December 10, 2008 (The date of publication in Russian)
Latvia's secret police detains a scholar for "indiscreet" interpretation of the financial crisis
Global wires sometimes highlight events that resemble rather stupid jokes than reality. However, the arrest of a university teacher of economics for admitting the fact of the global financial crisis is a real story. More surprisingly, it took place not in a "banana republic" with a primitive dictator willing to please his masters. The scandal broke up in Latvia, one of the three proud Baltic nations accepted to the EU unlike other post-Soviet contenders.
The Latvian secret police detained Dmitrijs Smirnovs, an assistant professor from the Ventspils University. Shortly before, rumors about criminal prosecution of economic bloggers, expressing pessimism about Latvia's financial perspectives in the situation of the global crisis, spread in the national Internet community, not being taken seriously.
Persecution of individuals for views? That sounded extraordinary for a country with a record of hard struggle for independence from the totalitarian Soviet regime. Still, it is true. Already since April 2007, a newly-adopted national law introduced criminal responsibility for "deliberate dissemination of fraudulent information on Latvian economic affairs". This legislative innovation reminds of Captain Lebedkin, a character of Victor Pelevin's novel "Dialectics of transition from Noplace to Nowhere", who dedicated himself to the struggle against financial terrorism. However, the famous mystificator was surpassed by the "fathers of Latvian democracy".
A month ago, Latvian press ridiculed the information policy of the Russian Government that reportedly "whitewashed" the symptoms of crisis in Russian economy. Admitting facts of window-dressing, we still have to address a similar grudge to Western colleagues who have chosen even a more radical method of clacking out any reminder of economic instability. Russian mass media have problems, but their excessive optimism has not reached the degree of idiocy.
Once a most rapidly developing economy (partly due to involvement of Russian corporations), Latvia is now in a deep recession. Only in the third quarter of this year, Latvia's GDP shrunk by 4.2%. In case the IMF takes back its promise to disburse a 5bln euro rescue package, Latvia may face an Icelandic fiasco.
The Latvian government chose a method of prevention not quite typical for today's Europe but well known to Russians: a blackout, or "lacquering" of reality. Like Stalin's NKVD that persecuted persons for admitting that New York is a more financially promising place that Moscow, Latvian authorities today persecute their fellow citizens that dare to doubt the nation's financial success.
In October, regional paper Venta Balss published an interview with Dmitrijs Smirnovs, in which the scholar dared to advise Latvians to keep their savings no in lats but in foreign currency. A month later, police servicemen acknowledged that they would like to talk with the informed economist. Leaving his home in Ventspils, Dmitrijs was seized and delivered to Riga, where he spent two days and nights in a prison cell. After being released, he was forbidden to leave the country. The investigation is continued, and the criminal case will be soon forwarded to the court.
"I cannot imagine the circumstances that would enable a university teacher to influence the whole of the national economy. However, Latvian police believed that my interview could provoke panic and impel the population to withdraw their savings from banks thus triggering a national financial catastrophe", Dmitrijs says.
Definitely, Latvia's open economy cannot be isolated from the winds of transformation, when huge US and European banks go bust and nationals like Iceland become bankrupt. Fitch, Moody's, and Standard & Poor's have lately drastically reduced Latvia's national rating. "We are facing a zooming budget deficit and a huge foreign debt. The IMF has estimated our prospects as very dire", reminds Smirnovs.
Dmitry emphasizes that he did not say anything new: similar prognoses appeared in international media. "After all, the patient's disease is not my fault", he explains. However, authorities explained to him that a forecast for the international audience is not the same as domestic expertise. In Soviet times, truth for the Soviet citizens was also different from truth for the outside world.
Within two months after the interview was made, Pareks Banka, the major Riga-based though actually international bank, really went bust, though this fact cannot be obviously ascribed to an article in a district newspaper that is rarely read even in Riga. Today, the Government of Latvia officially envisages a 5% decline of the national budget as well as a related upsurge of unemployment. "I am afraid that the crisis in Latvia is only in the initial phase", – comments Dmitrijs.
The witch-hunt for "financial terrorists" also appears to be yet in an initial phase. The Latvian police have launched criminal investigation against popular musician Walters Fridenbergs who dared to joke about the financial crisis at his concert. This fact aroused resentment in the Latvian Human Rights Center. Still, the indignation of intellectuals does not much impress law enforcement officials. Today, Latvian economists prefer to use Aesopian language in their lectures.
In spring, Dmitrijs Smirnovs is going to defend his theses on the subject of the national Bank's monetary policy. His official opponents will be definitely represented by the secret police. However, the scandal has made him famous: he is recognized in the streets, his photo is republished, and even Swedish TV journalists arrive for taking interviews.
It would be too banal to make conclusions from the viewpoint of the scores mentioned double standards of Western propaganda. But just imagine what would happen in case a story like that happened with a scholar in Russia.
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