INTERVIEW: OECD membership - grab it while you can

By bne IntelliNews September 17, 2014

Mike Collier in Riga -


Balts don't really do physical contact, except perhaps on Midsummer's Eve, which accounts for a mini baby boom every March. So when Angel Gurria, secretary general of the Organisation for Economic Co-operation and Development (OECD), reaches out and grabs the sleeve of the nearest Latvian for emphasis during his lecture at the Stockholm School of Economics in Riga on September 12, it sends a palpable frisson of discomfort through the audience.

Gurria is an engaging speaker, and not just because he might execute a flying tackle at any moment. Where most finance ministers are notable for their stoic reserve, the former keeper of Mexico's purse strings is quite the opposite, prodding and provoking his audience, and not afraid of using plenty of humour too, such as his advice to prospective members of the organization he has headed for eight years: “Don't invade anybody. It's bad practice.”

Officially, Gurria was in town to speak at the Riga Conference – a mid-level sort of talking shop that was effectively two days of variations on the theme “We must be tough with Russia,” but it was his Stockholm School of Economics lecture that was his bravura performance, foreshadowing Latvia and Lithuania likely accession to the OECD. "Estonia has been a member since 2010 and Latvia's accession was launched last year... I think we can do all the technicalities by the end of next year and leave the political issues for 2016 where through the year perhaps we can finish the process,” Gurria said. "It's an ambitious but realistic calendar."

No problems were foreseen with Lithuania's likely invitation to start its own accession process from next year, he added. "Latvia is now in the process, Lithuania is going to have decision taken next May or June which we're sure will be positive... Eventually in 2017-18 we'll have the three Baltics as full members of the OECD."

The way Latvia has bounced back from an acute economic crisis in 2008-10 could serve as a useful example for other small countries wanting to join the OECD, Gurria told his audience.

However he also said legislation needed to be speedily introduced to improve the way state-owned companies are managed to ensure Latvia did not fall behind schedule. "It is practically without exception that this is one of the issues that is not only analysed but discussed and debated, but it is typically one of the issues that is left to the very end of the case," Gurria said, citing the example of Slovenia where reforms were left "to the last second."

"It is a critical issue because there are 94 companies involved... We're not particularly religious about the ownership – what is important is that the companies work without any particular advantages or privileges, that there is a level playing field, that they are open to competition, that they are not monopolies and that they are managed professionally," Gurria said.

As if such straight-talking wasn't enough, he proceeded to further flabbergast his hosts by making himself available for informal press questions in an adjoining room – an rare invitation from a visiting VIP that bne was more than happy to accept. “You want to say so many things, the question is how do you do it?” he chuckles by way of intro.

Advice for other EU

Having touted the OECD's role as almost a consultancy for countries that aren't necessarily members, bne asked if the countries putting together the Russia-led Eurasian Economic Union had tapped the OECD for input.

“Yes, we have a programme called Sigma which is supported by the European Union and the countries themselves, we have another initiative called Eurasian Competitiveness and we have another programme called Caucasus, based on productivity, how to improve competitiveness and how to become more successful in what you could call a 'cut-throat' world," he says. "Now with everybody coming out of the crisis you lost jobs, you lost exports, you lost market share and everybody is trying to recover that as soon as possible – but everybody is doing the same thing so it's real survival. With Azerbaijan, with Kazakhstan, we are constantly working."

A good model would be the experience of Germany and Austria, Gurria suggests, where workers on reduced hours were given extra training to make them “more employable, more portable.”

And then there is Russia. Both Latvia and Lithuania have leapfrogged Russia's attempt to join the OECD after its accession hopes were put in limbo by its actions in Ukraine. “The issues surrounding that will be defined by the members, but the situation on the ground is uncertain to say the least," he notes.

“The sanctions are what I would call Europe trying to respond to the situation in a way that's acceptable. I'm sure everyone would like to be thinking of something else but we at the OECD will continue the technical [work]," he says. "But discussions about accession and when they are reinstated are really going to be defined politically by our members. Clearly this will require the situation on the ground to improve. When? I hope the sooner the better, not for the sake of accession discussions or the OECD but because this is important for the whole world."

To emphasise his point, he grabs another arm.


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