Fri, Feb 13, 2009 - Page 9 News List

Slump shatters East European dreams

After five years of boom, Lithuania is experiencing a slump worse than in western Europe. Faith in liberal capitalism, however, has survived

By Jason Burke  /  THE GUARDIAN , MARIJAMPOLE, LITHUANIA

ILLUSTRATION: MOUNTAIN PEOPLE

If you are a French-speaking trucker happy to be based 80km from the Belarus border with a minimum monthly wage of US$290, then Irena Grabaliskiene would be pleased to hear from you.

Grabaliskiene is director of the job center of Marijampole, a city of 50,000 in a bleak corner of farmland and forest in southern Lithuania, and the truck driver’s post is the only one of eight available at noon last Thursday that she cannot fill. So for the vast majority of the 3,000 registered job seekers in Marijampole, the outlook is bleak indeed.

“I try to be optimistic. Doing what I do, you need to be,” Grabaliskiene said with a wan smile.

Optimism is thin on the ground in Marijampole — as it is across eastern and central Europe. From the Baltic to the Black Sea, the global economic downturn is striking hard. The latest predictions are that Lithuania’s economy will shrink by 6 percent this year, that of neighboring Latvia by 10 percent. Next year will not be much better.

For such states, which broke free from Soviet rule in 1991 and survived a rocky period of economic transformation in the years after, the shock of the crisis is far greater than in Western Europe. The last half decade has seen an extraordinary boom. Year after year, growth rates have hit double figures. That boom has now come to a shuddering halt. Latvia, which only months ago was top of the EU growth charts, now has the fastest shrinking economy in the EU. Lithuania is not far behind.

“We were growing, growing, growing and then ... bam!” Lithuanian Prime Minister Andrius Kubilius said. “For us this has not been an easy period. People are upset, emotional, nervous. The problem is how to survive the next two years.”

For Kubilius, leader of Lithuania’s main conservative party, the crisis means change.

“A crisis brings opportunity for really significant change,” he said. “If you don’t change, you just suffer.”

The question now is what form that change will take. Already the economic crisis has fueled tension across the region — there were unprecedented riots in Lithuania and Latvia last month. Many in Western Europe are predicting outbreaks of populist nationalism, demagoguery and civic unrest.

Local politicians and analysts say that Western fears of a wave of street violence or even collapsing states are exaggerated, but agree that the economic crisis is provoking new soul-searching about which economic and social model to pursue when the dust settles.

“It will make a big difference to us, the first post-­communist generation,” said Agne Nacivkaite, 27, a language lecturer at Vilnius university, who has recently had her wages cut and works longer hours to make ends meet.

Some of her friends have lost their jobs, after taking out huge mortgages to pay for flats whose value has gone up six times in as many years.

“People are turning away from materialism and back to human values,” she said.

The crisis reached Marijampole, 145km of rolling hills, iced lakes, fields and woods southwest of the capital, Vilnius, late last year. By last month new applicants for jobs had reached 3,435, twice October’s figure. And the city is far from the worst affected in Lithuania.

Grabaliskiene said no companies were hiring and many of the hundreds of thousands of ­Lithuanians who had been working overseas were heading home.

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