ECONOMY | 30.03.2010

Broad support is crucial for tough reforms, Latvia's president tells Greece

Since his election Latvia's president had to face tough economic times

Last year Latvia became the first EU country to receive a bailout. After drastic cuts, the situation improved. The Baltic state can offer some advice to Greece, Latvia's president tells Deutsche Welle.

Valdis Zatlers has been President of Latvia since 2007. A trained physician, he served as director and chair of the state hospital of traumatology and orthopaedics from 1994-2007. In 1986, Zatlers worked as a medical service officer in Chernobyl following the nuclear reactor accident there.

Deutsche Welle: Latvia faced severe economic difficulties a year ago and had to get financial help from abroad. How is your country coping today?

Valdis Zatlers: Now we are feeling much better than a year ago. It is very important to understand by the politicians as well as by society that we were in deep trouble and that action by anybody and everybody is of crucial importance. We were successful because we created broad political support, we extended the coalition behind the rescue plan and it worked for the first year very good. You need that, because it's much better that discussions take place in the government and not over the public media. That creates more confidence from the society.

We made brave budget adjustments where we had to adjust one-sixth of the budget, and implement a wage cut of about 36 percent. As you can imagine, this is not an easy thing to do. And since we were the first, the entire world was watching us. We had no other chance than to cope with all those difficulties.

We are stabilizing the situation right now. The figures are recovering and the most important thing is to keep the public's support for the plan for the next few years. Because this is not a rescue plan for one year, it's a rescue plan for four years and the end point is joining the euro in 2014.

You have received money from the International Monetary Fund which has been a contentious issue in the rescue debate for Greece recently. How have you handled and experienced the relationship with the IMF?

We had a team of supporters which included the coach, the European Union, and we highly appreciate the EU's assistance because 80 percent of the funding came from the EU. And we had a policeman, that was the IMF, checking our actions and estimating and evaluating the measures we had taken. And we had a nanny, the World Bank, which took care of our social programs and restructuring. The good cooperation of all three led to the success. We really appreciate that all three were present.

After what you have been through, what advice can you give Greece, which is also in dire economic straits right now?

The difference between Latvia and Greece is that we were pegged to the euro, but we were not in the eurozone, so we had all the disadvantages of being pegged without the advantage of being in the eurozone. Greece has a much better situation, the eurozone's prestige and the EU's assistance is much stronger than what we could get. But there are a lot of things they have learned from our experience, because it's a recent experience with similar conditions, just on a smaller scale.

There seems to have been much more public opposition to "selling" a solution to the public in Greece than in your country and in the Baltics in general. How do you explain that and can you give some concrete advice to the Greek government on how to deal with the public and make severe budget cuts?

You have to be in a permanent process of negotiations with all the non-governmental organizations, with all public partners and most importantly with the population. You need to reach every person in the country and make him understand that it is his problem too. The country depends on the people and not the people depend on the state.

Interview: Michael Knigge
Editor: Jefferson Chase

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