Cicero's Songs

The three Eastern Baltic countries, Estonia, Latvia and Lithuania are relatively new constructs. Their languages are among the most ancient spoken in Europe, but their national identity was only slowly constructed, culminating in the late nineteenth century. Their political identity might have remained bound up in the Russian Empire had not that entity collapsed into murderous barbarism under the hammer blows of the evil of Lenin and Stalin. As a result of the collapse and the simultaneous fall of the German Empire in 1918, Estonia, Latvia, and Lithuania together with Finland and Poland were able to construct independent states- in the case of the Baltic three, for the first time in 700 years.  Yet within twenty years of their creation they were subject to a monstrous conspiracy between a Russia under the rule of the psychopath Stalin and a German under the rule of the no less wicked Adolf Hitler. The first consequence of the Nazi-Soviet pact was their joint attack on Poland. T...

It is not often that a country has the constitutional right to dissolve a Parliament by referendum. It is even rarer that this right is exercised. Thus the decision by the Latvian voters,to dissolve the Latvian Seima , and by a fairly substantial margin is a fairly unique set of circumstances.. But then again Latvia is a fairly unique country. Latvia came under intense pressure as the Great Recession began- its largest domestic bank went under, and the government budget fell out of control. The result was not chaos but determination. The technocratic government of Prime Minister Valdis Dombrovskis slashed the budget, rescued the bank with the assistance of the IMF, and set about getting Latvia's economy in order. The result was a recovery nearly as rapid as the initial collapse: a classic V shaped recession. More impressively still, the Prime Minister was able to be re-elected. Unfortunately that government was forced to rely on a disparate party: the "Greens and Farmers"...

I had meant to blog on the profound ignorance that both the Conservatives and Labour have displayed on the subject of Latvian history. That the history of the Baltic could become a political football in the UK is the result of the frankly disgraceful way that Labour have tried to target the Conservative alliance with the Latvian For Fatherland and Freedom Party in the European Parliament as somehow being an alliance with "Nazi sympathisers". The lone MEP from this party is the former finance minister, Roberts Zile, who I have met several times. Quite frankly he is no more a Nazi than I am, and it is ridiculous to cast this thoughtful and humorous man in the manner that, for example, David Miliband has tried to do. I said I was going to blog, but to be honest, this piece from The Times by Ben McIntyre says it all so precisely that I don't need to repeat him. I think the Conservative alliance is absurd, but it is not absurd because of their alliance with Roberts Zile. It is...

A few weeks ago a senior Estonian political leader said to me that he believed that the biggest threat to Estonia's security came from Latvia. It was not, he explained, that he had any ill-will towards Estonia's southern neighbour, but their failure to get to grips with the economic crisis could have paralysing consequences for the whole of northern Europe, including Estonia. Now concerns about Latvia are once again increasing. The emergency financing from the IMF and the EU needs to be rolled over and the government is going through a budget process that is contemplating massive cuts in expenditure, despite the fact that the Latvian economy has already shrunk by nearly 20% year on year. As the respite given by summer tourism now comes to an end, the Latvian government is facing what looks like a moment of truth. Although both Estonia and Lithuania have enacted generally coherent and organised responses to the economic crisis, Latvia's leaders have descended into a wave of...

The economic news has seen brighter of late- the dramatic interventions by the central banks are said to have brought a return to stability in the banking system. It is true that the financial system no longer seems to be evaporating before our very eyes. However the impact on the real economy of the wrenching shock to the banks is only now becoming plain. In fact, international banking system, through a combination of renegotiation and tight liquidity, is seeking to recapitalise itself as rapidly as possible- and several money centre banks such as Barclays and Goldman Sachs are repaying their emergency loans very quickly. The result is that despite the very loose liquidity offered by the central banks, the actual interest rates paid by corporates to the banks has actually increased substantially- and credit is still in very thin supply. The increase in the cost of money and the dramatic slowdown in demand is putting industrial production in a vice across the world. Yet it is only now ...

As I have come north from Lithuania, the weather has grown more wintry. Riga, yesterday was down to about minus 10, and catching the early flight up to Tallinn this morning has brought me to even chillier climbs: it is currently minus 19. I will not make smug comments about the chaos that a little snow and temperatures of about zero have brought to London. It just irritates me that when winter comes to Southern England, their disorganization makes the tiny problem into a crisis. It is the first time that I have done all three Baltic Capitals in a single week for some years. It is interesting seeing the relative progress. Despite Labour shortages which, in Vilnius, mean that there are very few taxis, the overall picture is extremely positive. The construction boom in Vilnius is particularly impressive. Meanwhile Riga has become a bustling hub for the whole region with plenty of flights across Europe, and now beyond, offered by airBaltic, the SAS owned dynamic little airline. Ryanair are...

I am back in Vilnius, meeting with a broad selection of the great and good in Lithuanian finance. In the rather damp thaw- about +1 degree- I consider what makes Lithuania rather different from the other two Baltic Countries. Culturally Catholic, as opposed to Protestant, it has been far successful in preserving hierarchies through the various political upheavals of the past two decades. In that sense the Lithuanians feel more similar to Poles and other Central Europeans- the generation in its fifties still has control: in Estonia, and to a lesser extent in Latvia the ruling generation is on average in its late thirties. The Hierarchy can be seen in all forms of life- in education, politics and in business. Perhaps this is why I somehow get a sense of anti-climax here. The City of Vilnius has changed much- but not as much as Riga or Tallinn. The economy has done well- but not as well as Estonia or Latvia. Talking to my friends, I sense a growing frustration with the political class- th...