Former Prime Minister Krasts Explained Why Latvia Has No Prospects 0 14

The first and biggest problem is privatization. Mass privatization for certificates was a mistake, although it should be noted that we were not alone in these decisions — there were recommendations from the International Monetary Fund and other foreign experts to proceed this way.

In essence, such privatization was imposed not only on us but also on many other countries around the world, especially in Asia. This rapid mass privatization led to deindustrialization. We lost our economic base, enterprises that could have been wisely restructured and adapted to other markets. We lost a skilled workforce in industry, which moved to other sectors, including small trade and informal business. We lost engineers and industry specialists. What could have been an alternative?

We should have gradually continued the operation of these enterprises using state resources, possibly attracting international experts. Selling in parts. But the main thing is not to lose the focus on processing and production.

This is what we almost completely lost at one point, perhaps with the exception of the food industry. With such privatization, we lost years and money. For example, compared to Estonia, we received four times less from privatization — one hundred million versus four hundred. And the Estonians had half as many objects for privatization. This money could have been invested in strengthening the state and infrastructure. Our one hundred million did not particularly help.

Banking Crisis and Governance Issues The second thing Guntars Krasts calls simply terrible is the oversight of banks: "We unforgivably let this go unchecked.

We are the second worst in Europe after Albania when it comes to losses from various banking crises.

As a result of the collapse of Banka Baltija — almost half a billion, Parex — 1.8 billion, and other banks. This was a terrible blow to the economy, the well-being of residents, and business. Money just "consolidated" and was often taken abroad."

The third mistake the former prime minister considers is governance, which was not put on a path of constant reforms. Guntars Krasts emphasizes that he acknowledges the initial idea — a civil service in which professionals rotate within the system: "Unfortunately, this did not work, and it started when the People's Party conducted a 'purge', replacing professionals with politically loyal people. This is what led to the current situation where everyone complains about the professionalism of public administration."

In the nineties, the birth rate sharply declined as social support and security systems were not created, which, as Guntars Krasts emphasizes, he began to form while being prime minister: "In the early nineties, demographics were unforgivably left to chance, and we still feel the consequences of this. We underestimate the factor of people's feelings of insecurity in those initially crazy years of economic liberalism.

Politically Appointed Officials — The Main Problem

When asked where we stumble today, Guntars Krasts responds that it is always a complex issue: "We need to start with the administration. Each of us has had to deal with people in institutions. If it is the level of a referent or specialist — usually this is a very intelligent, polite person who can speak in a structured manner. At the level of department heads — it’s about the same. Then there is the level of the department director.

At the level of deputy, you can still meet good specialists, but already at the level of department management, you encounter an arrogant, rude, and quite uneducated person. And if you go higher — to state secretaries or agencies — there are already 'emperors', as if appointed by God, who think they know everything, but in reality know nothing.

Why? Because they did not go through real competitions. It was the People's Party at the end of the nineties that began to massively replace professionals in leadership positions with trusted individuals. And now this 'beautiful' tradition continues. There are no honest competitions anymore. There are commissions, but there are no competitions for leadership positions.

This means that, in fact, a lustration of this level of bureaucracy is now necessary, starting from department directors. Perhaps those who are higher should be swapped with those who are lower.

Because the lower level did go through competitions — the parties just were not interested in this. Because of all this, we have so many problems. For example, why did Rail Baltic go off the rails? The management was below any criticism. We know nothing. Billions are disappearing, and we did not notice it. And what can we expect from politically appointed officials who lack professionalism? We need to find a way out of this erroneous state. Otherwise, Latvia will have no particular prospects in 2035.