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ORIGINAL FRENCH ARTICLE: Le FMI en accusation en Lettonie

by G. D. S.

IMF Accused in Latvia

Translated Saturday 31 January 2009, by Kristina Wischenkamper

Riga : The Baltic States are being hit by the full force of the financial crisis. The International Monetary Fund’s stabilisation plan violates Latvian labour rights.

The Baltic countries are in turmoil. Last week ended with the Lithuanian police firing tear gas and rubber bullets at demonstrators. Some of them were throwing stones at the Parliament building in Vilnius in protest of the government’s austerity plan. Five thousand people had responded to calls from the trade unions. The demonstration was marked by 80 arrests and some 20 injured. The scenes resembled those seen on Tuesday 13 January in neighbouring Latvia. In Riga thousands assembled in front of Parliament in a peaceful demonstration demanding early elections. By the end of the protest clashes had caused injuries to eight people and led to the arrests of 126 more. These demonstrations are the largest the Baltic States have known since leaving the Soviet Union in 1991.

It has to be said that Lithuania and Latvia are being hit hard by the financial crisis. Known for a long time as the Baltic Tigers – after the Asian Tigers – due to their economic success, with economic growth some years higher than 10 per cent, Latvia, Lithuania and Estonia have plunged into recession this year.

According to forecasts for 2009 published on Monday 19 January by the European Commission, the decrease in GDP in Latvia will be 6.9%, in Estonia 4.7% and in Lithuania 4%. Hence the governments’ restriction plans. Reviving the market is hazardous. As in all three Baltic countries, Lithuania has reduced public spending to 40% of the GDP these last years. At a time when domestic spending is suffering, there is little room to manoeuvre to get it moving again.

And worse still, Riga finds itself cutting civil servant salaries by 15%. It’s a measure dictated by the IMF’s terms, which, along with the European Commission, gave a 3.5 billion euro loan to Riga in December. A measure little appreciated by the Free Trade Union Confederation of Latvia (LBAS). LBAS president Peteris Krigers complained, “The government’s and IMF’s attitude has neglected Latvian society.”

He continued, “Instead of asking the unions and the employers to participate in creating an economic stabilisation plan, and thereby reducing the risk of making incorrect decisions, we are only told about these decisions once they have been made." Moreover a union report accuses the IMF’s plan of “breaking collective agreements in hundreds of businesses […] which is a violation of the recommendations of the International Labour Organization”.

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