Latvian Premier Dombrovskis Quits After Roof Collapse

Latvian Prime Minister Valdis Dombrovskis resigned after his minority government was shaken by the biggest loss of life since the Baltic country gained independence more than two decades ago.

Dombrovskis said he wasn’t asked to resign and made the decision today during his meeting with President Andris Berzins after reflecting on “my moral and political responsibility” for the disaster. Speaking to reporters in the capital, Riga, after the announcement, the premier said he won’t lead the next cabinet and will likely return to parliament, calling for the new government to secure a majority in the legislature.

Dombrovskis, 42, has been prime minister since 2009 and helped guide his country of 2 million to the European Union’s fastest economic growth and the brink of euro adoption next year. The roof collapse on Nov. 21 in Zolitude, a suburb of Riga, killed 54 people in the country’s deadliest accident at least since the former Soviet republic won independence in 1991. The toll included rescue workers who had rushed to the scene.

“I announce my resignation from the position of prime minister and take political responsibility for the Zolitude tragedy,” Dombrovskis said after meeting with Berzins. The president said on Nov. 23 the roof collapse was “the murder of many vulnerable people.”

The prime minister has called for an independent commission to investigate the causes of the roof’s collapse along with the police.

Future Coalition

With the next election scheduled for Oct. 2014, an early ballot probably wouldn’t be practical and a coalition of current parliamentary parties may take over, Daunis Auers, a political scientist at the University of Latvia, said by phone.

Dombrovskis said today the next government should be “center right,” suggesting he favors the return of the Union of Greens and Farmers, a coalition partner in a previous government, which has 13 members in the 100-member parliament.

Snap elections were called by former President Valdis Zatlers in 2011, whose Reform Party partly ran on a platform of keeping the Greens and Farmers Union out of government.

Berzins will begin meetings with political parties next week with the goal of forming a new government before year-end, according to an e-mailed statement.

Roof Collapse

The roof of the Maxima XX store collapsed after an alarm designed to detect fire, smoke and dust rang repeatedly in the basement where a parking area was under construction, according to the company. Police have opened a criminal investigation and have interviewed more than 107 people, and seized planning documents for the building as evidence, said police chief Ints Kuzis, in an interview with Latvian Television on Nov. 23.

“Someone had to take political responsibility for this disaster, an unprecedented peacetime disaster,” Auers said. “This is a government that has been fraying at the edges, it’s been struggling with a formal minority in the parliament.”

The yield on Latvia’s dollar bonds maturing in 2020 fell to 3.63 percent from 3.67 percent, according to data compiled by Bloomberg. The cost to insure the country’s debt against non-payment for five years using credit-default swaps climbed 11 basis points, or 0.11 percentage point, to 117.

The $28 billion economy expanded 4.2 percent in the third quarter from a year earlier. The Finance Ministry projects growth at 4.2 percent this year and next.

Latvia, which will start using the euro in January, planned to sell international bonds in the next six months to refinance maturing debt, Dombrovskis said last month.

‘Opportune Moment’

“With the 2014 budget passed, and euro accession on Jan. 1 2014 a certainty, this is an opportune moment for Dombrovskis to resign,” Otilia Dhand, an analyst at political risk evaluator Teneo Intelligence, said by e-mail. “In the coming weeks, the biggest challenge will be finding a political leader to replace Dombrovskis.”

Dombrovskis, educated partially in the U.S. and Germany, worked in the central bank as an economist until 2002, when he was elected to parliament and became finance minister.

Seventy-five percent of Latvians were unsatisfied with the government, according to a September poll by SKDS. Nineteen percent were satisfied, pollster Arnis Kaktins said on his Twitter Inc. account Nov. 21.

The three-party government made up of Dombrovskis’s Unity party, the Reform Party and the National Alliance have 49 seats and rely on support from six unaligned members to pass legislation.

“The prime minister has brought the Latvian economy a long way in a short space of time, enabling euro adoption,” Mohammed Kazmi, a London-based strategist at Royal Bank of Scotland Group Plc, said by e-mail. “Therefore his departure and the uncertainty it brings with it is negative. That said, euro adoption should still provide an anchor for policy and reform and therefore a significant shift in investor sentiment and prudent policies is unlikely.”

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