State sector austerity drives are old news for EU’s Baltic states

RIGA, May 9, 2010 (AFP) – Seen from the eastern rim of the European Union, the looming austerity drive in crisis-afflicted Greece reads like old news.

For almost two years, the Baltic states of Lithuania, Latvia and Estonia have brought in repeated draconian anti-crisis measures, slashing public spending and hiking taxes to try to dig themselves out of a hole.

“We learned the lessons very painfully, heavily and effectively, that you need to look after the fiscal situation very carefully,” Lithuanian Prime Minister Andrius Kubilius told AFP in a recent interview.

“We understood very clearly that fiscal consolidation was the only way for us to survive,” said Kubilius, a conservative who won power in October 2008 on an anti-crisis platform.

The picture is different in each of the Baltic trio, who joined the EU in 2004 and had a reputation for rapid economic growth until the crisis hit.

Latvia turned to the EU and International Monetary Fund for a 7.5-billion-euro (9.5-billion-dollar) rescue package, which set the terms for an austerity drive running from 2008 to 2012.

Among the measures have been average public-sector pay cut