Since Latvia’s new government came into office two months ago, the atmosphere of Latvian politics has changed almost beyond recognition. When President Valdis Zatlers picked Valdis Dombrovskis to be prime minister, a sequence of events began that now show us a government facing up to the realities both of the catastrophic financial crisis engulfing Latvia, and of the need to change a political culture of corruption and self serving.

Dombrovskis is from the New Era Party (Jaunais laiks, or JL), which stood outside the previous coalition, but he quickly stitched together a coalition that has been remarkably trouble free. Paradoxically, the situation made it easier to form a government, in that all the former coaliton parties were keen to do so quickly, or face a possible early Saeima election. Dombrovskis was also able to sideline a mortal enemy of JL. Ainārs Šlesers’ First Party of Latvia (Latvijas Pirmā partija, or LPP) was not accepted into the coalition, leaving it and the two Russian-oriented parties in opposition. To show he does not give a damn, strongman Šlesers himself is now a candidate for the mayor of Rīga, another source of potential kickbacks now that his political businesses in the national government (transport, communications, infrastructure) are no longer accessible. The former coalition-leading People’s Party (Tautas partija), the Union of Greens and Farmers (Zaļo un Zemnieku savienība) as well as the much bruised and discredited For Fatherland and Freedom (Tēvzemei un brīvībai / LNNK) make up the coalition together with JL.

Overshadowing the politics is the daunting economic situation, with Latvia needing to borrow several billion euros from the International Monetary Fund but needing to bring in severe cutbacks in spending. Budget cuts of just under LVL 1 billion (EUR 1.4 billion) will reduce the deficit to an acceptable level. Latvia must be able to eventually bring its budget deficit down to 3 percent of gross domestic product to qualify for acceptance into the euro zone. This time around it is intent on limiting the budget to a 7 percent deficit, fearful that revenue decline will even make this hard to achieve.

Dombrovskis gained his credentials as a Europarliamentarian, with a penchant for economic and infrastructure issues. His team includes the extraodinary return of a previous superstar, Einars Repše, who was the celebrated director of the Bank of Latvia that maintained the currency despite all adversity, then the ill-fated self-directed prime minister of the first JL government, and then a petulant isolate. Now Repše is back in the hot seat as finance minister, and seems to have regained much of his financial credentials. He and the government are in an almost impossible situation: given falling revenues, cuts to government spending must now approach some 40 percent. The government has indicated there will be protected core areas: health, education, internal affairs (including fighting corruption) and justice, but even they must restructure many of their activities. And “protected” is a very relative term: both teachers and health workers are facing salary cuts.

One other area that has already been cut savagely was the raft of committees, councils, advisory panels, secretariats and boards of dozens of enterprises and semi-government institutions where representatives—almost all with close links to one or other former coalition parties—gained enormous salaries for little work. These sinecures have been almost totally abolished. There is an ongoing reduction of numbers in all government departments. More worryingly, both the state-owned TV and radio face massive cuts. There are concerns over their maintianing programming standards and questions have been raised even about their viability. Other state-owned institutons of national importance, including libraries, also face uncertain futures.

Under this barrage of financial woe a remarkable scene is unfolding of ministers relatively rarely openly squabbling, and even those who despised JL and kept it out of previous coalitions have had to put their heads down and follow Dombrovskis and Repše into financial responsibility. While it is certain that drastic cuts in the upcoming budget will be unpopular, ministers of all parties are caught in a bind: Each wants to fight for their area of responsibility, but each knows that if IMF requirements are not met, the country will be in even greater financial chaos, and they will be blamed.

The first test of the new political order will soon be upon us with local government and European Parliament elections on June 6. Here other, more traditional, political issues are to the fore. Both elections will be a test to see what support the former coalition parties still have in the electorate. The People’s Party has been down to less than 2 percent popularity in some recent opinion polls, and although it holds power in many local government areas it could be in for a shellacking. For Fatherland and Freedom may share a similar fate, and even the traditional Union of Farmers and Greens has struggled to gain 5 percent support. JL is now the leading party, according to opinion polls, alongside the Russian-oriented Harmony Centre (Saskaņas centrs, or SC).

Yet it will be the Europarliament elections that will generate most heat, and there the SC is at the heart of the issue. The SC is a peculiar organisation. At the last Saeima elections it had considerable success in vastly outpolling the other traditional hardline Russia-leaning party, For Human Rights in United Latvia (Par cilvēktiesībām vienotā Latvijā, or PCTVL). SC consists of three factions. Two are moderate, gaining most of their votes for Russians who are Latvian citizens, but gaining some support among Latvians as well. Their very presentable leader, Nīls Ušakovs, is running for mayor of Rīga in the local government elections. Many Latvians indeed would prefer him to Šlesers, the other celebrity candidate. Ušakovs’ faction runs a moderate line on ethnic and national issues.

The third faction is headed by the notorious Alfreds Rubiks—former mayor of Rīga, Communist Party first secretary and unreconstructed pro-Moscow advocate—who was jailed in 1991 for six years because of his treason against the new Latvian state. Detesting the very existence of the Latvian state, he has worked hard to align himself with the SC instead of the PCTVL.

Now Rubiks is the No. 1 candidate for the SC in the European Parliament elections. Having a possible Latvian representative of this calibre in the EP has shocked many. It also raises questions about the “moderate” credentials of the SC. Was it really a put-up piece of political craftsmanship to assume a moderate face while still harbouring anti-Latvian and pro-Moscow policies? Although voters have the option of crossing off names and even many SC voters may balk at electing this troglodyte figure, there is a chance Rubiks may become one of Latvia’s Europarliament deputies. If PCTVL still manages enough votes, we may have two such deputies representing Latvia.

If you are a Latvian citizen your vote on June 6 may be more than usually needed.