Jun 11, 2009 | 17:04 GMT

2 mins read

Baltic States: Heating Up for the 'Summer of Rage'

Latvian trade union leader Peteris Krigers said June 11 that protests by unions are likely if the Latvian government does not seek to address the unions' concerns over 500 million lati ($1 billion) worth of anticipated budgetary cuts. Labor protests are also being planned in neighboring Lithuania, for June 13, and in Estonia, for June 16. The deteriorating economic situation in the Baltic States has caused the governments in the region to consider cutting their budgets drastically. Those considerations caused widespread rioting in January that in part caused the collapse of the Latvian government in February. In Latvia, the government is in a quandary, as the second tranche of its 7.5 billion euro ($10.6 billion) loan from the International Monetary Fund (IMF) is being delayed because of an IMF requirement that the Latvian budget be cut drastically. The government therefore has to choose between making the necessary cuts, which could cause social unrest, and delaying austerity measures, which will almost certainly delay much-needed IMF funds and risk exacerbating the effects of the crisis. Neighboring Lithuania and Estonia are watching the situation in Latvia carefully. A Latvian currency devaluation under the pressure of the crisis could cause their currencies to plummet as well, jeopardizing consumers who borrowed in foreign currency because those consumers' debts would increase greatly if their domestic currency plummets. The Estonian government has already come under pressure from the crisis, with Prime Minister Andrus Ansip reforming his coalition following disastrous results in the European Parliament elections and now governing with a minority government. Further political change and social unrest in the Baltic states is highly likely and could indicate what is to come for the rest of Europe's troubled economies. Greece, Ireland, Hungary, Bosnia, Croatia and Serbia are all going to have challenging economic problems ahead of them that could easily translate into unrest and political change. Furthermore, social unrest could manifest itself across of Europe as the "Summer of Rage" begins.

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