by Atis Lejins at Saeima, 25-01-2018
“As you may have noticed, we live in strange times.” This was said by the American writer George Saunders last year when he was awarded the Man Booker prize.
We know only too well what these strange times are and therefore I will not dwell on them other than mentioning that from 2010 untill 2017 the success of populist parties in elections grew from 7% to 35%. We have only seen this once before – in the 1930’s shortly before the Second World War. I will return to this phenomenon at the end of my speech, because such a rapid rise in populism could have effected and may effect our security in the future.
If we look at our three foreign policy priorities which we spelled out in this house last year, then we see that much has been achieved except in one, the third priority.
But first things first.
The first priority was, and still is, to strengthen our external security in close cooperation with our allies and NATO partners the USA and Canada. It is hard to think what more we can do. Everything has gone according to plan and is still proceeding as planned. The USA has strengthened its armed forces in Europe and the Baltic States have received 100 million dollars in military aid for the next three years.
One has to wonder sometimes what goes on in Putin’s mind. It’s one thing for Russian jets to encroach on our airspace, or that of the Nordic countries, or even Canada. But to do the same against the USA in the state of Alaska?!
Last year we were afraid that a deal could be struck between the USA and Russia at our expense, because the new American president was the first US president who did not mention the Fifth NATO paragraph in Brussels, even though it was in his text. We were not the only ones. Christoph Heusgen, Merkel’s foreign policy and security advisor, has acknowledge: “One of the issues we were most worried about from the early news where the Trump administration would go was that they would make a deal (with Russia).”
It didn’t happen and could not have happened. In spite of the rhetoric, both sides of the Atlantic have returned to the conviction that the one side cannot do without the other. As Bruno Kahl, head of the German Federal Intelligence Agency has said, Russia is no longer a strategic partner of Germany, but a potential danger. I would add, and not on account of Germany!
Russia is heavily involved in German politics. The Kremlin has built a comprehensive propaganda network in the German language and has hired prominent Germans as Russia’s lobbyists, foremost of whom is the former chancellor Gerhard Schroeder.
The second priority is continued engagement in the development of a united and secure Europe. This is being done, but, of course, much more has to be done.
If we look at defense, a good beginning is PESCO, which all three Baltic States have joined. The European Defense Agency has been established, but the money that has been budgeted, one and a half billion euros, is small change. Europe can no longer pay four dollars for defense for the same value that the USA gets for one dollar. It would not do if the world started to look down on Europe for not being able to get its act together.
Let us watch how the German-French protocol to invent and produce a fifth generation jet fighter will proceed. Earlier France competed with Europe’s “Eurofighter”, now, together with Germany and other countries, it will cooperate to build a new jet. Because of “Brexit”, Great Britain will be left out, though it took part in the “Eurofighter” project. We are not just talking about a future fighter plane, but a whole weapons’ development program, including heavy tanks. This will be real money, and we must see if Latvia can join. Certainly it will be a challenge for our scientists.
Now a few words about big politics in Europe.
With regard to “Brexit” one sees that the “remainders” are growing in numbers, and it is said the in both houses of parliament a bipartisan silent majority has formed that would like Britain to stay in the Single market and Customs union.
And no less than a miracle has happened in France with the victory of Emmanuel Macron in the presidential elections. At one moment it seemed that a “Franxit” would follow “Brexit”, but then Joan de Arc appeared, this time in the form of a man, and everything once again settled down on secure foundations. Macron not only saved France, but also the EU, and perhaps also NATO.
Allow me to offer you a short conversation that took place between two presidents in the posh Palace of Versailles last May between Macron and Putin. Of course, I have used a little poetic license in recapturing it, since the press conference took place after the meeting.
Macron: Mr President, tough luck. Your candidate lost.
Putin: Please! I only received Madam Lepen in my residence as a sign of friendship between our countries. After all, she did want to lift the sanctions.
Macron. Not only that. But in future?
It’s not clear what Putin replied, but after this meeting Lepen did a somersault on “Franxit” and the euro.
The third priority is the most difficult, i.e., to further proceed in fostering stability and development in the EU’s Eastern and Southern neighborhood region. Actually, this priority blends with the already mentioned first two priorities.
As we can see, nothing much has changed on the eastern front. The EU and America maintain their Russian sanctions. The grabbing of another state’s territory in Europe simply cannot be tolerated!
On the southern front – also little has changed, but one can readily see that the conflict between Saudi Arabia and Iran could escalate into war. Presently the fighting is contained in Yemen. The war in Syria continues relentlessly. And it seems that a two-state solution for Israel and Palestine is not in the cards for the foreseeable future, if ever.
But the foremost challenge for Europe is another one.
This is uncontrolled immigration, illegal migrants, who, exploiting the Syrian refugees fleeing from war, surged into Europe and threatened the political stability of several EU countries. In order to regain control of the EU southern border, the member states established the Border and Coast Guard Agency withing the “Frontex” framework. This was quickly done during the refugee crisis in 2016. Our contribution to this and “Frontex” as a whole has been significant. Latvia has gained in prestige, and who knows, perhaps one day our effort could outweigh an infantry battalion for our security.
But there is another challenge which is increasingly looming in the future. Nigeria has almost 200 million inhabitants; after another ten years this number could well grow to 300 million. Despite being a very rich state, it is also the worst governed country. Of 159 states where inequality has been measured, it has been placed at rock bottom.
Dramatic climate change is taking place, Sub-Saharan Africa is becoming ever dryer. It is not hard to see that from this region will come ever greater pressure on Europe’s border. Already now the biggest number of refugees in Libya come from Nigeria. The problem has been recognized in the foreign minister’s written statement in that the EU must concentrate its economic cooperation funds for this region.
Latvia is also hit by climate change. Kurzeme’s coast is giving way to the sea. We should recognize this in our security and foreign policy documents, so that any lobby is unable, for example, to have young trees chopped down along the coastline.
In conclusion I will return to populism.
The data I mentioned on the rapid growth of populism was taken from an interview in the FT with the New Yorker Ray Dalio, the world’s biggest hedge fund owner. His wealth amounts to 160 billion dollars, that is almost two thirds of the Finnish budget, which is 237 billion dollars. It pays to remember that Latvia’s living standard was equal to that of Finland’s before the war. What had to happen so that our budget adopted last year amounted to only 9 billion euros; in dollars, a bit more than 11 billion?
Dalio foresaw precisely the 2008 crash of banks and credit markets. Now he warns – if inequality is not decreased, then in the future it will be not economic data that will determine market dynamics, but rather political conflicts. In other words political issues will be more important than macroeconomic issues since more than half of the people have not felt economic recovery.
I would like to think that the reforms, including tax reform and the modernization of our Internal Revenue Service, which we legislated last year, will bring increased prosperity to Latvia and a decrease in the inequality gap.
I want Latvia to belong to that group of countries where inequality becomes smaller instead of bigger. A good indicator is that more and more of our economic migrants are returning, but now, in our 100th year since the establishment of our state, we should have more of our citizens returning than leaving.
Still, is it not strange that we had to wait until we joined the OECD before we understood that we have to rid ourselves of malicious insolvency and corrupt judges that found their way into our judicial system. This cost Latvia some 650 million euros over a span of seven years. If we complete our reforms Latvia will have the means to build a reserve fund for the future and attract bigger foreign investments.
Then we will be able to say with conviction that the return on the two million euros spent on gaining entry to the OECD will have been one of the best investments we have made as a state. There is still time for this Saeima to lay the foundations for next year’s budget so that it tops 10 billion euros.
Actually we should have had such a budget this year, instead of 8.7 billion, if we had started with our reforms earlier. This is just a reminder, let us not stop halfway. Let us celebrate Latvia’s 100 year birthday with good works and not just events!
This would be the best gift we as legislators can give Latvia in our centennial – for Latvia’s future, security, and prosperity. And Latvia’s prestige in foreign policy!
(the italics is the text I wanted to say but, due to time limits, was not able to do so)