Vilis Krištopans — Member of the European Parliament, former Prime Minister of Latvia (1998-1999), former Minister of Transport (1995-1998) and president of the “Sudrabkalni” hunting club — believes that what is happening in the European Union brings to mind the old saying: “They have it so good they don't know what to do with themselves, so they cook up trouble of their own.”
What is the situation with the European Union (EU) Green Deal? As we know, US President Donald Trump announced his withdrawal from the UN climate agreement signed in Paris as soon as he took office?
Members of both the European Parliament (EP) and the Saeima lack any real understanding of what the EU Green Deal actually is, what its real impact is (as opposed to the “social media bubble” version), what its consequences are today and what they will be in the future. In my view, if the EU wants to preserve the competitiveness of its producers on the world market, it should have withdrawn from the Paris climate agreement the very day after the world's largest economy — the United States — did so. Already today, and even more so in the years ahead, producers operating in Europe will find it impossible to compete successfully with manufacturers of equivalent products (or providers of services) outside the EU. Why? The cost base of goods produced in Europe is already “weighed down” by all manner of additional requirements, which generate costs and quite literally destroy companies' competitiveness. To put it in sporting terms, an athlete running with a kettlebell tied to their leg cannot outrun a competitor whose legs are free. Admittedly, the first green shoots of common sense are becoming visible: deadlines for introducing bureaucratic requirements set by the EU Green Deal are being postponed, proposals are being made to review the relevant conditions, and so on.
For example, the requirement (confirmation) that beef, cocoa, coffee, palm oil, rubber, soya, timber and products derived from them have not been produced in connection with deforestation or forest degradation has been put back from 1 January 2025 to 1 January 2026. I hope common sense will prevail and this pointless requirement will be scrapped altogether. It is yet another bureaucratic burden that brings no benefit whatsoever to producers in Latvia or in other EU member states.
There is now a proposal to postpone by two years, and to review, the requirements for preparing sustainability reports and including them in companies' annual accounts (in the management report) — something previously trumpeted as all but a panacea for saving the climate. These requirements supposedly apply only to large companies, but one fact is being ignored: to prepare such a report, data must be gathered from the medium-sized and small companies that form part of the large companies' supply chains. In practice, smaller players will not be required to report on sustainability in their annual accounts, but the data will have to be produced all the same. Will gathering that data, and bearing the associated costs, make anyone more competitive? Not a chance! Quite the opposite — competitiveness will fall, because costs will rise and will have to be reflected in the prices of goods and services. And that is exactly what will happen, unless common sense prevails.
Of the 720 Members of the European Parliament, only 85 currently sit in the Patriots group; the right as a whole numbers roughly 200. Many EU member states, too, are led by decision-makers who do not see, do not wish to see, or are incapable of seeing the harsh reality. Just one example: we cannot gather enough signatures from MEPs to set up a parliamentary committee of inquiry into the payments worth millions of euros made to Green Deal supporters — propagandists — under the wing of a former European Commission vice-president. In my view, those who champion the Green Deal are people who want to make money, people who have already made money, or — to put it mildly — oddballs. The desire is for every EU member state, every company and every individual to pay a tax on air (CO₂), collecting tens or even hundreds of billions of euros to be handed out by certain people for the purpose of promoting products they consider “clean”.
Unfortunately, if we carry on as we have been, then in a few years' time the EU's economic might compared with that of the United States will not be 1:2, as it is now, but 1:3. There was a time when the EU and the US were level (1:1). The EU has lost ground to the US, and there is no guarantee it will not lose ground to China as well. Bear in mind that the US has a little over 340 million inhabitants, while the EU has around 448 million, which means that US GDP per capita is already more than twice as high. If President Trump succeeds in his plan to bring manufacturing back to the US, it will be a different country altogether. Alongside building up production, he promised to cut US federal tax rates, which will also boost the competitiveness of US-based producers on world markets. This means that real life will force the EU to postpone the requirements and conditions of the Green Deal, because farmers and carmakers are already protesting loudly — and the latter are being forced to close plants, leaving tens of thousands of people out of work, whose only recourse is to fall back on national social budgets, adding to costs rather than to the revenue that a working person generates.
There is a thesis doing the rounds that growth in the defence industry will absorb the able-bodied workers released by the car industry.
No one has yet spotted a manufacturer of “green” tanks or self-propelled guns. It will be interesting to see whether tank manufacturers (companies) will also have to prepare sustainability reports. The ReArm plan essentially involves borrowing to strengthen military might, yet there are several EU member states whose debt already exceeds their GDP. That means they have borrowed quite enough; there is no scope to borrow more, and the cost of servicing the national debt is becoming critical too. This approach is not entirely fair on countries that have had very prudent stewards — Estonia, for example, with its small national debt; it is not clear why our northern neighbours should have to increase it. Since no options other than raising national debt are being considered, the eurozone and the European Union as a whole will most likely have to live through a burst of inflation, as a result of which the price of bread and fuel will rise and people will be unhappy with a situation where their wallet is full of banknotes but there is not much they can buy with them. There is also the question of what the goods produced for military purposes will be used for: stockpiles in warehouses or the battlefield — and, of course, where that battlefield might be: in Europe, in Africa, or somewhere else.
The EU can, of course, proudly announce that it will supply Ukraine with military equipment and secure its funding even without US participation — yet Statista data show that in 2022-2024 US support amounted to a little over 119 billion US dollars, while support from EU institutions came to 52 billion US dollars, Germany's to 18.1 billion, the United Kingdom's to 15.4 billion, Japan's to 11 billion, Canada's to 8.7 billion, Denmark's to 8.4 billion, the Netherlands' to 7.7 billion, Sweden's to 5.7 billion and France's to a little over 5 billion US dollars. These figures need to be kept firmly in view, rather than making promises and hoping for a miracle, because support on that enormous scale has only managed to secure something close to a draw, in which a great many people have already died and Ukraine has lost part of its territory. Yet there are those who have grown seriously rich off the back of the war. War — the defence industry — cannot be the foundation of a country's growth; it can only ever be a sort of supplement to the wider economy. In my view, the far more important question is whether the EU, which is so fond of stressing sustainability, will itself live up to that principle if it presses on unchanged with the course it has set.
What is to be done?
The simplest answer is to change the leadership, which is not happening yet, so the only solution for now is to change the approach and the attitude — and with it, initially perhaps to postpone, but over time to repeal, the requirements of the EU Green Deal, which in essence wipe out the competitiveness of EU producers not only globally but also within the EU's own internal market. Yes, the European Commission has for now postponed some deadlines for meeting Green Deal requirements and promised to review those requirements, but that is a small step, because maintaining these requirements at a time when the world's largest economy — the United States — is not doing so (and, adding to that, populous India and economically very powerful China) is pointless. Why? EU-based producers lose competitiveness, and there will be no meaningful benefit for mitigating climate change, because Europe's “contribution” to the share of greenhouse gas emissions is relatively negligible. It would be interesting to see figures on how much CO₂ nature itself produces — volcanoes, bogs and so on — and what share this gas makes up in the overall composition of the atmosphere.
It would be worth looking into exactly who finances — who pays for — the activities of the so-called green movement: in Latvia, say, is it wealthy locals, enthusiastic members, the state budget, or some foreign “patrons” and foundations, and why do they do it? For money, as we know, the devil himself will dance. If such activities are financed from Latvian state budget funds, one has to ask why the politicians in power are channelling public money into making the public worse off and leaving less money for genuinely important services.
There is no certainty that in any EU member state the so-called green organisations are not, through their activities, “working off” the foreign funding they receive. I fear that such “working off” does harm to everyone — to national economies, through new prohibitions and restrictions and therefore fewer jobs, which are mostly in the regions and which in turn feed through to the volume of domestic consumption and the amount of tax paid. Who benefits from that? Local residents? Not in the slightest! The state budget? Not in the slightest! Who, then? Those who wish to damage the state budget (lower revenue, higher national debt), working people and every single resident. In Hungary, incidentally, organisations financed from abroad are already being banned.
Changing the approach and the attitude will require replacing the parties in power across virtually the whole of Europe, with the exception of Hungary and Italy, where those in power recognise the green-deal quagmire that will be very hard to climb out of. Alongside that, we need to stop pursuing projects that are pointless and out of step with today's realities.
What sort of projects are those?
There are several in Europe. Latvia is no exception either.
Life in Europe needs to be made cheaper, not more expensive. Unfortunately, both in the EU as a whole and in Latvia, life is being deliberately made more expensive all the time, which reduces opportunity. For example, 95-octane petrol costs around 0.8 euros a litre in the US and around 1.6 euros a litre in Latvia; before long (with the CO₂ tax component of fuel excise duty rising) the price here can be expected to reach some 2 euros a litre, and in a few years' time even 2.5-3 euros a litre. So what distances will still make freight haulage economically viable? How will such a policy affect Latvia's economy? These are hugely important questions that the politicians currently in power are unable or unwilling to answer. At the same time, the questionable Rail Baltica project rolls on, having already “eaten up” several hundred million euros and requiring several billion more.
The question is: where is the money for this scheme to come from, given that nobody has guaranteed EU co-financing? The planned train speed on Rail Baltica is slower than in China, Japan or France, for instance. So we are going to build a last-century project that will most likely be unable to cover even its own maintenance costs. Why?
The question is: how many passengers and how much freight will there be, given that volumes have already shrunk substantially since the eastern border was closed? It is worth remembering that rail freight volumes grew until competitive lorries came along, as a result of which — some time in the 1960s, I believe — rail and road freight volumes “crossed over”, and ever since then the volume of goods carried by road has been growing while rail volumes have been shrinking. You cannot force freight owners to use the railway by administrative means.
If lorries are hit with a very high vignette charge, or a zero-emission vehicle requirement is introduced, then freight that today is delivered from Latvia to, say, central Germany will be carried on Rail Baltica.
That is nothing more than theory, with no rational or economic basis. At present, rail freight can compete with road transport only over very long distances. Many producers and consumers in Europe and in Latvia have switched to precision deliveries — at a specific time and place — thereby reducing the size of their raw material stores and hence their costs, while increasing their competitiveness. I doubt that this way of transporting components or parts would have the effect of an elixir of life on the already frayed competitiveness of German producers.
Rail Baltica has not been built yet, and it is not known whether it will be — or, if it is, when. It is not known who the operator of this line will be, who will buy the appropriate rolling stock and with what money, or who will cover the infrastructure maintenance costs. Most likely each country's government will pay for the kilometres on its own territory. In any case, one can put forward all sorts of theses and make all sorts of forecasts about the future, but for now that is a pointless exercise. Of course, Rail Baltica is a gain — for Estonia, but not for Latvia! Why? The line connects Tallinn with Pärnu, and only about 70 km of track then remain to the Latvian border, whereas in Latvia the entire mapped main route runs through sparsely populated areas, where there is neither economic nor rational sense in connecting them by rail, since the Riga loop is Latvia's own wish. At the Saeima's committee of inquiry the question was raised: what will Estonia say if Latvia does not build this railway line? The parliamentarians shyly failed to answer whether they had been elected by voters in Latvia or by those of our northern neighbour. Latvia's interests must come first. Plenty of examples bear this out, where Latvia has meekly set its own interests aside and stood up for the interests of other countries, or for interests that are “harmful” to the Latvian state and to the people who live here.
What do you mean by that?
I have lived in the countryside for several decades now, surrounded by fields and forests that are home to a great many different birds and animals; bears have been picked up on trail cameras less than a kilometre away. The presence of bears means you have to be very careful, because real life is not a cartoon in which a person “has a chat” with a bear or a lynx. Unfortunately, the pavement-polishers of the city do not understand this life, do not see it and have no wish to listen to differing views. As events in other countries show, people too fall victim to wolves, lynxes and bears. Does Latvia need precedents of that kind before decision-makers “wake up” and stop playing with “explosives”? A single lynx needs 50 roe deer a year to survive; there are no “negotiations” between these species.
My neighbour grew old and was no longer able to mow his field; within a few years there was already a young stand of trees 5-7 m high growing there. It simply confirms that nature takes back everything it can. At the same time, a string of small organisations are shouting about the destruction of natural assets. Latvia's forest area has doubled over the past 100 years, yet from these organisations come cries about the annihilation of living nature in Latvia, about irreversible damage being done to nature, to forests, to birds, animals and plants. How can that be, when a field left unmown last year has this year naturally “acquired” a young stand of trees? Perhaps the leaders of these organisations have seen little of life, been nowhere and know very little — about what goes on in Africa or South America, for instance, and about whether products from those regions do not end up in Europe. It is paradoxical how these tiny organisations manage to command the attention of decision-makers — politicians, officials, heads of institutions — who for some reason often give in to these desperate “cries”, even though there is no basis for it at all.
I can agree with what investment banker Ģirts Rungainis once said: “an organised minority messes about a disorganised majority”. It would be interesting to know who finances this organised minority — some country's budget (if it is Latvia's, that budget faces lower revenues), foreign competitors of companies operating in Latvia, or others whose intentions towards Latvia are neither noble nor innocent. What would happen to these organisations if Latvia introduced a foreign agents law, as Hungary has, denying the right to exist to NGOs that receive funding from abroad? Not infrequently, listening to the initiatives of the so-called friends of nature and looking at the consequences of what they have achieved or might achieve, one gets the feeling that it is nothing more than an exercise in absorbing money, in which ordinary activists are blindly used. Latvian politicians must put the interests of Latvian society first and look at every question or problem from precisely that standpoint — what will we gain, or what will we lose — rather than how we will look in the eyes of foreigners.
What would need to be done for decisions to be taken in the interests of Latvia's people?
There is no need to reinvent the wheel or to look for highly complicated solutions. Life has to be made cheaper, and that can be achieved by abandoning both the constant search for solutions to invented pseudo-problems and the upkeep of unnecessary bureaucratic processes. An example: Latvia has, I believe, 16 taxes and 110 duties; six taxes generate 98% of revenue, while all the rest “bring in” the remaining 2%. That means the taxes and duties yielding 2% of revenue are nothing but feeding troughs for bureaucracy, and they can be repealed (abolished), which would make life easier and the business environment more favourable for everyone who wants to get something done. Instead, the “professors in the Saeima” propose raising existing tax rates and increasing the national debt, forgetting the bitter experience of 2009, when national output shrank, the debts remained, and their share relative to a shrinking GDP rose sharply. Of course, nothing is easier than spending other people's money. It is often trumpeted that the state needs more money to fund the many services society requires, yet the opposite happens — new, unjustified requirements are imposed, along with pointless restrictions and prohibitions, and unnecessary overhauls are carried out that reduce both development opportunities and state budget revenue.
For example, in 2018 a complete overhaul of the financial system was carried out, as a result of which the bulk of non-resident money left Latvia and exports of financial services shrank, while Lithuania increased its financial services exports over the same period by, I believe, 420%. Those who carried out the overhaul in Latvia appear to have been acting in the interests of Lithuania's financial services exporters, freeing up the corresponding niches for them. It would only be fair if the heads of the institutions concerned received our neighbour's highest honours for it. It should be borne in mind that the consequences of the financial system overhaul are still being felt, because the sector's requirements in Latvia are far more stringent than in Lithuania. It is no surprise that new financial institutions or their branches are opening in Vilnius. And of course, during the overhaul, no trace was found in Latvia's banks of the loudly trumpeted North Korean money, nor of any transfers from or to that country. One wonders what the people who once frightened everyone with talk of some sort of North Korean money are up to these days.
For some time now Latvia has been waging an exaggerated campaign against the use of cash, even though it is exactly as legal a means of settlement as non-cash payment. At the same time, the moment there is a problem with the internet, it becomes impossible to pay for purchases, even though the person has tens or hundreds of times the amount of the purchase sitting in their account as non-cash money. It is no surprise that here in Europe there are countries that have “set it in stone”: cash is and will remain a legal means of payment, and still less should it be regarded as somehow dirty, criminally obtained and so forth, as certain “characters” in Latvia are prone to present it. What happens if the electricity suddenly goes off? ...everything simply stops — because the till does not work, there is no internet, and you can neither fill up with fuel nor buy bread. Can that be called sustainable behaviour? Everyone can answer that question for themselves, but in my view it certainly cannot!