Austerity Satire Slams ECB Banker’s Tale of Economic Triumph

  • Latvian play disects 2008 crisis, post-communist transition
  • Central bank governor blamed for worker exodus, sluggish wages

Central bankers aren’t often star characters in stage dramas. Then again, most plays don’t tackle economic slumps, austerity measures and the merits of international bailouts.

“Success Story” is a satire being performed in Latvia, a country lauded by European Union officials for its trailblazing adoption of sweeping government cost cuts after 2008’s global collapse. The production challenges those who deem the economic medicine a triumph, focusing its ire on central bank Governor Ilmars Rimsevics, now an ECB Governing Council member. In one scene, a supporter of his crisis-era decisions is stabbed to death.

The play draws on an idea that’s roiled elections from Washington to Warsaw -- that an economic recovery on paper can feel very different to the citizens living through it. While five straight years of growth followed the Baltic nation’s unprecedented recession and unemployment has halved, tens of thousands of workers have sought a brighter future in Europe’s west. More than half of those remaining have been unhappy with the country’s direction for eight years.

“Numbers can sometimes give you a false impression that things have got better,” said Valters Silis, the play’s director, whose work is appearing for the first time at the National Theatre in the Latvian capital of Riga. While some have called his production “foolish, there are people who were involved in this period who admit that some of the things we cover are pretty accurate.”

Rimsevics, the longest-serving central bank chief in the euro area, is slammed as a proponent of policies that slashed benefits and raised taxes to meet the terms of a 7.5 billion-euro ($8 billion) International Monetary Fund rescue. Rather than devalue the lats, he kept its peg to the euro to allow entry into the common currency in 2014. The play questions whether a euro-denominated mortgage taken out by Rimsevics contributed to his opposition to devaluation. A Bank of Latvia spokesman declined to comment on the play or the mortgage.

Read more: How Latvia’s economy pushed workers overseas

The production also covers Latvia’s transition to a market economy after communism collapsed and independence was restored. While wealth and incomes have surged in the subsequent 25 years, gains have been skewed toward the wealthiest, according to the European Bank for Reconstruction and Development. About half the country has missed out altogether on wage convergence with richer nations, the London-based lender estimates.

Four actors adopt an array of roles, switching between IMF Managing Director Christine Lagarde, ex-European Central Bank board member Joerg Asmussen and Latvians suffering amid the gloom. The audience is blasted by bright lights and ear-splitting rock music, representing the “shock-therapy” policies the government has championed since 1990.

“The crisis was harsh,” Martins Kazaks, chief economist at Swedbank AB’s Latvian unit, said by phone. “It also hit the less affluent more and many emigrated. That’s going to be bad for the future.”

High Inequality

Not everyone agrees that the outlook is gloomy. Economic growth, which was the slowest in almost six years in the third quarter, is set to accelerate to 3.9 percent in 2018, according to the IMF. The government is trying to lure back emigres after an exodus that’s almost unrivaled continent-wide.

But the distribution of any economic expansion is key to making the country attractive enough to tempt workers who’ve left. Inequality has persisted since the crisis and state support for those in need has been lacking, according to the Organization for Economic Cooperation and Development in Europe.

“Persistently high poverty and structural unemployment were among the most visible symptoms of uneven growth patterns, even as overall inequality stabilized at very high levels during the recent crisis,” it said this year in a report. “Highly volatile economic growth and one of the biggest income disparities in the EU create a pressing need for effective social policies.”

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