Could territorial reform destabilize the ruling coalition?

UNCLAS RIGA 000312 SIPDIS E.O. 12958: N/A TAGS: PGOV LG SUBJECT: Could territorial reform destabilize the ruling coalition? ¶1. Summary. The adoption and implementation of the administrative reform which would consolidate many small local governments (527) into bigger regional governments (88 or 127 municipal districts) has become a major object of disagreement between the two biggest parties in the ruling coalition -- People's Party (TP) and the Union of the Greens and Farmers (ZZS). TP's key public arguments for the reform are that bigger municipalities would have more resources and capacity, while the ZZS states that the mergers would seriously complicate the access to a number of crucial public services, including education and health care, for rural residents. However, some politicians and political experts argue that those are only public arguments and the real reason behind the disagreement is the fight for the zones of influence in regions. Some experts even speculate that the fight might result in changes of the ruling coalition in the fall when the map of the future regions is on the Saeima agenda. Because this is about resources, it is the kind of issue that could be used to bring down the Godmanis government. But we think it would be an excuse to do so rather than the real reason and continue to believe the coalition is stable for the immediate future. End summary ¶2. The large number of small local governments in a sparsely populated country was one of the heritages left by the Soviet period. Over 10 years ago the government took a decision to consolidate the local governments with the aim to save resources, improve efficiency in the work of local governments and raise the quality of their services. The need of the reform has been acknowledged by many international actors, including the World Bank. The implementation of the reform requires numerous changes, including drafting and amending numerous laws (about 100 laws should be amended) and practical management rearrangements, including changes in the local education, health and social care systems. Given the scope of the change, there is resistance to the reform among rural residents, who fear degradation in the quality of government services. ¶3. Until now, no government has had the political will necessary to tackle such a complicated issue. The People's Party saw it as a chance to build political capital and set the adoption and implementation of the administrative reform as one of its key priorities after the 1006 elections when the party was asked to form the government. However, TP has not been very successful, mainly due to strong objections from one of its coalition partners, ZZS, which claims to represent the desire of small local municipalities to remain independent. ¶4. However, it seems that more is at play. As post was told by New Era Saeima faction head Dzintars Zakis, it is a fight between the two parties about influence and control of budgetary resources. TP hopes that the reform will help to strengthen its positions in the rural areas because many of the local governments it leads would remain, while ZZS objects because it many small local governments they are currently running would be eliminated. The media has reported on the attempts of both parties to find allies among other parties, however, no formal coalitions have been formed or common decisions taken. ¶5. Comment. According to several political experts the administrative reform could become a stumbling stone for the Godmanis government. However, this is most likely to be an excuse for bringing down the government when politically expedient, rather than the actual cause. It seems to us more likely that the parties will reach a compromise regarding the reform since there are many other issues, including economic interests, where they need each other's support. Larson