2024-05-01 04:27:18
In Šteinbuka’s view, Latvia’s development over the past twenty years can be divided into stages. She called the first a “phase of euphoria”, when after joining the European Union (EU) growth rates were high, up to 10% per year. According to Šteinbukas, it seemed that Latvia would immediately succeed in reaching the level of prosperity that it has, for example, in Germany, but it turned out that such a development was unhealthy.
“Despite warnings from both the European Commission (EC), the International Monetary Fund and other allies, the politicians decided otherwise. If the global financial crisis had not occurred, perhaps nothing tragic would have happened, but this crisis had a profound effect on Latvia,” concluded LU professor.
According to her, Latvia’s level of backwardness compared to neighboring countries can be traced directly to the 2008 crisis. At that time, it was necessary to find a solution to save the situation. Steinbuka said that she well remembers the words of the then Prime Minister Valdas Dombrovskis (JV), namely that this will be a “government of suicides”. “The ‘suicide government’ has actually done the impossible. It doesn’t happen often when the case of Latvia is described in textbooks, in which way tightening the belt or a drastic reduction of budget expenses allowed the country to enter the Eurozone after a few years,” said the professor of the University of Latvia.
She pointed out that, according to the conducted survey, Latvian residents consider joining the eurozone and the introduction of the euro as the fifth main achievement of being in the EU. Steinbuka emphasized that Latvia was more competent when faced with future crises, such as the Covid-19 pandemic or the energy crisis.
“Latvia had macroeconomic stability, fiscal discipline and, most importantly, the euro, which increased the trust of potential lenders in the Latvian state and we were able to borrow cheaply, which was not possible at all in 2008. This is one of the important achievements and benefits of the introduction of the euro, which probably is not as obvious as, for example, going abroad and not changing the currency,” said the LU professor.
ES Šteinbuka called the next stage of Latvia’s development a stage of moderate growth. According to her, at that time all of Europe could not recover from the experienced global crisis. Investors were also cautious and for several years there was a gap between the necessary investments and the real investments in all EU member states, but in Latvia this gap was larger, and therefore the growth was more moderate.
“We thought again that we would be able to achieve a breakthrough, but then the capital overhaul of the financial system began. It was absolutely necessary for Latvia to preserve its reputation and image, but then the Covid-19 pandemic came, which no one expected. Strict regulation of the banking sector scared away investors a little , who chose to invest in our neighbors, not in Latvia. The starting position was not the best for us during the pandemic,” said Šteinbuka.
She explained that no growth could be promoted during the pandemic, but when the pandemic was over, the war in Ukraine and the energy crisis began. The LU professor emphasized that Latvia’s development went like waves, but the growth trend was upward.
“We say that we are lagging behind our neighbors. Yes, we are lagging behind, but we are not a poor country. This is another myth, along with the fact that Latvia has destroyed its industry. The share of industry, if we look at the added value, is 30%. Yes, There are more in Lithuania, but we cannot say that we have destroyed industry in Latvia,” said Šteinbuka.
She emphasized that the people of Latvia highly value not only the introduction of the euro, but also the security promoted by both NATO and the EU. The second benefit appreciated by society is the opportunity to travel freely, the third achievement is the availability of European funds. The LU professor pointed out that there have been good and not so good projects to learn EU funding, but if there were no European funds, the growth of the gross domestic product would be 8% lower on average per year.
“You can always look for something bad, but you have to look for the good. Looking to the future, one of our challenges is accelerating growth, which depends on investments, innovative projects. If we talk about investments, they can’t always be European funds. We can’t all our lives” “to sit on a needle” and be completely dependent on European funding, Steinbuk said.
She emphasized that it is necessary to promote private investments, to try to find funds in the state budget, and to look at private banks that can provide credit for development. The LU professor admitted that there are many obstacles. Both the EC and the OECD have been providing Latvia with various advice for many years. Steinbuk pointed out that they do not necessarily have to be implemented immediately, but they mark the direction.
“The situation is difficult, because geopolitical tensions make our efforts uncertain. We live in uncertainty. In EU member states, the economy is stagnating, in one country more, in another – less. Latvia also has problems with human capital, education and so on. But there are things that do not require large state efforts budget investments, for example combating bureaucracy. We could deal with it if we had the political will,” said the LU professor at the end of her speech.
It has already been written that the study “Latvia in the European Union – 20 years”, which, based on current data and analysis, continues to evaluate Latvia’s achievements in the EU. The previous studies looked back at Latvia’s achievements, marking respectively the 10th and 15th anniversary of Latvia’s accession to the EU.
The authors of the study are Žaneta Ozoliņa and Šteinbuka, the leading researcher of the University of Latvia, who worked on the study together with the Latvian Association of Political Scientists and the public opinion research center “SKDS”.
The study analyzes both overcoming the financial crisis and ten years of experience, as Latvia is a member state of the eurozone, as well as the Covid-19 crisis and the EU’s role in mitigating it. The study also looks at the challenges of inflation and growth and the importance of EU budget funds in the development of Latvia.
The study also examines the public’s attitude towards democracy, Europe’s response to disinformation, the aspect of public trust, as well as Latvia’s involvement in European-level decision-making, aspects of the expansion of Latvian politics and challenges in the field of security.
2024-05-01 04:27:18