RADU TOMA, ROMANIA
„We have a society in which money is increasingly concentrated in the hands of a few people, and that concentration of income and wealth threatens to make us a democracy in name only.
Paul Krugman, ‘The New York Times’,
3 November 2011
I considered that an essential topic in the economy of my last book on the Black Sea geopolitics should be the presence and commitment of the European Union in the East, after Europe’s return to its geographical and historical borders. And that is because, in the last two decades, the EU’s official documents, but also those of the North Atlantic military alliance, the annual summits or occasional meetings, insisted that the two main institutions of the Euro-Atlantic region must work together, in a symbiotic coordination, to optimize their efforts and missionary endeavours in this part of the continent including the Black Sea.
But the official rhetoric was one thing, and the reality another.
The current state of affairs: Kiev and Tbilisi in an agonising stand-by at the Euro-Atlantic door and, in reverse, an apparently incapable West to decisively ‘settle’ in those two places, has probably a deeper explanation than Russia’s opposition. It is an explanation revealed to us by the cohabitation and, especially, the contradictory, rather negative experience gained over the last 30 years by Eastern Europe with the institutions, ideologies and economic doctrines of the West, an experience to which the aspiring Black Sea riparian states, Ukraine and Georgia should absolutely resort to (1). In order to support this opinion, we will elicit and comment on facts, which to us seem to be essential, from the last three decades’ existence of the Eastern Europeans returned to capitalism.
On November 9, 1989, the Berlin Wall fell, but not long after the collapse of communism, in the general enthusiasm of those historical moments, the first signs of the invisible face of capitalism returning to East appeared, a far less attractive one. From the very beginning, a coherent program, quickly brought from the West, to restore Eastern Europe after 45 years of faulty Marxist-Leninist economic and financial management, did not exist. Also, a second Marshall Plan did not come to life and US’ East European policies went in other directions. The hope from 30 years ago was not fulfilled. It was impossible as, at the time of the communism fall and the USSR’s collapse, the US’ treasury was empty. 10 years after 1980, from the world’s first crediting nation, US has become a debtor, former Reagan President heavily indebted the nation, with $ 2.6 Trillion. USA was not able to generate a new Marshall Plan. With soldiers scattered all over the world and neoconservatives breathing down his neck, Bill Clinton barely managed to find $ 4.5 Billion for his friend, Boris Yeltsin, a drop in an ocean, just .4% of what Europe received between 1947 and 1951, his offer being 40 cents for each Russian. After 1990, USA’s economic and financial assistance was minimal, the EU’s insufficient, Eastern Europeans, from the Baltic sea to the Black sea had to fend for themselves.
Also, after 1990, the Baltic states, for example, embraced with the greatest enthusiasm liberal democracy, market radicalism and macroeconomic stability, and left behind the industry reform and population protection, the latter remaining defenceless in the face of world economic pressures. Millions came out to vote, to enjoy the benefits of parliamentary democracy. But, as it is often said, ever since then, they vote with their feet, not with their heads or hands, meaning that they leave, emigrate. They leave their countries, where a social and economic inequality has been established, unknown in the past, with many close to poverty and even beyond it. In recent years, a strong Euroscepticism has emerged from it, a free public debate about the bureaucratic structure in Brussels, which is huge, expensive, dysfunctional, alienated from the common man, and ignoring the economic and cultural particularities of the three Baltic States. Equally, dissatisfactions of all kinds have accumulated everywhere, from Poland to the south of the East, in Bulgaria.
Times not too far away, detested by all, of an authoritarian leadership from an outside centre, over the head, will, and interests of the nation, have insistently returned into the collective memory of Eastern Europe.
Estonia has had a formidable market promotion, as an ‘inexpungable fortress’ of the economic neoliberalism. It became a favourite example for the austerity supporters, for those wanting the quickest implementation of the euro and the exit at all costs from the post-2007-08 crisis and recession (2). That meant ‘recovery’ by any means and at any cost. Its price, however, was paid by the younger generation, pensioners and unemployed people, compelled to bear the austerity and the purely political decision to adopt in 2011 the Euro currency, while the recession effects were still visible at every turn. The income differences between the majority of the population and a small group of people became massive, and the emigration for working in other countries transformed into an exodus. And, it is said that, the subsequent recession exit was neither due to the euro adoption nor to the austerity but to the geographic luck that Tallinn is right around the corner from Helsinki. Every day, hundreds of ferries carry the bulk of the 133,000 Estonians who went abroad (12% of the population) to Finland, and are employed in construction, services, IT, various communications and electronics industries, etc. (3)
Estonia, since the day it was free from Communism and the Soviets’ presence, has always faced a very high unemployment (4), reaching a considerable 20% percentage of the country’s workforce. But Estonia’s paradox, whose economy is ranked in the West as the healthiest of Europe, is that Tallinn, its capital, has become the ‘European drug capital’, with 123 deaths in 2011, all young people, in a country with a population of only 1.3 million, as reported by the American weekly ‘TIME’ (5).
After 12 years as Estonia’s representative at the European Court in Brussels, since October 2016, Mrs. Kersti Kaljulaid is the President of the country. An ardent supporter of EU’s unity, she regrets Brexit and hopes that Macron, the one belonging to a few Frenchmen and refused by 72% of them, will be able to repair the ‘damage’ caused by London (6). Prudent when discussing protectionist measures in the world trade of US President Donald Trump, Kaljulaid is a top product of anti-Trump and anti-Russian neo-liberalism, lost in pro-EU, pro-NATO, pro-globalism rhetoric. Otherwise, nothing of substance about her own country, about the outstanding inequality in the income there, nothing about the chronic national mega unemployment; nothing about the most recent mass Euroscepticism, nothing about the necessity of recovering the national labour market and containing the emigration haemorrhage; nothing about the appreciable opportunities offered further on by the neighbouring, large ex-Soviet market, etc. Just a presidential approach cobbled together from pieces of neo-liberal economic doctrine, historical grudges and myopic strategies of a carried away leader, from a small country seated next to a geographical, political, economic, nuclear colossus, etc. It is another declaration of vassalage towards the West, copy-paste from the Romanian model 2004-2019, of the sell-outs Băsescu and Iohannis.
The bruxellocrat Kaljulaid has set the goal of her mandate: to create the world’s first ‘digital society’ in Estonia. A society, therefore, where all: mass emigration, endemic unemployment, indecent income inequality, poverty unknown in the past, Euroskepticism, anti-Trumpism, anti-Putinism, Rusophobia in general, lethal drug consumption, etc. everything, absolutely everything, is to be digitized …
Complimented by the World Bank as being ‘a friendly business environment’, Latvia was presented as a neoliberal success story, a ‘model’. But, according to Western economists, in fact it was an experiment that should not be followed by anyone. The economic collapse of this country after the financial collapse of 2008 was unparalleled throughout the East (7). Emigration has gotten out of control, a percentage of 14% of the population has left the country since 2004, since entering the EU. In the last seven years 78,692 people have emigrated solely from Riga, according to the data communicated by the central statistical office of the country (8). ‘People are getting less, the problems are getting less’, the corrupt governors whisper, ‘we vote not with our hands, but with our feet’, say the Latvians who started on the road towards other places, and the outflow plus the reduced number of births, according to demographers and universities, are equivalent with a kind of demographic euthanasia, possibly leading to the extinction of the nation. And indeed, statistics show that, from 2.66 million in 1990, Latvia’s population has dropped dramatically, by almost 30%, to 1.9 million on November 10, 2018, and is forecasted for 2050 to be 1.6 million, a decrease of 40% of the population reserve since 1990 (9).
Far from being a ‘model’ and a success story, the neo-liberalism brought by the EU to Latvia has proved to be a calamity.
The economic and financial austerity, when joining the Euro-Atlantic structures, proposed by Brussels to the aspirants from the Black Sea, Ukraine and Georgia, was accompanied, for the 1990s Latvia, by the industrial dissolution and transformation of that country from a functional past reality, into a socio-economic experiment with unknown future finality. Having left the former Soviet Union without debt, with a substantial, but ‘nobody’s’, estate capital, i.e. the old socialist state property left unattended in ‘the middle of the street’ and ripe to be plundered, with a very educated population, Latvia was privatized by its former politicians and by foreign capital. The ‘real-estate bubble’ imported from America in 2006-2008 has enriched western banks and has thrown the customers bankrupted by the system in the street. INET, George Soros’s NGO, was deeply involved in what remained of the public domain. Latvian kleptocracy was and remains fully loyal to the neoliberal economic power, the forced austerity did not offer any magical solution and remained another sad ‘triumph’ of globalization in Eastern Europe.
How did the new political beneficiaries in Latvia succeed in convincing the people to vote for neoliberalism? By scaring them. Fooling them that the alternative would be to return to Stalinism, to deportations to Siberia. That the Russian invasion is possible at any moment, that, and read well, ‘Putin and the Jews will come and steal everything.’ This is what Latvian anti-Semites and nationalists kept close by… a Jew named George Soros (?!) his people and his ‘open’societies in Latvia have said, as everywhere else where the deceit worked, in Estonia, Ukraine, Romania, Bulgaria, or elsewhere (10).
Nearly a decade after independence, the economic ‘meltdown’ has generated unprecedented historical cases of spontaneous local hunger strikes in Latvia. It became clear that the austerity enforced from abroad also brought decline in that country.
Latvia recorded one of the most serious economic crises in the world in 2007-08. Equally, it was accompanied by a demographic one, and the euro introduction was the main pretext for tightening the belt further. The ‘friendly economic reforms’ coming from the West created a new model of kleptocracy – locals and foreigners closely united in the secrecy of plundering, at night, together. In the Chile’s ‘Chicago Boys’ from the late 1980s style, the experts from Georgetown, a Washington district, who arrived in Latvia, did the same: they demolished social security and industries, and leased the government to local associates. The new pagan deities, with prayer and sacrifices altars and statues in all the corners of the country (ATM machines), were corporate capitalism, the free market economy and liberal democracy. Fallen into the hands of banks, of foreign capital and kleptocracy, real estate, taxed softly for its owners, was put up for sale to the public at exorbitant prices, much higher than the market value – see Romania 2007-2009. On the other hand, the remaining labour and industries were drastically taxed, sometimes by 59%. It was, say Latvians and foreigners, an out of control economic experiment, worse than a foreign military invasion. When they spoke of Latvia, neo-liberals called the austerity and emigration ‘stability’, even economic growth and recovery, as long as people did not complain, or did not actively claimed an alternative.
Meanwhile, Latvia’s political life has been and continues to be dominated by oligarchs, corruption, influence trafficking, control on the democratic institutions, of the press, etc. Russia, through the ethnic party Harmony of Latvian Russians, which is strong in Parliament, business, society, media, culture and, especially, in foreign relations, permanently remains an alternative to governance, an alternative to pro-EU, pro-NATO, pro-West political groups in general.
Will the biggest danger come to Latvia from Russia? In Riga, but also in Washington, realistic experts suspect someone else. They say that corruption has reached, in that country, levels which remove it from the legal and economic fields and make it a national security issue. While nationalist politicians accuse the Latvian Russians of being a 5th Column of Moscow, shocking testimonies have been published in Riga, that the real danger is the oligarchs, those who, pursuing personal gain, are hijacking the democracy and weaken the state institutions. Many fear that Russia could destabilize Latvia using the Russian media to stir up the Russian population in Latvia, considerable in number (11), but the evidence suggests that the local, greedy without measure elites would be ready at any moment to demolish the Latvian state (12).
Since the 1990’s independence, Lithuania has undergone major post-communist transformations and a number of transitions in different fields. The former Soviet republic became a democratic and liberal state, the former socialist state became a member of NATO and the European Union, with a market-economy etc.
And, contrary to all expectations, also since 1990 up to now, from a stable country, with a former functional economy, a reasonable gross domestic product, with the problems of real-estate, social and medical assistance solved, with a decent urban standard of living, but also rural, it became a country of exile, of massive emigration, with an inert population, disinterested in the EU, NATO, parties and politicians and living, not a few, on the edge of poverty, and with a political class present daily in courts, for corruption.
The political pluses mentioned at the beginning imposed dramatic costs.
In recent years, net migration from Lithuania has been the highest in the whole European Union, surpassing even those from Romania and Poland (13) and, due to the extensive emigration among youth people, this country records the fastest population aging rate throughout Europe. It is understood that these demographic movements continue to have drastic consequences for the labour market, social security system and, ultimately, economic development. Austerity has generated a continuous demographic crisis, forecasts show that, from 3.69 million in 1990, the country’s population will decrease to 2.82 million in 2030, a percentage decrease of 24%. The long-term recovery seems to be compromised, despite the optimistic rhetoric of politicians about improving macroeconomic performance. For example, villages lost more than 50% of the inhabitants, departures transformed into a true depopulation, the Lithuanian rural area became a declining world, a world of the elderly, with an economic level stuck in the poverty range (14).
Population’s mobility free of any control, so highly glorified by the European Project, in reality generated a dangerous instability, on the eastern, Lithuanian periphery of Europe. Today, Lithuania is supported by the forced import of euro currency and the export of its emigrants. The large emigration determined the government to look for solutions on maintaining the population in the country. On December 1, 2018 a long-term national plan, mainly targeting the youth, was adopted for the 2018-2030 period. Subsidies, free tuition, flexible work schedules, substantial tax exemptions for future pensions are provided, yada yada. But there is a general skepticism about these programs. Experts and the public opinion say they are cumbersome, bureaucratic, resembling past failed experiences, that they are ‘a package of documents born already dead,’ drawn up by a gang of bureaucrats on the payroll of politicians, said a future candidate in the 2019 presidential election (15).
Under these conditions, in Lithuania the former crisis of the planned economy from the time of socialism has transformed into a current crisis of the unplanned, free market economy from the time of capitalism (16). Despite serious economic performance, labour productivity is only two-thirds from the average of West-European’s, due to professional qualification and lower quality of work. Wage inequality, very high social contributions and strict labour market regulations mean that about 17% of the population lives in relative poverty, with an income below 50% of the average, women, young people and the elderly being particularly affected (17). After years of decline, the illegal trade in alcohol and cigarettes is growing again, as revealed by a study by the Lithuanian Free Market Institute in Vilnius. In 2017 the underground economy took over a high percentage, 24%, of the national market for alcoholic beverages and tobacco (18). Despite numerous incentives, foreign investors are reluctant, and as a consequence the national labour market ‘froze’, public opinion polls show that many Lithuanians are disappointed by the social and psychological climate in the country (19).
In a few words, the previous difficulties and failures, caused by the mega extension of the EU in 2004 in 10 countries and by the accession itself, have now been replaced in Lithuania by the social failures brought about by neoliberal austerity.
In May 2009, the former EU Commissioner for Budget and Finance, Dalia Grybauskaite, was elected President of Lithuania. The elections provoked a wave of criticism regarding the country’s political life, and the opinion that outstanding leaders are missing got emphasized. In that 2009, the public confidence in the government was the lowest of all the previous 20 years, the parties taken together managed to gather a ridiculous percentage of members, of only 2.8% of the total population, and the presidential election turnout was the lowest in the whole EU. With a bruxellocratic president, similar to Estonia, it is easy to understand that Lithuania has also unconditionally followed EU policies, including economic ones. As a result, the crisis control plans in this country have also resulted in increased taxes and duties, drastic reductions in public spending and social benefits, as well as a decrease in the number of state employees. Unlike Tallinn, however, Vilnius has made a slightly more pronounced change in foreign economic policy and taken a more pragmatic approach towards some eastern neighbours, Belarus and others, and to some extent Russia (20). Grybauskaite, as suits to a zealous brussellocrat, is not one of Donald Trump’s fans either (21).
In the last year, the Grybauskaite administration has made obvious efforts to integrate Lithuania into the free market democracy model and Western value system promoted by the EU institutions. However, the local political intrigues and manoeuvres and the long-winded reforms have had unfavourable consequences on the political management. The apathy and the public’s removal from the political processes deepened, as did the citizens’ participation in civil-administrative affairs. The crisis and recession accentuated these negative trends, the national budget has diminished. The deficit of the public sector has increased, ‘consolidated’, similarly to the unemployment. Lithuania’s austerity policy successes, proclaimed by local neoliberal politicians and economists and EU ones, are strongly challenged by its social and economic consequences, such as the on growing national debt, emigration, lack of work, negative demographic change, strong income inequality in the urban area, social exclusion and poverty especially in the rural area what little there is still left of it, the deterioration of the health system, the misery and the perpetual financial crisis of ordinary people. Moreover, Lithuania is probably the best spot to see from in all East, how the permanently installed policy of austerity contravenes the very fundamental principle of ‘social Europe’ obsessively trumpeted by Brussels, but also contravenes the representative democracy, which places first the role of state as the guarantor of citizens’ welfare.
In Lithuania, 2017 was preceded by a year of political turmoil, all parties showed signs of instability which, Western analysts believe, could influence the country’s democratic governance (22). Its political stability faces a very high ballot absenteeism, and a pronounced apathy regarding the population involvement in any kind of actions, social, or administrative, and all these around the triple elections of 2019, presidential, local and for the Europe Parliament. On the other hand, however, the same numb Lithuanian society strongly rejected the guarantee of legal rights for minority sexual groups. A new law, adopted in 2017, clearly defines the family as a union between a man and a woman, Western LGBTs have been disappointed and anxious about this ‘discrimination’ which surprisingly emerged in the docile Lithuania…
Despite the economic growth recorded by the Bank of Lithuania at 3.3% in 2017, the issue of socio-economic inequality has become extremely serious. The income gap in this country is one of the largest in the EU, 20% of its rich people earn five times more than 20% of its poor. Also, in the following year, corruption continued to take ‘the lion’s share’, involved top politicians from four of the six parties represented in Parliament, and public institutions managers. 48% of the population believes that this is the most pressing problem in the country.
Following the 2008 financial collapse, Lithuania’s governors assumed that they found the solution to remove all the hardships of crisis, austerity, unemployment and mass emigration. Under the slogan ‘It is not only a job, but also a vocation’ displayed in Vilnius and on all roads, they introduced the compulsory military service and went on to militarize the country (23), in fact a manoeuvre to keep the working population loyal, in the absence of any real material incentives. Of course, it was said that the Lithuanian citizen was made into a soldier to defend Lithuania against ‘the other’. An ‘other’ – guess who? – the one that in the last 28 years no longer appeared. But, this manoeuvre to divert public attention had an unexpected result, tens of thousands of Lithuanians went out into the streets, first in Kaunas on May 14, 2010, under the anti-slogan ‘We will not serve’ neither the neoliberal state, nor the Army and neither the business owners.
In Lithuania, as in other parts of the East, the hegemony of a West delegitimized by its own excessive export of liberal democracy and economic neoliberalism, of corporate capitalism, survives.
(to be continued)
RADU TOMA, ROMANIA