Belarus Compared with Latvia

Here is an interesting perspective on Belarus and Latvia offered by US economists Michael Hudson and Jeffrey Summers-The Myth of the Baltic Tigers, The Death of "Social Europe"-which is critical of the doctrinaire IMF neoliberal model imposed upon it in past years.

The standard mantra (as recently rolled out in The Economist) is that Latvia’s taciturn and honest prime minister, Valdis Dombrovskis, won re-election in October even after imposing the harshest tax and austerity policies ever adopted during peacetime, because the “mature” electorate realized this was necessary, “defying conventional wisdom” by voting in an austerity government.

What is interesting is how politics in Latvia is divided on the basis of ethnicity and how populist nationalism has dovetailed with the imposition of neoliberal economics, whereby the nationalists are a symptom of the disease of which they pretend to be the cure.

Moreover, after the economic collapse of 2009, many Latvians decided to be apathetic or follow large numbers of angry Poles in repudiating their nation and voting with their feet to go and work and live in the West. One more consequence of the mantra of 'There is No Alternative' .

While the economic crisis was deep enough to drive even Latvia’s depoliticized population into the streets in the winter of 2009, most Latvians soon after found the path of least resistance to be simply to emigrate. Neoliberal austerity has created demographic losses exceeding Stalin’s deportations back in the 1940s (although without the latter’s loss of life). As government cutbacks in education, health care and other basic social infrastructure threaten to undercut long-term development, young people are emigrating rather than to suffer in an economy without jobs. Over 12 per cent of the overall population (and a much larger percentage of its labor force) now works abroad.

A land with hardly more than a million people lost 100,000 of its youngest and most ambitious to emigration after EU accession, almost half of them to Ireland. The Latvian government then toyed with importing workers from Ghana.

This is a fact never mentioned by those Euro-Atlanticists such as Timothy Garton Ash as such facts are subversive but some facts are more subversive than others, not least if the facts are used to prove the prescriptions of an Atlanticist narrative of neoliberalism and "People Power".

One Latvian one remarked that "During the Cold War we all dreamed of leaving but the risk is that everyone leaves, then the country will disappear". Hudson and Summers compare that with performance with Belarus whilst offering no rationalisation for authoritarian rule.

Given the geographic proximity of Latvia and Belarus, it is illuminating to compare how neoliberals have assessed their respective economies. Latvia suffered Europe’s largest economic collapse in 2008 and 2009, with continuing double-digit unemployment. Its economy will show no growth until this year (2011), and its modest growth likely will remain accompanied by double-digit unemployment. A huge slice of its population has evacuated the country, leaving many children with relatives or to fend for themselves. Neighboring Belarus, with few of Latvia’s geographic advantages (ports and beaches), has a per capital GDP not too far behind Latvia’s. Belarus had a boom with double-digit growth before the crisis, and kept its economy at full employment during the crisis rather than collapsing by the 25 per cent rate that plagued Latvia. Belarus also has a GINI coefficient (inequality) roughly on par with Sweden, while Latvia’s is closer to the widening inequality levels that now characterize the United States.

Yet neoliberal Latvia is declared a success model and Belarus a failure. The CIA’s World Factbook reminds its readers that Belarus’s economic performance occurred “despite the roadblocks of a tough, centrally directed economy.” This is the standard characterization of Belarus. But one needs to ask to what degree its success may reflect its central planning. Latvia has produced greater political freedom for dissidents, but Belarus has less economic inequality and foreign debt.

Every economy in history has been a mixed economy. We are not defending Comrade Lukashenko’s media and political repression in Belarus. We simply are not going to the opposite extreme of applauding Latvia’s neoliberal model. One can criticize Belarus’ political system without endorsing the electoral oligarchy that characterizes much of Latvia’s political life. Yet win or lose on economic outcomes, in the western press and academies Latvia and the Starving Baltic Tigers will be declared the winners, while Belarus always will be declared the loser on economic performance, regardless of achievement. You will not see a measured look at both nations’ economies to examine objectively where they are succeeding and failing (including by sector) with an eye for what lessons might be derived from such an investigation. Economic comparisons are entirely political.

Our intention is not to blame the Latvian nation for the cruel neoliberal policy experiment to which it has been subjected, to question the global community of policymakers, intellectuals and some of Latvia’s own elites that persist in pursuing this failed policy and even recommend it to other countries as a path of growth rather than economic and demographic suicide.

Perhaps one day those such as Garton Ash can start to deal with the stark and depressing reality of undemocratic IMF "reforms" and the mantra of There is No Alternative, as it is one that has vastly diminished the People Power creed he continually advocates.