Added to the blogroll

Estonian Housing Bubble. It's in Russian but, if you read Russian, there is a lot of information there, both original commentary and media stories gathered in one place.

Making fun of the president

There are quite a few parody websites making fun of the new Latvian president Valdis Zatlers:

zatlers.blogspot.com
www.zatlers.lv
www.valdiszatlers.com

"Zatlers blog" on blogspot was the first one that cropped up, the next day after Valdis Zatlers was nominated as a candidate for being the Latvian president. The people running it managed to pass it off as "Zatlers' official campaign website" to several newspapers, before the journalists realized it was a parody.

It has grown more and more intricate since then. The blog now purports to detail the life of a fictional character, "Zaldis Vatlers" who is "the chief resident of Latvia". And it's supposedly run by "Vatlera Draugu Kopa (VDK)" which translates to "Vatlers' Group of Friends" but, most importantly, abbreviates to VDK... which is also the Latvian abbreviation for KGB. The site is non-sensical but funny... those who know Latvian can go and read it.

It's quite a change from our past president, Vaira Vike-Freiberga. She was an authority figure who was almost always right. VVF was to be worshipped, rather than made fun of. Zatlers looks different:


Zatlers has his flows. His scandal with gifts that he received as a doctor. The scandal has died out by now and opinion polls say that only 17% of Latvians have a negative opinion of Zatlers. The remaining 83% either approve of him or are going to wait and see how he turns out as the president. Nevertheless, I doubt he will ever become Vike-Freiberga-like "moral authority" figure. Zatlers will be like most of our politicians - to be made fun of, even if he ends up being relatively popular.

Latvian housing bubble, part 4

Latvia may be having a housing bubble and the prices have started dropping slightly (4% in the last two months). How far could they drop?

First, Latvia has a lot of people who would want a bigger apartment. According to this study by the Bank of Latvia, the levels of apartment space per person in Riga are lower than in both Tallinn and Vilnius. And even if the present construction boom continues at the current rate, it will take 8.6 years to reach the current level of Tallinn.

The problem is the prices that people are willing to pay. According to the same study, the price of 1m² in Riga is 3.5 times the average monthly salary. That is more than in any other European country for which they have data. (The next most expensive country is Spain, with 1m²=3 times the monthly salary.) They also counted the number of people who need a bigger place and are able to qualify the loan at the present prices. The conclusion? If not for people who are buying property for investment or to rent it out, Latvia would have run out of mortgage applicants in 6 months after the study. (Maybe slightly more, if one includes people with "unofficial" incomes which are not declared to tax service, but not much more.)

The other key variable is the credit availability. As I wrote, the home loans are mostly funded by money borrowed from abroad and Latvian banks have been borrowing abroad a lot. The continued willingness of foreign banks to lend ever-larger amounts is questionable. I suspect this is, actually, the most important constraint.

About 50% of loans are funded by local savings. The remaining 50% are borrowed from abroad. If the inflows of credits from abroad decrease by 25-50%, that means that the amount of money available for credits decreases by 12.5-25% of what it was at the peak of the lending boom.

In the first approximation, I would guess 12.5-25% decrease in prices based on that. It may be less because some people would withdraw their apartment from sale, instead of selling them for less. On the other hand, the new housing projects are being finished now and when they are ready, the number of apartments will increase and this will press the prices of existing apartments down. (This is already happening in Estonia.)

This is all my guesswork. (Do not regard this as an investment advice!) I'd love to hear what other people think.

Added to the blogroll

FotoLat, a photo blog about Latvia. I found it when the author commented on one of real estate posts!

Baltic real estate update

To those who are following the developments in Baltic housing markets via this blog... Here is a news story from Eesti Paevaleht, one of major Estonian newspapers (via Latvian news agency LETA).

To summarize the article, Estonia has been having a housing boom as well... Lots of new construction. People reserving apartments in the to-be-built buildings with hope to resell them quickly and make quick money. Now, the new projects are built and the speculators are discovering that they can't resell the apartments for the price they hoped. It has gotten so bad that some of them prefer to walk away and lose the deposit that they paid to the developer (9000-25000 US dollars) rather than end up with a place that they can't resell.

Meanwhile, in Latvia, ... a real estate magazine did an investigation whether the apartment sellers have lowered the prices. They took 23 real estate ads from March and called up the sellers. 8 of them had sold their apartments, 4 had decided not to sell because they couldn't find a buyer who was willing to pay the price. The remaining 11 were still for sale and 9 of 11 sellers were ready to lower the prices... but only by small amounts, from 1% to 5.5%. No signs of big drop in prices.

Developing...

Sun flowers for the president

Before the World War II, Latvian fortune-teller Eizens Finks made a prophecy about the future of his country. I'm not sure about the exact wording but it involved a female leader leading Latvia into a new age of prosperity.

It was a bold prediction for that time. In the first three elections of 1920s Latvia, no female candidate was elected to the parliament. In the fourth election, there was exactly one women elected, out of 100 members of the parliament.

I don't believe in fortune-telling. But it seems that Finks' prophesy has come true, by a strange turn of fate. Eight years ago, in 1999, a deadlocked Latvian parliament chose a vaguely known academic, Vaira Vike-Freiberga, as the compromise candidate for the presidency. Yesterday was the last day of her second term as the president.

Vaira Vike-Freiberga has surpassed all expectations that we had about her. (OK, the public was very skeptical and cynical about politicians in 1999 and we might not had much expectations at all... But if we had had expectations in 1999, she would have still surpassed them!)

VairaVike-Freiberga believed in Latvia, at the time when many people did not. As she said in her second inauguration speech:

Every nation has its uniqueness, its beauty and its special value and we can say that about our own Latvia as well.

We are rich in our diversity, we are rich in everything that we have experienced in both sunny days and also dark and dreary days.

We can all shape future in such a way that we will be proud of.

As the president, Vaira Vike-Freiberga was the most passionate advocate of Latvia that we had ever seen. She was great at explaining our history and our aspirations to the world outside Latvia. And, I think, it was her belief in Latvia that made her such an outstanding advocate for our country.

We often complain about our politicians wasting too much money for trips abroad. Well, Vike-Freiberga went to 180 visits abroad in 8 years (probably more than anyone else) and nobody complained. Because we knew that she was there to articulate Latvian causes.

Latvia has gone a long way in 8 years of Vaira Vike-Freiberga presidency. In 1999, we had to argue to be included into the expansion of European Union. Now, the borders between Latvia and the EU have essentially disappeared. Our economy has grown tremendously and, even if we fall back due to the present economic bubble crashing... we are not going to fall back to where we were in 1999.

The standards for political integrity have also grown. It may be lost in the daily arguments about corruption scandals but Latvia is certainly moving forward. As Vaira Vike-Freiberga said in her last interview as the president:

Our country still has many people whose ethics standards don't match what we would like to see and we should continue the fight against that. It's not a one-day task, we won't be able to check "corruption has been eliminated" on our daily planner in one day.

But I am optimistic that our country can move forward.

And she has certainly done a lot to set higher standards for our politicians! Vaira Vike-Freiberga has promised to stay around and continue her work as an advocate for Latvian causes abroad. As she said in a TV interview yesterday, "I am saying bye as the president but I'll say see-you-later as Vaira Vike-Freiberga".

Note: The title of this post refers to the thank-you event "Sun Flowers for the President" organized one of our newspapers week ago. Here is a photo report from the event.

Latvia's forgotten referendum

Tomorrow, Latvians will vote in a referendum. I haven't been writing about it much because the whole matter leaves me perplexed.

First, the history. On March 1, our parliament passed the amendments to two laws: The National Security Law and The Law on Security Institutions. Immediately after, the president Vaira Vike-Freiberga invoked a previously unused clause of Latvian constitution that lets the president to suspend a newly passed law for two months. If during the two months, a sufficient number of signatures (at least 10% of Latvian citizens with the right to vote) is gathered, a referendum is held.

The president accused the "oligarchs" in trying to gain the control over the security institutions and said that she was worried about NATO secrets falling into the wrong hands. That was enough to get signatures of 14.41% of Latvian citizens, resulting in tomorrow's referendum. Here is a conversation over the phone that I had with one of my friends who signed:

FRIEND: I signed the referendum petition today.
ME: Did you read what the controversial laws actually say?
FRIEND: No, but I've heard they are really bad.

This was fairly typical. I tried reading them and it left me perplexed. This is one law and this is the other one (both links in Latvian). The most serious change appears to be adding this sentence to the existing law:

For the parliamentary oversight, the members of National Security Committee of Saeima (the Latvian parliament), together with persons who have been authorized by the committee and who possess the top category clearance for access to national secrets, have the right to conduct examinations of national security institutions, to access the necessary information and documents, except for information about secret sources, to interview employees of national security institutions, to verify the legality and the necessity of conducted intelligence and countrintelligence operations.

I'm wondering what are the standards of other countries on this. Do the parliaments usually have the oversight or not? Unfortunately, the Latvian debate on the laws never got to this question.

The debate was just mudslinging about the evil conspiracy to gain access to the state secrets. Well, if we can't trust members of parliament who have top category security clearance, we might be in deep trouble anyway. (Of course, that assumes that Latvian security services actually possess some valuable information and I'm not sure about that, either.) On the other side, I generally trust Vike-Freiberga when she makes a claim that something is wrong in a major way...

As I said twice before, I am perplexed. But the number of signatures was enough for a referendum. To avoid being humiliated by a referendum loss, the government invalidated the two laws before the referendum. So, now we have a referendum on whether to abolish two laws that have already been abolished.

The people who hate the current government will regard this as a chance to show that they hate it, by voting the abolish the laws. The president has called on everyone else to vote. What comes out of it and what is the big picture... who knows?

UPDATE (7/8): The referendum is now over. According to preliminary results, about 23% of eligible voters showed up to vote. (For comparison, the turnout in the last parliamentary election was 61.88%.) Out of those who voted, 95.7% supported repealing one of two laws and 95.8% supported repealing the other.

Because of the low turnout, the result is not legally binding. This means that the two laws have only been repealed once (by the parliament) instead of being repealed twice (by both parliament and referendum).

New Era Party (which is in opposition) believes that the referendum's result shows that the government lacks popular trust. They've called for resignation of prime minister. Well, New Era Party seems to be using every chance to call for someone's resignation this summer...

Latvian architect honoured

While researching my real estate posts, I came across this...

American Institute of Architects has compiled a list "America's Favorite Architecture" consisting of 150 all-time best buildings in United States. (The list has 150 buildings because this professional organization is celebrating its 150th anniversary this year.)

The list contains two buildings designed by Latvian American architect Gunars Birkerts: the University of Michigan Law School Addition (at #93) and the Museum of Glass in Corning, New York (at #136).

It's always nice to see another Latvian achieving something major in their profession. Birkerts also designed the project for the new Latvian National Library (aka "The Castle of Light"):It was a real honour to have the famous architect design a building for his homeland. Our politicians, however, are still arguing about the money for actually building it.

Latvian housing bubble, part 3

Latvia is probably having a housing bubble now, with apartment prices having increased 61.2% in one year. This bubble has been largely fueled by money borrowed by Latvian banks from abroad. What will happen next?

Some people say that the housing prices in Latvia will only keep rising, since the average living conditions are worse than in Western Europe and there are so many people who would like a bigger apartment or house. True, but... the apartment purchases are typically financed by credits from banks and those credits are often financed by Latvian banks borrowing from abroad.

There are two possible events that could decrease the availability of credit (thus bringing down the housing prices):

1. Increase in the interest rates;
2. Stricter lending standards.
   

There is no signs of interest rates increasing but there are reports that Latvian banks are turning down mortgage applicants in larger numbers. An article today says that the amount of money issued in home loans in May was 20% less than in the first months of 2007.

Over the last months, there has been an increasing number of warning signs about Latvian economy. Articles in Latvian and international press, statements by Bank of Latvia. I suspect banks have reacted to that by pursuing more cautious credit policy. Latvian government is also trying to push banks in the same direction, by introducing stricter regulations on credit.

The last two months (May and June) have seen the first declines in housing prices, by 1% and 3.5%. A new report by Latio real estate company says that the number of housing sales has declined 15% in May (compared to April), due to lack of buyers who are willing/able to pay the requested prices. Some sellers are lowering prices, others are waiting.

The real estate companies say that 10-15% drop in prices is possible but they don't expect more than that. Developing...

In the news: Latvian housing market and economy

Real estate company Latio informs that apartment prices in Riga have decreased by 3.5% in June. This follows a slightly less than 1% decline in May. It's a bit early to make conclusions based on two month data but the hot real estate market in Latvia may be cooling down.

Meanwhile, multiple economists are sounding alarm about the overall state of the Latvian economy (e.g. Latvian banks borrowing too much money from abroad):

• Latvian language news story: Danske Bank: The fast economic growth in Latvia may end in crash.
• English language blog analysis from Edward Hugh: shorter summary version, detailed economic analysis, analysis of demographic aspects.
  

Latvian housing bubble, part 2

As I mentioned in the previous post, Latvian real estate prices have increased 61.2% in one year. The most important reason behind that is, probably, the wider availability of bank credit in Latvia.

In 1990s, when I grew up in Latvia, it was fairly common to pay the entire amount upfront, when buying an apartment. The economy was fairly unstable and, if the banks issued credits for purchase of housing, the credits would be repayable in 5 years and would have quite high interest rates (20% or so? I no longer remember exactly). A friend of mine took one of those and then realized that the terms were so bad that he would have been better off if he had borrowed money from friends instead of the bank. This is largely why apartment used to cost 7000 or 20000 dollars those days.

With Latvian economy recovering from the post-Soviet slump and the outlook for the future becoming more certain, banks became more willing to issue long-term loans to their customers. Interest rates fell, 5 year loans were replaced by 15 year, then 30 year, than 40 year. When Latvia joined European Union, the interest rates fall to a level than was just slightly higher than in Western Europe. Latvia had gone from post-Soviet economic chaos to normalcy in just 10 years.

The speed at which credit became available was, however, much faster than the speed at which new apartments were built. And, so, the prices spiralled up. Also, since most Latvians don't have much savings, many of new loans (from 40% to 70%, depending on the bank) have been financed by borrowing from abroad. The foreign banks now saw Latvia as a part of European Union (rather than part of post-Soviet chaos) and were very willing to lend the money. The inflows of credits from foreign banks soon became comparable with the entire export revenue of Latvia:

• Latvian exports in 2006: 3.294 billions lats.
• Money borrowed abroad by Latvian banks in 2006:2.214 billion lats

In short term, this influx has been good for Latvian economy. Whenever someone buys an apartment with borrowed money, someone else gets the money by selling the same apartment. And that money is then spent in Latvia on goods and services, benefitting people who produce or sell those goods and services. Latvian economy has been growing 11% per year, average salaries are growing at about 30% per year. The tax revenues of the government are expected to grow 29.6% this year, which might mean that Latvian teachers will not be as underpaid as they used to be.

In longer term, it is not clear how long those trends will continue. Foreign banks might not be willing to issue new credits in so large amounts to Latvia forever. When the inflow of new credits into Latvia slows down, it can bring down the housing prices and, more generally, slow down the Latvian economy quite a bit.

Part 3 on real estate and Latvian economy coming in a few days...

Latvian housing bubble, part 1

I might move back to Latvia later this year or in 2008 and I just started researching the real estate market, over Internet and by consulting friends in Latvia.

It's quite expensive. 1 bedroom apartments in Soviet era buildings (built 20-40 years ago) cost from 70,000 to 110,000 Euros (100,000 to 150,000 US dollars). Bigger apartments or ones in newly built buildings are even more. Houses start at 200,000 Euros (260,000 US dollars) and can cost much more if they are in a good location. (I'm not even trying to figure out how much more. I wouldn't be able to afford that on a Latvian salary anyway.)

It's not quite London or New York prices but, according to newspapers, real estate in Riga is already more expensive than in Vienna or Frankfurt. And I've heard stories of people who have sold a run-down house in Latvia and discovered that they could buy a house at a much better condition on the Mediterranean coast of France for the same amount. At the same time, the average income in Latvia is still 4-5 times less than in US or France or Germany. As a result, most of population is completely priced out of the housing market.

It wasn't always this way. In mid-1990s, one could buy an apartment in Riga for 20,000 dollars. The only similarity with today is that it was unaffordable for most people. The incomes were much lower than now and bank credit was almost unavailable. Now, 40-year loans are common, the interest rates are almost as low as in Western Europe. The incomes have increased substantially, except that...

The increase in real estate prices has outpaced that all! Economists are talking of global housing bubble and Latvia seems to be at the forefront of it. The home prices in Latvia have grown by 61.2% in 2006, more than in the any other country in the world. And that comes after a similar more than 60% increase in 2005.

I'll post some more thoughts on the Latvian real estate bubble in the next few days...

Return to normalcy

Edward Lucas has an interesting column in the Economist. I think the facts are spot-on but I would like to argue about the conclusions.

Lucas starts by contrasting our president-elect Valdis Zatlers with our outgoing president, Vaira Vike-Freiberga:

Optimists hope that Valdis Zatlers, an orthopaedic surgeon, will grow into his new job as Latvia's president. But even his doughtiest supporters doubt that he will fill the exquisite shoes of his predecessor, Vaire Vike-Freiberga, a steely-minded émigré polyglot who ushered her small Baltic country into both the European Union and NATO.

Then, he observes that this is a part of a bigger trend. The previous generation of Eastern European leaders had many big figures:

Lech Walesa of Poland and the Czech Republic's Vaclav Havel remain world famous. Poland's Aleksander Kwasniewski was widely admired abroad for his diplomatic skills. Reformist politicians such as Estonia's Mart Laar, Russia's Yegor Gaidar and Slovakia's Mikulas Dzurinda wowed the policy wonks with their zealous embrace of flat taxes and free-marketry.

Now, it's different. Only Russia's Vladimir Putin and Estonia's Toomas Hedrik Ilves qualify as "big figures", according to Lucas. As for the rest:

A lot more typical are such political leaders as Slovakia's prime minister, Robert Fico, or Hungary's Ferenc Gyurcsany: wily political operators with good business ties and a populist touch.

I think this trend is a part of Eastern Europe returning to normalcy, after the Soviet oppression and the chaos of first post-Soviet years.

Great leaders often emerge as a response to great challenges. When Vaira Vike-Freiberga came to power in 1999, Latvia had to convince the Western world that our country is a part of it. During her presidency, Latvia succeeded in that. Latvia became a member of the European Union and NATO.

The same thing happened in other Central European countries. Lech Walesa and Vaclav Havel were symbols of Poland and Czech Republic rejecting Communism and aspiring towards the same values as Western Europe. Now, the values that Walesa and Havel fought for are universally accepted in their countries. And, once something is universally accepted, there is no need for a visionary leader articulating that.

Today, the main challenge for the countries that joined European Union in 2004 is ensuring competent day-to-day management. We are not making a fundamental choice between democracy and totalitarianism, or free-market and centralized economy any more. Those choices have been made long ago.

As a result, there is not much space for visionary leaders any more. Businessmen and managers are taking their place. The main issues in the past Latvian election were: "Who is the most competent?" and "Who is the least corrupt?".

I hope this trend towards normalcy continues. I prefer to live in a world where proper enviromental standards for new housing developments are the most burning political issue, rather than in a world were Latvia has to worry about Russian military buildups. Of course, that depends on whether Russia is heading towards normalcy as well, and I am not sure of that at all...

An article on Livs/Livonians

In comments to my previous post, reader Ed points to an interesting Deutsche Welle article on Livs/Livonians, the nearly extinct indigenous ethnic group in Western Latvia.

The article says that the number of native speakers of Livonian is less than a dozen (even less than what I said in my previous post). But the younger people of Liv descent are trying to learn the language and keep it alive. I hope they succeed!

As a side note, I find it amusing that English uses the word "Livonian" for two entirely different things:

1. The indigenous ethnic group of Latvia;
2. The German knights who conquered the land of Livs/Livonians in the 13th century.

In Latvian, we distinguish the two by calling the first Livs and the second Livonians. In English, both the local people and their conquerors are Livonians! I was really surprised when I first saw that in Wikipedia three years ago.

Blue cows!

A friend from London told me he had seen an ad by Latvia tourism agency:

Two million reasons to visit Latvia
Reason #653,432: blue cows.

That started an interesting conversation. I think I managed to convince everyone that Latvia indeed has blue cows.

Latvian blue cows are farm animals, a peculiar variety of regular cows.


Traditionally, blue cows were grown by Livs, an indigenous ethnic group of Latvia which spoke a language related to Estonian and Finnish. Livs lived along the Baltic sea in the Latvian regions of Vidzeme and Kurzeme (Courland). An old legend says that blue cows used to live in the sea and would come out briefly before the sunrise to graze on the seaside grass. Then, once upon a time, The Mother of the Sea (Juras Mate) gave some of them as gifts, to families of Liv fishermen who had died in a storm.

Both Livs and blue cows became nearly extinct during the Soviet period. In case of Liv people, the Baltic Sea became the border between the Soviet Union and the West. Livs were uprooted from their fishermen villages, to make space for military. At the end of Soviet period, there were less than 100 people speaking Liv language.

Blue cows were almost completely displaced by other breeds. Less than 100 of them survived the Soviet period, too. In 1990s, Latvia, together with UN Food and Agriculture Organization, started an effort to preserve this peculiar variety of cows. As a result, blue cows can be still seen along the coast of Kurzeme (Western Latvia).

Latvian presidential election, two weeks later

The two weeks since Valdis Zatlers became the next Latvian president have been quite predictable:

• Zatlers has visited State Revenue Service, to settle the taxes on cash gifts that he, as a doctor, received from his patients. State Revenue Service has also called other doctors to pay taxes on their gifts. So far, only three other doctors have responded. Meanwhile, the public debate on appropriateness of those gifts is continuing at full speed.
• Shortly before the election, our current president Vaira Vike-Freiberga accused the ethnically-Russian party Saskanas Centrs of being disloyal to Latvia (my guess: she meant they are being funded by Putin's administration). Saskanas Centrs threatened to sue her for libel. Vike-Freiberga claimed that she has a classified information that Saskanas Centrs is disloyal and refused to make it public. We have not heard about a possible Saskanas Centrs lawsuit since then.
• The Delna organization that organized the anti-Zatlers demonstration near the Latvian parliament during the presidential vote is looking for donations. The demonstration of 500-1000 people had cost 20,000 euros to organize! Those protests are expensive...
• Someone has created an unofficial Zatlers homepage at valdiszatlers.com and offers to sell the domain to the highest bidder. The website contains three paragraphs on Zatlers and his picture. Amusingly, half of the text has been copied word-by-word from this post on my weblog.
• Social Democratic party is gathering signatures in support of a referendum that would change the Latvian constitution and make the president elected directly by people, rather than by the parliament. But now, after our parliament voted for the less popular of the two candidates two weeks ago, its chances of passing are higher than ever!
  

Index to my previous posts on the presidential election.

In the news

Latvian historian Heinrihs Strods has been denied Russian visa. He intended to visit Moscow to explore documents in Russian archives and to give a talk at a conference. Strods applied for visa several times, with support letters from the Latvian embassador to Russia and from a history institute of Russian Academy of Sciences and was repeatedly denied visa. This is a second instance when a well-known Latvian historian has been denied Russian visa. The first was Aivars Stranga in 2005.

This is quite outrageous. Apparently, in Putin's Russia, foreign historians are not allowed to do archive research unless Putin's government is sure that they'll interpret archive documents in desired way!

Found on the web

Riga Daily Photos. Some of the pictures are very nice!

Oil and the collapse of Soviet Empire

The fall of the Soviet Union in 1991 was preceded by a deep economic crisis during its last years. Until a few days ago, I wasn't sure why this crisis started in late 1980s and not earlier or later. The former Russian prime minister Yegor Gaidar says there was a good reason for that. The reason was oil.

During late 1970s and early 1980s, the oil prices were high and Soviet Union was making a lot of money by selling oil to Western nations. That allowed to buy food and other goods that the dysfunctional socialist economy of USSR could not produce in sufficient amounts. Then, in 1985, the oil prices plummeted. In half a year, they fall more than twice. And so did the oil revenues of the Soviet Union.

Soviet leader Mikhail Gorbachev desperately tried to reform the Soviet economy. But no reform, even the most perfect one, could compensate for sudden disappearance of most of oil revenues. Soviet Union had to borrow money to pay for food imports. By 1989, Western banks stopped lending money to Soviet Union, because they did not believe the country would be able to pay it back. At that point, the only loans that Soviets could get came from Western governments directly and those loans came with strings attached.

In 1990, Baltics declared independence. In January 1991, Soviet tanks attacked the TV tower in Vilnius, Lithuania. For next two weeks, Baltic states were tense. Will Soviets follow through and remove the pro-independence leadership of Baltics with military force? Nothing happened. According to Gaidar, Soviet Union had gotten the following message about Baltics:

Do as you wish, this is your country. You can choose any solution, but please forget about the $100 billion credit.

The goodwill of Mikhail Gorbachev may have played some role in Soviet Union not using military force, but the fear of not getting $100 billion credit sealed the deal.

Here is the full transcript of Gaidar's speech on this topic. He has also published a book, Gibel' Imperii: Uroki dlya sovremennoi Rossii [The Collapse of an Empire: Lessons for Modern Russia, with English translation available in two months] which I plan to read, once I get hold of it.

Oil prices are now high again and Russia is swimming in oil money, with $400 billion reserves for the case if the prices fall. Preventing Russia from using military power by threatening to withhold credits wouldn't work these days.

Posts on Latvian presidential election

This is the list of my posts on the recent presidential election in Latvia, for an easy access to them:

• Valdis Zatlers: facts, my opinion.
• Aivars Endzins: facts.
• Notes on the election campaign: March 27, March 29, opinion poll.
• Post-election thoughts: part 1, part 2, part 3.
• Estonian humour about the Latvian election.