The new economic doctrine of PM Krišjānis Kariņš: Transit is harmful to the Latvian economy

At the Saeima sitting, the Prime Minister Krišjānis Kariņš, in response to the comment of the deputy Nikolajs Kabanovs (Harmony, Saskaņa), pointed out that the main evil to the Latvian economy so far has been the transit business.

K.Kariņš's theses on the causes of Latvia's economic disasters expressed in the Saeima debates on March 11 this year have slipped almost unnoticed by the public.

At the remote extraordinary sitting of the Saeima on March 11, K. Kariņš presented his annual report to the Saeima on the work done and planned by the Cabinet of Ministers. After the speech, the deputies of the Saeima commented on what he said, and then the Prime Minister gave them answers.

Responding to the statement of the deputy N. Kabanovs, K. Kariņš stated the following: “Mr. Kabanovs, you are talking about what has, in my opinion, held our country behind in development for some 10-15 years: this outdated idea that transit will save us - a bridge between East and West. So where did it take us? We transport, transported oil products, coal, minerals, bulk cargo to our ports. When crossing our territory, /these cargoes/ go to the port and are sent out. Individuals may get rich from it, but unfortunately the country does not get rich from it. The money transit business, which you praise - the financial sector, as it worked for some time: there, individuals became very wealthy, but if you noticed, when the largest bank began the process of self-liquidation, the impact on GDP was completely imperceptible. It only shows how far this business was actually completely separated from our economy.

And this transit thinking - buy, sell, transport, we will get rich - because of this we are not rich. I will say the opposite of what you have said - this is the thinking that has impeded us for a long time. The vaccine for this is the smart reindustrialisation, which means jobs and wages for people, not wages for a couple of people who are able to earn in such a monopoly position simply at the expense of transit.”

By the way, N. Kabanovs, commenting on the official report of Prime Minister K. Kariņš at the Saeima sitting, did not mention transit business at all, but said the following: “Last year, Latvia's foreign trade deficit was around two billion euros. This negative balance between exports and imports was directly due to the mistakes of your government. Namely, the data of the Finance Latvia Association show that since the end of 2015, the value of Latvian banks' assets has decreased by 23 percent or 7.38 billion euros. If we count, it will be the same figure that Latvia borrowed from the European Union and from the financial market. This is the culmination of your so-called overhaul of the financial system. Thanks to the recommendations of some countries outside the European Union, Latvia destroyed an entire sector of its economy, and, as the Governor of the Bank of Latvia, Mr Kazāks, said today, we are no longer a bridge between East and West. Of course, I also like the concept of reindustrialisation, but let us remember the sad fate of Latvian metallurgy, which your government unfortunately did not promote. It is certainly very good that there are technology companies with 200 employees in Latvia, but let us also remember that just recently a large food company ceased to operate in Latvia. It was a simple bakery owned, by the way, by the capital of the same Northern Europe that you suggested we all follow. And so the Nordic country evaluated the actions of your government, Mr Kariņš. I think your time is up.”

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