On July 23, by a 94 percent majority, Latvian voters as expected supported the referendum instigated by ex-President Valdis Zatlers to dismiss the Saeima. They will return to the polls on Sept. 17 to elect a new parliament.

This ended a truly unprecedented series of political events, and signalled the way for at least one new political force to take the stage in Latvian politics—Zatlers himself and his now many supporters.

On the same day as the referendum, Zatlers officially founded his party. Curiously, by many commentators’ estimation, he put his own persona in the party title: the Zatlers Reform Party (Zatlera Reformu partija, or ZRP). Such a person-driven approach seeks to capitalise on his popularity in dismissing the Saeima, which has rocketed Zatlers’ personal approval to 79 percent—an unusual rating for any Latvian politician.

As the referendum dust settles and Zatlers’ political course becomes clearer, two radically different interpretations are put on his motivation to dismiss the Saeima. The first takes Zatlers at his word that he wanted basically to rid the Saeima of the influence of oligarchs who control several political parties and who had instigated a series of votes against the national interest, or who had in other ways resisted necessary policy implementation. The trigger for Zatlers’ move was the Saeima’s decision not to allow the Corruption Prevention and Combating Bureau (Korupcijas novēršanas un apkarošanas birojs) to search the home of “bulldozer” MP Ainārs Šlesers. The concern of Zatlers had been to restore a measure of democracy to the working of the Saeima. The leading party, Unity (Vienotība), sharing such sentiments, in fact then invited Zatlers to join it, but he declined in favour of founding his own.

The second interpretation is far less favourable. When he triggered the referendum on May 28 by recommending the Saeima dismissal, Zatlers was faced with the likelihood that he would not be elected by the parliament to a second term. As it turned out, the Saeima appointed the financier Andris Berziņš to the presidency. The dismissal of the Saeima thus is viewed more as an act of revenge. And Zatlers further declined to join Unity as it had stood staunchly against any idea of a coalition with the second-largest party in the Saeima, the Moscow-leaning Harmony Centre (Saskaņas centrs). Zatlers was looking for his own political advantage, being willing to go into coalition with anyone to secure his own power.

Debate over Zatlers’ motives will continue, but meanwhile his popularity with the electorate has not diminished. In the first party ratings since its founding, ZRP ranked first with Harmony Centre, both favoured by 17.5 perent of the electorate. It seems that Zatlers had taken voters away from all parties, even marginally from Harmony Centre. Unity—the largest party in the dismissed Saeima—slumped to 8.7 percent, while the pivotal Union of Greens and Farmers (Zaļo un zemnieku savienību) declined to 8.1 percent. The Union of Greens and Farmers is very much associated with oligarch and Ventspils Mayor Aivars Lembergs. Also in decline, though less sharply, was the National Alliance (Nacionālā apvienība), claiming 6.3 percent support.

No other party came near to the 5 percent barrier required to sit in the Saeima. The great loser appears to be the oligarch Šlesers. His First Party of Latvia/Latvian Way (Latvijas Pirmā partija/Latvijas Ceļš) had managed to get into the Saeima on previous occasions after blitz advertising campaigns, but support for the party has dropped to just 1.7 percent.

On these figures, any kind of coalition is a possibility, either including or excluding Harmony Centre. Yet with more than a month to the elections, we may expect volatility as much as stability in predictions, as the heat is turned on Zatlers and his relative lack of political experience, and the very mixed bag of supporters who have flocked to his flag. An uncomfortable feeling comes precisely from the populist nature of his campaign so far, and the relative lack of substance in policy terms he has announced. While we are used to party platforms in Latvia often being very similar—so voters’ decisions revolve around personalities—the search for power seems to override careful policy considerations, making ZRP perhaps just one more party devised for an individual leader, rather than being a genuine party representing stable interests.

However, a further sense of discomfort comes from Zatlers’ own background. Four years ago, he was an apolitical surgeon who was installed as president by the same oligarchs he now berates. Also in the background is his self-admitted taking of “envelopes” (bribes) as a surgeon, as is the common practice in most post-Soviet countries. This makes his claims to be against oligarchy or corruption ring somewhat hollow.

Further, Zatlers’ battle cry to get rid of oligarchs has taken on a somewhat bizarre life of its own, with a number of popular events including a “festival for buried oligarchs” (Oligarhu kapu svētki) arousing hilarity.

Yet the real problems facing Latvia are not restricted to the activities of oligarchs, however odious. The painful road back to economic health in Latvia is hurting many. The country is experiencing depopulation as workers head abroad, and many small and medium enterprises are in trouble. The desire to repay loans to the International Monetary Fund and other lenders has led the government to slash wages and increase taxes.

Latvia now enjoys a two-track economy. One part, largely concerned with transit and finance, is experiencing a boom, but the rest of the economy depressed. Yet the parties struggle to devise any policies to address these issues. Unity’s insistence on repaying the debts, maintaining the value of the lat and tightening belts is being increasingly criticised as undermining any growth potential. And corruption is still widespread in administration, while the shadow (non-tax paying) economy remains strong.

Not to be outdone, Hamony Centre’s potential prime minister candidate, Nils Ušakovs, has proposed a radical suggestion: Political parties should put aside all issues to do with nationality and ethnicity—citizenship, official state language, language in schools, etc.—for a period of three years so that they can concentrate on solving the nation’s serious economic issues. Directed clearly at nationalist attempts to mobilise around issues such as having Latvian be the only language of instruction in schools, Ušakovs’ approach may yet strike a chord among voters, though it is unlikely to be accepted by other parties, whose own economic credentials are often weak and for which national issues may sometimes be a useful pretext to mobilise support.

Voters will be faced with more choice in these elections, but the substance of this choice will still be an open question as this intriguing battle intensifies.

The last few weeks have seen an intensification of political activity in Latvia after President Valdis Zatlers proposed dismissing the Saeima, leading to the July 23 referendum on this question.

Since that time we have seen:

• Zatlers not being appointed to a second term as president. In his stead the parliament voted in Andris Bērziņš.
• Zatlers deciding he will form his own political party, Zatlers’ Reform Party (Zatlera reformu partija).
• One of the older parties in the Saeima, the People’s Party (Tautas partija) voting to disband.
• Intense jockeying in the governing centre party Unity (Vienotība) to regain popularity after Zatlers declined an invitation to join it.

Zatlers’ term in office concluded July 7, with increasingly political tones in his last pronouncements and activities. He repeatedly declared that politics in Latvia should not be run in the interests of the few, but should be based on transparency and honesty. Confronting the oligarchs will be a major theme of his campaign. With universal agreement that the referendum will approve the dismissal of the Saeima, the campaigning has already begun for the next election likely in September.

There had been much speculation over whether Zatlers would form his own party or take up the invitation to join Unity. It seems there were two factors that convinced him to go with his own party. First, his decision to begin the process of dismissing the Saeima has been hugely popular in Latvia, and he needed to ride this wave of popularity and support. Secondly, however, is the perception of Unity that it precisely lacks unity, that it has had to make too many compromised decisions as the leading party of the government coalition, and that for Zatlers to hitch his fortunes to that party may be to limit his influence rather than to maximise it.

It should be said that in political terms Zatlers’ move is a considerable gamble. One outcome of the election could well be that the Moscow-oriented Harmony Centre (Saskaņas centrs) could emerge as the largest party (it is the second-largest in the present Saeima after Unity). If it is able to build a coalition with the Union of Greens and Farmers (Zaļo un Zemnieku savienība), an opportunistic party that is at the centre of all coalition deals, we could have a Harmony Centre-Green and Farmers majority, and an prime minister from Harmony Centre. This would be enormously satisfying to Moscow but a danger to Latvia.

However, one other outcome, likely more desired by Zatlers, may be that his Reform Party, together with Unity and the National Alliance/All for Latvia! (Nacionālā apvienība/Visu Latvijai!) could gain the 50-plus mandates in the 100-member Saeima.

In his program, Zatlers has not ruled out an alliance even with the Harmony Centre, but he sets a precondition: Harmony Centre must recognise that Latvia was occupied by the Soviet Union, a point of seeming obsucre historical semantics, but a vital core value for all Latvian parties, and one that Harmony Centre has continually evaded.

Meanwhile, Unity has suffered from its own lack of unity, as well as from a continual attack on its policies of austerity and the shenannegins of its coaltion partner, the Union of Greens and Farmers. First, Unity has always been a coalition itself of three groupings that has struggled to give an impression of unity on major issues, with two factions in particular intense disagreement over policy directions and the question of whether an alliance with Harmony Centre should be ever thought of. Second, the austerity measures of cutting budgets, lowering wages and raising taxes—to satisfy the demands of the International Monetary Fund and other lenders—has caused widespread disillusionment. This comes ironically at the very point where the economy seems finally to be turning around, and where even more bizarrely Latvia and the other Baltic states are being used as examples of how countries can get out of the global financial crisis, while seemingly richer countries such as Greece cannot.

Also wounding for Unity has been the constantly undermining by its coalition partner. The most galling example of this was the election to president of Andris Bērziņš, who is a Union of Greens and Farmers member, a banker and one of the fat cats of the Latvian establishment. In interviews Bērziņš cannot even admit there is any oligarch influence in Latvian politics, yet he is a close friend of them all.

Nevertheless, the reality of a looming election has made politicians behave in public. All parties agreed to dismiss the head of the Corruption Prevention and Combating Bureau (Korupcijas novēršanas un apkarošanas birojs) Normunds Vilnītis, a man clearly out of his depth in the position. The Saeima also agreed to stronger measures to ensure competence in the Latvian language in professional occupations, a clear sign of Harmony Centre (which usually supports a stronger role for Russian in public affairs) not wanting to rock the boat and scaring off Latvian voters who may vote for it. Such stances will likely not survive the election.

One party that may not survive the election is For a Good Latvia! (Par labu Latviju!, or PLL). Part of PLL, the long-standing People’s Party, has just decided to disband, perhaps encouraged by a looming conclusion to a long legal process to bring it to account for overspending at past Saeima elections. The People’s Party was the leading party of the previous Saeima when it was seen as largely responsible for Latvia’s troubles in the global financial crisis. For the first time, there is a feeling that the oligarchs’ ability to manipulate public opinion is being challenged, and a returned Saeima with the PLL removed would be a significant step forward in the slow crawl to democracy.

Much remains unknown as the various factions and parties position themselves for the post-referendum scramble to the elections. Zatlers’ initiative in dismissing the Saeima has been seen as a splendid move. It remains to be seen if Zatlers’ involvement in the messier side of politics away from the presidential chair will be just as productive.

The past two weeks have brought two of the biggest political shocks yet seen in Latvia’s 20 years of renewed independence.

On May 28, President Valdis Zatlers used a previously never activated constitutional power to recommend the dissolution of the parliament—the Saeima. The action leads automatically to a referendum, scheduled July 23, on whether the Saeima should be dissolved.

If the majority of voters agree, then we head for new elections, less than a year since balloting for the 10th Saeima in October. In a delicious constitutional twist, if the voters do not agree to dissolve the Saeima, then the president himself must step down.

There is little doubt the referendum will overwhelmingly decide on dissolution. The immediate instigation for Zatlers was a scandalous vote in the parliament just a few days before his announcement. The Saeima failed to allow a search of MP Ainārs Šlesers’s house by the Corruption Prevention and Combating Bureau (Korupcijas novēršanas un apkarošanas birojs, or KNAB). Šlesers is one of Latvia’s more odious oligarchs with a long history of tying his political interests to his business interests. As a parliamentarian he has immunity from criminal investigation, an immunity that can be lifted by the Saeima.

For Zatlers it was the last straw, one more instance of the Saeima using its powers to obstruct justice and protect the most wealthy and powerful. This parliament and the previous one during the past couple of years have made a number of decisions related to appointments and other matters that have gone clearly against the national interest.

Zatlers’s annoucement was met with surprise. In a rare cameo, those who were most tongue-tied and least able to comprehend were the oligarchs themselves, not only Šlesers but also his political ally Andris Šķēle and Ventspils Mayor Aivars Lembergs. They initially simply did not know how to react, before regaining their composure after a few days and setting out to destroy Zatlers.

The second shock came as a direct consequence of the first, for the week after Zatlers’s announcement, the election of the next president was scheduled. In Latvia the president is elected by the Saiema for a four-year term, and Zatlers‘s time in office ends July 9.

The method of electing the president, particularly the process of nomination, is not spelt out in the constitution. Candidates have appeared in the past from all kinds of unlikely sources. Zatlers, a surgeon who was not involved in politics, was persuaded to stand for president four years ago—in a now infamous meeting in the Rīga Zoo—by the oligarchs he is now criticising.

For a long time Zatlers (who was eligible for a second term) was the only announced candidate for this year’s election. He received endorsements from the leading Unity (Vienotība) party and ironically by Šlesers’s party, For a Good Latvia! (Par labu Latviju!).

But a few weeks ago another candidate was nominated by members of the Union of Greens and Farmers (Zaļo un Zemnieku savienība, or ZZS): Andris Bērziņs, an old-time fat cat from the Soviet era, a man successful as a party apparatchik in that regime, who after independence became a banker and board member of some of the larger privatised companies.

A typically hypocritical non-debate then ensued about who would be the better candidate, with ZZS members making contradictory statements. However, most parliamentarians did not publicly commit, nor did they need they commit. In one of Latvia’s most undemocratic conventions, parliament elects the president—and other top appointments—by secret ballot!

Although seen by many as a lapdog appointment by the oligarchs four years ago, Zatlers showed a considerable degree of independence as he grew into the job, and made a number of critical interventions into local politics. So, even though Šlesers’s party at least publicly supported him, Bērziņš‘s candidature seemed to indicate the oligarchs were looking for a safer option.

Zatlers’s bombshell move to dissolve the Saeima clearly mobilised all the oligarch powers against him, but it was no plain sailing for them. To be elected president, a candidate has to receive 51 votes in the 100-seat Saeima.

In the first vote on June 2, Bērziņš only received 50 votes to Zatlers’s 43. As many commentators mentioned, something had gone awry with the oligarchs’ plan. In the second ballot Berziņš scored 53 votes to Zatlers’s 41. Three MPs had been found to change their vote, by means or reasons still unknown.

Two significant outcomes of this dark process can be pointed to, and one brief speculation may be worth airing. First, in relation to Zatlers himself, he has now become a hero for many who were dubious about his nomination four years ago, while those who supported him then now see him as the Devil incarnate. There has been much speculation about his political future. Will he form his own political party? Unity members have invited him to join them. Clearly Zatlers has grown in statute to become a significant political figure.

Secondly, the election of Bērziņš (who incidentally denies that so-called oligarchs have any influence on Latvian politics) once more showed the tenuous position of the leading Unity party, particularly in light of the continuing undermining by its coalition partner ZZS. Facing a decline in the polls and internal bickering, Unity has attempted to revitialise itself after Zatlers’s announcement, but now faces an uphill battle to make sure it is still the largest party after the elections.

To speculate further on Latvia’s surprising politics: If this is the first time a president has recommended dissolving the Saeima, could it be that if Bērzīņs really is seen to be protecting vested interests, he could become the first Latvian president to be impeached by the Saeima?

We await the referendum of July 23 and then the new Saeima elections. Will they bring the desired change to a more democratic Latvian politics?