Zat's the way to do it!

By bne IntelliNews May 30, 2011

Mike Collier in Riga -

At the start of his first presidential term, Valdis Zatlers was a national joke in Latvia. A virtual unknown, the gawky medic was assumed to be a patsy who would be easily manipulated by the country's oligarchs. Four years later on May 28 - just five days before he is due to face a parliamentary vote on a second term - he completed an unlikely metamorphosis from national joke to national hero by taking what he called "radical action" in attacking those oligarchs head on by proposing to dissolve parliament.

When he announced on Friday, May 27 that he would address the nation in a live TV broadcast on the following night, most people assumed Zatlers would do a bit of finger-wagging about recent events involving a shaky coalition government. He would try to bolster his image in the run-up to the June 2 parliamentary vote and then everyone could get back to the beer gardens.

But as soon as Zatlers appeared on screen, trembling with emotion, it was clear something was up. A man initially mocked for his awkward oratory was speaking without a script and with remarkable eloquence. We see politicians engaging in a passionate struggle over jobs instead of thinking about the country and its economic development. Jobs were handed over to friends, as has always been the case. The Saeima showed on more than one occasion that it defends the personal interests of narrow groups or even specific individuals - not the interests of the state," Zatlers said.

It was a savage indictment of the oligarchs. "Let us finally bring an end to the all-permissiveness of a narrow group of people," Zatlers said. "Let us bring an end to the situation in which the wealth that we have all accumulated with such hard work is found in the accounts of offshore companies."

He also lambasted parliamentary decisions on the appointment of new judges and a vote not to waive parliamentary immunity for MP Ainars Slesers in order to allow anti-corruption officers of the agency KNAB to search his flat. "What to do? Sadly, I get the feeling that even though seven months have passed since the last election, the new Saeima feels comfortable in an atmosphere of political scheming, lies and impunity," Zatlers said.

By the time his allotted 10-minute slot had expired and he was still talking, not even members of his staff were entirely sure what he would say next. Then the bomb: "I am appearing on this live broadcast to inform you about Decree No. 2 of the President of the Republic of Latvia. On the basis of Article 48 of the Latvian Constitution, I am proposing the dissolution of the Saeima." You could almost hear the sound of jaws dropping from the Baltic Sea to the Russian border. Wow - he really did it, probably sacrificing his own presidency in the process.


Zatlers' action sets in motion a chain of events that cannot be stopped. Within two months (probably on July 30), a referendum will be held on whether the Saeima should be dissolved. No quorum is required. In the unlikely event Zatlers loses that vote, he would be sacked, but as his term expires on July 7 in any case, that is largely irrelevant. No-one is going to turn out to defend the oligarchs that Zatlers blasted in his historic address, so by winning the referendum he will succeed in dissolving parliament and fresh parliamentary elections will be held probably at the end of September or beginning of October.

At the beginning of last October, Prime Minister Valdis Dombrovskis seemingly ushered in what seemed to be a new dawn with his victory in parliamentary elections. Now it seems that tuned out to be a false dawn and Latvians will have another chance.

However, that would require Latvians to alter their voting patterns, and with the same faces on offer, similar results might be expected. Much of Zatlers' ire was directed at the Greens and Farmers' Union (ZZS), which has proven itself to be an unreliable and self-serving party in coalition with Dombrovskis' Unity bloc (which itself has failed to transform into a single party). ZZS has its strings pulled by pint-sized oligarch Aivars Lembergs, currently on trial in both Latvia and the UK for offences inclusing fraud and money laundering.

Lembergs' office was among those sensationally raided by KNAB on May 26 (other targets included airBaltic, the ports of Riga and Ventspils, the Latvian Shipping Company, Riga city council and the Diena newspaper), and officials are still trying to drill into his safe after he claimed to have forgotten the combination. Yet remarkably, Lembergs retains a hard core of support, mainly from residents of his home Ventspils region and old ladies who like his smile and possibly mistake him for crooner Des O'Connor, with whom he shares a remarkable resemblance.

One of the most intriguing aspects of the affair involves a conversation between Slesers, Lembergs and the third oligarch, former PM Andris Skele at the upscale Ridzene hotel. Slesers went public with a claim that the conversation had been bugged then went suddenly quiet instead of carrying out his threat to kick up a stink. It seems highly possible that Zatlers has heard the tape and it contributed to his decision that enough was enough.

Zatlers' rival for the presidency is ZZS MP and former Unibanka banker Andris Berzins, recipient of the country's largest pension whose impressive private home in the country was apparently built as a "guest house" and recreation complex using generous EU co-funding, according to a TV expose on May 29. If Berzins too fails to win the parliamentary majority needed to bag the presidency, a second round of voting would be needed that would see other candidates emerge and parliamentary speaker Solvita Aboltina becoming acting president if necessary.

One possible scenario has Zatlers losing the presidency, then forming his own party to alter the political landscape. A week ago such a suggestion would have seemed absurd, but in the wake of his gutsy gamble, he could now be assured of widespread support.

While it's all very exciting, the impact on the economy of this political turbulence is likely to be minor, says Martins Kazaks, chief economist with Swedbank in Latvia. "If a new parliament gets elected at the beginning of October, there is still ample time to get the budget for next year together, so I wouldn't see important risks there," he says.

"There may be some short-term impact, but those investors who are already here are used to this rollercoaster we have had for the last few years. Their experience will tell them that things are going to be sorted out and nothing bad is going to happen. In fact, changing the political environment may even be a boost to attract foreign investors," Kazaks says.

Zat's the way to do it!

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