Latvia is joining the eurozone

Despite obvious misgivings on the part of the population, Latvia is set to become the eighteenth member of the eurozone.

In a report, the Commission confirmed that the Baltic state had met the criteria for joining the single currency.

Officials hope the news will show the eurozone is set to grow despite a three-year sovereign debt crisis.

Latvia is keen to strengthen ties with western Europe and reduce its dependency on Russia.

One can understand why Latvia would want to reduce dependency on Russia (something the East European and Baltic states have been trying to achieve since the early nineties with variable success) but the notion that the crisis will somehow magically disappear because another country clambers onto the sinking ship seems rather doubtful.

Latvians show reluctance to join the euro

The Wall Street Journal thinks this reflects "Ambiguity Over Euro":

Political parties in Latvia skeptical of joining the euro zone next year took the bulk of the votes in the capital in local elections Saturday, heightening the view that many here still don't support joining the bloc.

I'd say it reflects some reluctance on the part of the people of Riga (likely to be the most pro-euro part of the contry) to join a problematic currency union. Never mind, says the article.

Still, the elections, held to select members of 119 municipal councils across Latvia—including the 60 members of Riga's city council—aren't expected to derail Latvia's planned adoption of the euro in January. The European Commission is expected this week to green light the small Baltic nation's entry into the euro zone.

Quite so. Why should votes and elections matter?

Latvians don't want the euro

Well, I am shocked, I tell you, shocked. Apparently the idea of the euro, due to be introduced in  Latvia in January 2014, is unpopular with the people of that country. What can they be thinking of?

They are thinking of two things: the fact that their currency is the symbol of their cherished independence (a questionable concept within the EU) and the equally important fact that they cannot trust their politicians to tell them the truth. How extraordinary! I dare say they might also be looking at the mess the eurozone is and wondering whether it is worth their while to be part of it.

ADDENDUM: I see The Banker has nominated Andres Vilks of Latvia its European Finance Minister of the Year 2013 [scroll down].

In the first nine months of 2012, Latvia’s economy grew 5.6%, the fastest pace of any EU country. The road to this remarkable turnaround was not an easy one, however. After entering into an International Monetary Fund (IMF)-supported readjustment programme in 2008, Latvia implemented a programme of fiscal adjustment which totalled about 15% of its GDP. The results were painful, but resulted in renewed confidence and subsequent successful bond issues.

In fact, a somewhat better result than seen in the eurozone.

What's sauce for the goose ...

There is a battle going on in the EU about sanctions to be imposed on Belarus and its unquestionably oppressive and kleptocratic government.

Mid-level diplomats will this week discuss who else to add to the Belarus sanctions list when EU foreign ministers meet in Brussels on Friday (23 March).

EUobserver understands the provisional roll-call includes oligarch Yuriy Chizh, several companies owned by another regime billionaire, Vladimir Peftivev and a handful of officials. Peftiev is already under a visa ban and asset freeze, along with three of his firms - a decision he is currently fighting in the EU court in Luxembourg.

"You wouldn't believe how many [people] have come through here," a senior EU official told this website on the queue of NGOs, diplomats and companies telling him in recent weeks why Peftiev should be let off.

The article lists various reasons why Peftiev probably should stay on that list if there is such a list but also mentions that among various organizations that are arguing for his removal is at least one supposedly "anti-Lukashenka" NGO.

"I have not seen any evidence that Peftiev should be on the list. It's the police, the KGB, and the judges that should be on it," a contact from one Prague-based 'anti-Lukashenko' NGO told this website. A Brussels-based 'anti-Lukashenko' NGO recently sent a letter to EU officials containing 25 names - including Peftiev - of people who it says were put on the register unjustly.

This blog's opinion is that it is probably best not to take sides in the murky dealings between government, NGOs and oligarchs unless there is clear-cut evidence one way or another. Certainly, Vladimir Peftivev seems to be up to his eyes in business that, at least, in principle we in the West do not approve of:

He is the majority shareholder and chairman of Beltechexport, the country's largest weapons manufacturer. It makes aircraft, armoured vehicles and small arms. But its main business is to act as a middleman between Russian arms firms and dictators in Africa, Central Asia, south-east Asia and South America. The US says it has sold weapons to Iran and North Korea.

"It would be a further blow to [Russian President] Putin's reputation to have Russia sell its own weapons directly to these regimes in violation of international prohibitions. So Belarus does it for him," Stanislav Shushkevich, a former Belarusian head of state, told EUobserver.

I am not convinced Soon-To-Be-President Putin cares all that much about his reputation about selling arms "in violation of international prohibitions". It is not as if there was any mystery about the fact that he sanctions the operations or, at the very least, shrugs his shoulders in a typically Russian way.

What has caused a certain amount of distress is the role of Latvia and Slovenia.

EU diplomats say Latvia has now joined Slovenia in trying to protect him.

The two countries are willing to agree to the new EU sanctions but only if selected Chizh companies, which do business with their own firms, are left alone. In one example, Chizh is working with a Slovenian company, Riko Group, to build a luxury hotel and electrical sub-stations worth €157 million.

Latvia is barely emerging from a severe economic crisis and there may be a feeling that economic sanctions against firms that are willing to invest in the country is not a very good idea. Slovenia may look with some trepidation at other eurozone countries.

No, this blog is not advocating dealings with clearly dishonest firms from countries where the overwhelming proportion of the economy is owned by an oppressive kleptocracy that passes for a state. On the other hand, it might be a good idea to look at the way other countries behave.

Belarus is not the only country with those problems; there is another one, a larger one slightly further to the east. Is Germany likely to participate in any kind of sanction against Russia? Is Britain, come to think of it?

We can see the answer to that, if we look at the appalling Magnitsky case (about which I shall write in greater detail). Sergei Magnitsky, a lawyer for a British firm, tried to prevent its theft and the use it was put to to steal many millions of rubles from the Russian treasury by various members of the FSB and the Ministry of Finance. For his pains he was imprisoned, kept in confinement for a year, tortured and, finally, murdered. The names of the people who were involved in the theft and Magnitsky's murder are known and it would be easy to put them on a list of people who are not allowed into this country together with their immediate families. The FCO is refusing to do so because a move of that kind might prejudice Anglo-Russian business links.

I cannot help thinking that the expulsion of British businessmen, the theft of their company to be used for fraudulent tax rebate and the murder of their employee ought to prejudice those relations more but, apparently, the FCO thinks otherwise.

ADDENDUM: This, on the other hand, is inexcusable, no matter what decision our own despicable FCO might take:

Long before Lithuania and Poland handed over confidential information to Belarusian authorities which led to Bialistki's arrest, Natalia had begun preparing herself for what she saw as the inevitable day when police would drag him off.

Alex Bialitski is a Belarusian human rights activist, leader of the group Viasna (Spring), who is serving a four and a half year sentence of hard labour.

For the past 15 years, Viasna has provided practical support for families and victims of political oppression. It is one of the few voices that still makes itself heard in the cacophony and white noise of President Alexander Lukashenko's regime. Every year it publishes a book-length analysis of human rights violations in Belarus. Every year it gets longer.

It has a long history of run-ins with the KGB.

When it was banned from receiving international funding, it opened bank accounts under Bialistki's name in Lithuania and Poland. In March last year, authorities in both countries handed over those very bank account details to Belarus.

Ausra Bernotiene, the former head of the international law department at Lithuania's ministry of justice, who delivered the information, has since resigned and now heads the international relations unit at Lithuania's national court administration.

There are, apparently, people who think her decision had been a genuine mistake and she was made a scapegoat when the whole mess was uncovered. A mistake of that kind would indicate a complete inability to understand the international situation and a complete unfitness for any position to do with international affairs. Given the position Ms Bernotiene ended up with, scapegoat is not precisely the word I would use. Let us also consider the fact that her husband is partner in a legal firm that does extensive business with Belarus.

I wish I could understand this

Latvian politics seems to be extraordinarily complicated:

Latvian president Valdis Zatlers has called for the dissolution of parliament after MPs blocked an anti-corruption probe against a prominent politician.
The move means a referendum will be held in the next few months on whether to break up parliament and hold new elections.

Somewhere in there a £6.4 billion international bail-out, a presidential election in parliament next week and, undoubtedly, a good deal more. As the article says, political turmoil is indicated.

Catching up - 1

Not only did I take time out from blogging, I also managed to return to the need for some sort of comment about the party formerly known as Conservative. But one cannot just go around having fun all the time.

In the meantime, Latvia had an election in which the Unity Party Alliance under the Prime Minister Valdis Dombrovskis retained its leading position despite the fact that various austerity measures had been introduced.

The Baltic Review reports on the 5th that a coalition partner is needed and speculates

whether instead of working with a centre-right coalition as he has done so far he is considering a cooperation with the Harmony Centre party representing Latvia’s Russian-speaking minority

One wonders why that should be so, as the previous coalition seems to have been fairly successful and the Harmony Centre party is not precisely popular. I hope the Latvian Prime Minister is not about to take a leaf out of our own Boy-King's book.