RIGA — Several opposition lawmakers helped Latvia avoid a political crisis by throwing their support behind a bill that gives the government the right to conduct negotiations with international lenders.
Had the mandate not been granted the country would have been deeper into economic and political chaos.
Fifty-four MPs supported the bill, including seven from the Latvia’s First Party/Latvia’s Way faction in the opposition. Twenty-two voted against and three abstained. The opposition center-left Harmony Center did not participate in the vote.
Opposition support was necessary for passage since the People’s Party, a senior coalition member, has said it would not support the bill and instead proposed its own version.
The blatant rift in the coalition on such a basic, crucial mandate — without it Prime Minister Valdis Dombrovskis would have been hamstrung during talks with lenders such as the IMF and the EU — testifies to its awful fragility.
Speaking to lawmakers before the vote, Dombrovskis said that without the mandate Latvia would have difficulties receiving funds from lenders and meeting its obligations, including pension payments.
There is no small amount of irony in the mandate issue. The previous government of Ivars Godmanis was able to hold talks with lenders without such a mandate, as was Dombrovskis when he took over the reins last March. However, in a recent ruling the Constitutional Court stressed that Latvia is a parliamentary democracy and that the government’s practice of signing large loans with international lenders was dubious and should require approval by the Saeima.
The ruling set off a chain reaction that eventually led to an increase in the rift between New Era, Dombrovskis’ party, and the People’s Party, which is low in opinion polls and fighting for survival.
The People’s Party’s version of the mandate would have imposed tougher constraints for the government in dealing with lenders.
In Dec. 2008 Latvia signed a three-year €7.5 billion aid package with the IMF, EU and other lenders to avoid bankruptcy and help stabilize the banking sector. Latvia is due to receive €800 million in the first quarter of the year.
