A conversation with Raivis Bremšmits, Director of the Regional Policy Department at the Ministry of Environmental Protection and Regional Development
What are your feelings when you look at Latvia's development?
Distinct! That is the right word!
Are we talking about regional disparities here?
The statistics show that there is a large gap between regions in Latvia, for example, in GDP indicators (2.5 times). There is a huge difference in the ability of commercial entities to attract investment (about 5 times). If we look at wages, the gap is not as large – 1.5 times, but… If we look at it differently – at present, the lowest average wage is in Latgale, and if you look at when such a wage level was last seen in Riga – it was 10 years ago! 10 years!
Here one must mention the situation that many of us see on Fridays and Sundays – the flow of people towards Riga – there and back. In some parts of the Pierīga region, we are seeing overcrowding; there are populated areas where the number of inhabitants has doubled in the last ten years. There are cases where what was once a so-called allotment garden village is now “home” to a normal small Latvian town. These are developments and situations that many Latvians see every day: the population and density of the Pierīga region are increasing.
Daugavpils, Liepāja, Jelgava, Valmiera, Ventspils… Don’t other large cities “attract” people?
They do, they certainly do! According to OECD data, we have the third highest level of internal regional disparity (in terms of development) among member states! The lowest in Europe is in Finland, and the lowest in the world is in New Zealand.
Finland is a good example – territorially much larger than Latvia, and the climatic conditions are much more unfavourable between its parts – for example, territory beyond the Arctic Circle will have much higher costs. In Finland, the difference in GDP between the north and the national average is about 10%! (In Latvia – Riga against Latgale – 50%!) The Finns, across a vast territory with diverse climates and great distances, have managed to balance development. They are a relatively self-contained nation that has one natural wealth (like us!) – forests (for the Norwegians – oil, for the Swedes – ore). We and the Finns have a lot in common!
The name of Latgale is mentioned in various ways, and has been for years. How did the aforementioned difference arise? Historical, theoretical reasons?
First of all, I want to say that when talking about Latgale, one should not use the word “backward”, which is often heard! The difference in many indicators is large, but this region is neither backward nor hopeless! These words must not be used! Latgale is the second largest region in Latvia with its own potential, even though the economic differences are currently significant. The country's second-largest city is located in the region. During the recent crisis period, unemployment in Daugavpils was lower than in Jelgava and Jūrmala. The city has its own “local economy”, which was undoubtedly affected by the crisis, but which was able to adapt and react competitively.
The reasons are many and varied; there are researchers who begin their assessment with the late abolition of serfdom in Latgale (1861) or look even further into the past, examining and analysing the consequences of the Polish-Swedish peace treaty…
I would look at it differently. Over the last decade, a kind of vicious circle has formed in our regions – lower wages and cheaper real estate do not provide sufficient security for attracting bank financing, but at the same time, without external investment, those same wages and real estate cannot become more valuable.
Another problem is demographics and generational change. While people born in the 80s were in the economic cycle, there were problems, but they were not as sharp. Now, unfortunately, a pronounced lack of young people, a new shift, is expected – the “gap” of the 90s (the demographic pit). This circumstance exacerbates the differences in the country even further because young people have a choice, and the choice is usually in the “direction” of higher wages. We have significant emigration from the regions – both to Riga and abroad. Of course, people are now returning, and this trend must be strengthened and stimulated, but first, conditions must be created so that people do not want to leave.
People say it’s hard to find a third or fourth-generation Rigan…
I am not a Rigan, even though I work in Riga. I was born and live in the Pierīga region, and agricultural work is not foreign to me, because my family had a farm.
How important is the balance between different conditions and requirements? For example, a farmer or forester and land, environment, regulations?
When talking about land use, municipalities and their plans and actions play a significant role, as they are the managers of local resources. A municipality is an owner of resources and can be an active owner. For example, if there is a derelict building in a small town or village, the municipality can acquire and renovate it. A municipality, as a manager or owner of real estate, has a significant place in the country!
The mentioned situation is well known, and it is gradually improving. When we started to pay more attention to this issue, another question arose: what a municipality is allowed or not allowed to do! About seven years ago, in the then-planning period, there was a view that a municipality must not support local businesses and must not, for example, build roads for this purpose. A completely wrong stance! It is the municipality's duty to provide favourable conditions for businesses, to sort out the infrastructure so that the entrepreneur does not have to deal with it. The duty of the state and the municipality is to create the service infrastructure and its operation! There are municipalities that, over the years, have taken over environmentally degrading properties, renovated them, and now rent them out. Such sensible actions accidentally revealed several problems, for example, in the leasing process. The state and the municipality are interested in ensuring that tenants also invest actively… But – the more the tenant invests, the more the value of the property will rise, which, upon alienation, the tenant will have to pay for – it turns out that this will be a price that the tenant has “increased for themselves” with their work and investment. That is slightly strange, to say the least! We have prepared amendments to the law that set the amounts of investment so that tenants have the opportunity to purchase properties at a reduced price proportional to their investments. The changes would support tenants who are focused on active farming! This would create a sense of stability and continuity for entrepreneurs!
Another area directly related to municipalities is education. In a recent interview, we talked about how a school in a parish is being closed, farmers and foresters remain, but the parish is emptying…
Municipalities cannot stimulate development by relying on a public institution! Be it a school, a library, a post office, or… If there are no or very few people in a parish who will “use” this institution, sooner or later it will be decided to close it! This applies to any institution provided by public funding! Of course, every salary received, every small shop, every lunch spot, every post office maintains a certain vitality, but – if there is no client… Society and the entrepreneur pay for it; the existence of this place is sponsored, and sooner or later the process will end. Some time ago, in the ministry, we prepared development forecasts at the level of each national parish for the next 14-20 years. Many denied them and considered them erroneous. At present, it looks like the forecasts were accurate, and that is exactly what has happened and is happening. Comparatively: you go to a doctor and you get a harsh diagnosis…
In my opinion, it is important to address this issue regarding schools in parishes and municipalities or nearby, and to think about what to do, rather than pretending that there is no problem! If there is a problem with a school, it is empty, but education is needed, so let’s see what we can do – what is happening in the neighbourhood, what the roads are like, what transport there is, what should be done! There cannot be a universal solution.
Will Latvia's rural parishes ever be empty, as people sometimes say?
No! I don’t think so! In several places, we will soon reach the lowest, critical point, after which a renaissance will surely follow. I think that people in rural municipalities are living and will continue to live even better! In my opinion, farmers (agriculturalists) have already experienced their lowest point. Taking into account forest resources, farmers’ skills, and technology, everything will only develop. It won’t be that the number of people will double everywhere, but the country will certainly not be empty or uninhabited! Because! Looking at the next 100 years, I think the world will not have problems producing mobile phones or such things, but it will have a problem growing high-quality food.
Driving through Latvia, one can clearly see that development and work are happening in the countryside! A topical subject currently under discussion is the regional reform. It has been heard that some municipalities are planning to merge themselves, it has been heard that representatives of municipalities themselves admit – by merging, the centre will skim the cream… Will the reform achieve the balance within the country that we discussed in this interview?
I think that development is always successful if we do not draw artificial boundaries to what is happening. For example, how many municipalities and municipal centres do we have that provide work for people in a wider surrounding area? Currently, in the regions, a significant portion of residents work in one municipality but live in another (not to mention the Pierīga region). Municipalities are a form of government that effectively manages the taxes we pay. We are interested in seeing municipalities think about services intended for living (schools, roads, etc.), and also in seeing municipalities actively invest in the economy! Consequently, the potential of territories can be used much more successfully if both of these areas of life (work and place of residence) are managed in one unit – as one.
To solve the aforementioned regional development problems, the active work of municipalities in supporting entrepreneurship has been and will continue to be of great importance.
The regional reform has its own schedule, which is being and will be followed; consultations and discussions will take place, and the process will move forward.