8th Dec 2021

Latvian government could fall as crisis bites

  • Tractors blocked roads in Latvia in the second such protest in a week (Photo: EUobserver)

As unrest spreads in Latvia as a result of the worsening economic crisis, the government faces a no confidence vote in the parliament on Wednesday (4 February).

The vote could see the first European Union government - and the second in Europe after Iceland - felled by the financial and economic turmoil that has hit Latvia harder than most other states in the 27-member bloc.

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On Tuesday, the country's agriculture minister resigned in the wake of farmer protests that blocked the main road around the capital, Riga, and saw the agriculture ministry building surrounded by tractors.

The farmers lit bonfires outside the ministry building and demanded the minister resign.

In imitation of similar actions by Greek farmers in recent days, thousands of tractor-driving farmers headed to Riga, bringing traffic to a halt on a number of motorways - the second such action in a week.

The government convened an emergency meeting out of which emerged €34 million (22m lats) in fresh aid for the farmers. Shortly after Prime Minister Ivars Godmanis announced the decision, the agriculture minister, Martyns Roze, fell on his sword.

The economic crisis has bludgeoned the country's farmers, whose productivity has slid as prices plunge. The losses are bankrupting rural Latvia, with producers unable to pay their loans and processing firms going out of business.

Some 15 million lats is to come from the State Forests budget and another 7 million from the Latvian Privatization Agency. The aid amounts to around 5 million lats more than originally planned.

A system of export loan guarantees is also to be established for dairy farmers, which, according to the prime minister, will temporarily save the sector from bankruptcy.

The industrial sector has also dropped off the cliff, with industrial production dropping 2.5 percent in December, equal to a year-on-year decline of 14.2 percent, according to figures released on Tuesday by Statistics Latvia. The fall comes atop an already steep drop of 3.1 percent in November.

Manufacturing has been pummelled in particular, seeing a decline of 18.2 percent on an annual basis.

Some 70 percent of the people have lost faith in the government according to polls and last week, the Union of Greens and Farmers said it would abandon the ruling coalition if the government did not come up with additional aid for farmers.

The prime minister approached opposition parties to join the government, but they all declined his offer.

Meanwhile, the country's neighbour, Lithuania, is itself seeing fresh protests, a fortnight after riots over the economic crisis hit the capital.

A small demonstration of some 200 people, many of whom pensioners, was countered by 500 police officers and a kilometre-long fence was put up to protect the Seimas, the Lithuanian parliament, from the "unsanctioned protest", according to Vilnius police commissariat spokesperson Loreta Tumalaviciene, the Baltic Course newspaper reports.

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