hand washes another" in law enforcement, as well as in spending of tax money.
Janis, Valmiera



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  Votes MEPs
Party % +/- % Total +/-
EPP 33.4 -1.4 264 -18
Socialists 23.2 -4.1 183 -26
Liberal 11.0 +1.6 84 +5
Green 7.4 +1.3 50 +9
Left 5.3 -0.6 34 -2
UEN 3.4 +1.6 28 +2
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No Group 13.6 +3.4 72 +3.4
0 of 27 countries declared.

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% +/- % Total +/-
CON 27.7 1.0 *26 1
UKIP 16.5 0.3 13 1
LAB 15.7 -6.9 13 -5
LD 13.7 -1.2 11 1
GRN 8.6 2.4 2 0
BNP 6.2 1.3 2 2
SNP 2.1 0.7 2 0
PC 0.8 -0.1 1 0
OTH 8.5 2.4 0 0
SF 1 0
DUP 1 0
72 of 72 seats declared. Vote share figures exclude Northern Ireland as it has a separate electoral system to the rest of the UK
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