Latvia should strengthen old-age safety nets and raise the basic state pension in order to reduce pensioner poverty, especially among women, and address the challenge of a fast declining population, according to a new OECD report.
The OECD Review of the Pension System in Latvia highlights the challenges facing the pension system. Latvia’s working-age population (people aged between 20 and 64 years) is expected to fall by about 20% over the next two decades, due to low fertility rates, increasing life expectancy and high emigration. The pension system is designed to automatically adapt to demographic trends. While this will secure the system’s financial stability over time, it will also reduce pension benefits.
Already today, Latvia’s old-age poverty rate is the second-highest in the OECD, after Korea: more than 25% of people aged 65 and older have an income below the relative poverty line. Older women are especially vulnerable: more than one-third of females over 75 live in poverty and the notional defined contribution (NDC) scheme does not offer survivor benefits for spouses.
At 64 euros per month in 2017, the basic pension represents 8% of gross average earnings against the OECD average of 19% and has not increased in nominal terms for more than 10 years. There is substantial room to increase the level of old-age safety nets, according to the report. In order to avoid a negative impact on work incentives, the minimum pension should be set so that each year of contribution increases the benefit.
The normal retirement age is 63 years and 3 months for both men and women and will reach 65 in 2025. As benefit levels decline when life expectancy increases, linking the future retirement age to life expectancy gains will help prevent too many people retiring with too low entitlements.
The Latvian NDC scheme meets its objective of delivering pension benefits that depend on contributions made during the working life in a financially sustainable way. However, the current practice of transferring funded defined contribution (FDC) assets to the NDC scheme to compute regular pension payments, the so-called annuities, should be eliminated as the two schemes are based on different rules and principles.
The design of the mandatory and voluntary funded pension schemes should be improved. Introducing a default investment strategy so that the amount of risky assets invested falls as people get closer to retirement would help.
Administrative fees charged by private financial service providers for the management of the FDC scheme are high in international comparison. In part, this may reflect the relatively recent introduction of the system, but it is mostly due to a lack of competition between pension providers. Recent reforms introduced in early 2018 to rein in costs go in the right direction but require strong monitoring to be effective.
Did Russia Really Win in the 2008 August War?
Eleven years have passed since the short Georgian-Russian war started on August 7-8 in 2008. As every discussion on who started the war generally is, the Georgian-Russian one too is about finding moral grounds for military actions which both sides took at the time.
Morality in geopolitics, and the Georgian-Russian conflict is indeed caused by pure geopolitical calculations, is at most times a superfluous thing. All these years the Russians have been trying to convince the world and the public inside the country that the Russian military moves actions and subsequent recognition of the independence of the Abkhazia and Tskhinvali regions were the only possible and correct actions to be taken. The Georgians also have their dilemmas: some marginal political figures still believe that it was the Georgian government that was most to blame for the catastrophe of 2008. Though close geographically, these diverging narratives and the constant need to prove one’s own truth says a lot about how far apart Georgia and Russia have grown in the past decade.
11 years since the war and it is still unclear what Russia has gained from its military and diplomatic actions since 2008. True, military build-up in Abkhazia and Tskhinvali Region limited Tbilisi’s ability to become an EU/NATO member state. Moreover, Russian intervention into Georgia in 2008 also showed the West how far Moscow can go if a strategic decision is made to draw Georgia into the alliances. At the time (August-September 2008) those seemed to be long-term (strategic) victories for Moscow. In international relations and geopolitical calculations, you can stop a country from attaining the aims harmful to you, but in the long run you will be unable to reverse the process by forceful actions alone: you have to provide a counter-policy to turn an unfriendly state into an amenable neighbor.
Put all of this into the Russian case. More than a decade has passed since 2008, only a few not-so-important states recognized Georgia’s territories as independent entities. The Georgian public is overwhelmingly anti-Russian, the last hopes of a grand geopolitical bargain – the return of the territories in exchange for reversing EU/NATO aspirations – have disappeared among the Georgian public, and support for western institutions so far has only increased.
In the end, though Moscow waged a reasonably costly war in 2008, took and still experiences a diplomatic burden for its moves against the West, and has yet to attain its grand geopolitical goal of reversing Georgia’s pro-western course. Politicians in Moscow, at least strategists behind the scenes, all understand that Georgia’s persistence, which seems naive today, might turn into serious business if Russia’s geopolitical positions worsen elsewhere in Eurasia.
Indeed, there are signs that Russian influence is set to diminish further in the former Soviet space as the country’s economy is unlikely to be attractive to the neighboring states. Imagine a scenario where Russian internal problems (Putin’s upcoming succession, economic downturns, China’s rise, stronger Ukraine, etc.) weigh ever stronger upon the Russian decision-makers in the 2020s, then Georgia’s western aspirations might become more concrete – it will be easier for the West to make a strategic decision to draw Tbilisi into EU/NATO.
Overall, Russia definitely gained significant results in 2008, but in the long run it did not change the strategic picture in the South Caucasus, though it did produce a grand design for geopolitical domination in north Eurasia: years after the war, Moscow initiated its Eurasian Economic Union (EEU) to draw its neighbors into one economic space – a prerequisite for building a world power. Ideally, it should have attracted Russia’s major neighbors and it would have served the people of the former Soviet space economically. But Moscow failed to get Ukraine and other states involved: without Kiev, the EEU, if not dead, is at least a marginal project. This means that Russian policies towards Georgia and the wider South Caucasus remain the same as before 2008 – keeping foreign powers out of the region, while failing to provide an alternative vision for Tbilisi.
Author’s note: first published in Georgia Today
Lithuania’s new chief of defence has no chance
Lithuania’s new chief of defence, Major General Valdemaras Rupsys calls himself a realist though it seems as if he is a fatalist with no hope to change anything in the national armed forces.
In a detailed interview with BNS Valdemaras Rupsys demonstrates his inability and even lack of hope to modify national military system. He distinctly reveals his plans.
Major General Valdemaras Rupsys says he will seek to accelerate new armored vehicle and artillery system purchases if the country’s defense spending makes this possible.
The key words here are “if the country’s defense spending makes this possible”. The matter is Lithuania itself can rely only on foreign financing and help to strengthen its defence. Thus, he informs that a number of Boxer IFVs are currently being delivered to Lithuania. Renamed “Vilkas”, or “wolf” in Lithuanian, the vehicles will be provided only to two battalions of the Iron Wolf mechanized infantry brigade, in Rukla and Alytus. It should be noted that Mechanized Infantry Brigade “Iron Wolf” is the core unit of the Lithuanian Army and forms the country’s contribution to NATO collective defence. But even this unit will not be provided with all necessary vehicles and equipment.
The brigade’s other two battalions, in Rukla and Panevezys, will continue to use old M113 armored personnel carriers, with plans to replace them with more advanced vehicles by 2030. No budget money – no vehicles!
Major General Valdemaras Rupsys admits that the only thing he can definitely do – to speak to the authorities. “We’ll definitely have to speak to the ministry about whether there are possibilities to replace their platform earlier than planned,” the general told in an interview. “Plans call for doing so in around 2030 but everything depends on financial resources. There won’t be any drastic decisions to replace the acquisitions that we are already planning now,” he added.
When he answers to the question if the Iron Wolf brigade needs tanks he is very flexible and says that “being aware of our means and financial capacity, I don’t dream about tanks right now. We don’t have such plans.
Another question is if he dreams about fighter jets in the Lithuanian army. And he again says – “No, I don’t today. I am a realist and don’t dream about things we cannot have.”
The worst thing is his full satisfaction with the existing situation. He will not even try to change things. In terms of conscription system he shifts the responsibility on the political leadership, on the whole, which should decide on that. And then what is his responsibility? Does Lithuania need such a chief of defence who decides nothing from the very beginning?
Obviously, Lithuania has no money, but according to Major General Valdemaras Rupsys Lithuania even lacks of ambitious either to be a strong country. Possibly, this aim could be reached at the expense of others. At least he is honest.
Polonia: Poland’s diaspora policy
In 2007, the Polish authorities for the first time adopted a government program to promote cooperation with the Polish diaspora (Polonia) and Poles abroad. In 2002, they introduced May 2 as Day of Polonia and Poles Abroad.
The strategic objectives of this program for 2015-2020 include support for the development of Polish language and culture among Poles abroad, strengthening Polish national identity among representatives of Polonia, contributing to the popularity of Polonian organizations abroad and the return of Poles living abroad to their homeland, establishing economic, scientific and cultural contacts between Poland and Polonia .
The Polish Foreign Ministry estimates the number of members of the Polish diaspora, including ethnic Poles and people of Polish descent, at 18-20 million, one third of them were born in Poland. Polonia and the Poles rank the sixth if we compare the proportion of members of the diaspora abroad with the population of the country of origin. 18% of tourists visiting Poland are members of Polish organizations abroad and ethnic Poles.
The largest Polish diasporas are in the USA (9.6 million according to 2012 reports), in Germany (1.5 million) and Canada (1 million). Poles are also living in France and the United Kingdom (0.8 million in each), the Netherlands (0.2 million), Ireland and Italy (0.15 million in each), the Czech Republic (0.12 million), Sweden and Norway ( 0.11 million in either), Belgium (0.1 million). In countries such as Austria, Spain, Denmark, and Iceland, members of the Polish diasporas number less than 100 thousand people.
According to the Polish Foreign Ministry, more than 1 million Poles and people of Polish descent live in post-Soviet countries. According to the ministry, these estimates are not accurate – for one, in Belarus, the most “Polish” republic of the former USSR, the number of Poles and people of Polish origin could amount to up to 1 million (official reports estimate the number of Poles living in Belarus at 295 thousand).
Lithuania comes second by the number of Poles residing there – (250 thousand), the third is Ukraine (144 thousand), then Russia (47 thousand), Latvia (46 thousand) and Kazakhstan (34 thousand) – the fourth, fifth and sixth, respectively.
Polonia is conditionally divided by the Polish Foreign Ministry into ten functionality-based geographical groups: 1. Lithuania 2. Belarus 3. Ukraine 4. Latvia, Moldova, Romania, Slovakia, Hungary, the Czech Republic 5. Western European countries (Great Britain, Germany, France, Italy, Denmark, Switzerland, Sweden, etc.). 6. USA, Canada, Australia, New Zealand 7. Other European countries 8. Russia, the Caucasus, Central Asia 9. Brazil, Argentina 10.Other countries of the world.
This division was carried out on the functional, rather than numerical basis and there is no universal approach as to how to categorize Poles living abroad – each of the above mentioned countries sets its own requirements for working with Polonia. People who have Polish roots but do not speak Polish and who reside in the USA, Canada, Australia, New Zealand, Argentina, and Brazil are regarded as Polish diaspora by Warsaw. In this case, there is a need to popularize Polish informational and ideological products for Polonia in these countries in the language of the country of residence with emphasis on the economic and cultural components and projects for the study of the Polish language.
The latter bears particular importance. In Brazil, for one, there are more than a dozen Polish language courses. People who go there are provided with social benefits and all the necessary documents – student ID passes for students, work certificates for teaching staff (teachers get discounts 33% to 49% on public and rail transport in Poland, etc.), certificates of Polish schools for distance learning, etc.
Given the presence of anti-Russian sentiment in Poland’s policy, it is not surprising that Russia, the republics of the Caucasus, and countries of Central Asia are among those that Warsaw accuses of breaching the rights of ethnic minorities, including Poles, which is not true. Working with Polonia in these regions carries a clear ideological touch, as historical grievances prevail over culture and economy. By intentionally inciting conflict, concocting accusations of violating the rights of ethnic minorities,Warsaw equips itself with ideological tools to justify its aggressive Eastern policy towards Russia, Belarus, and Ukraine.
In particular, there are noticeable attempts by Warsaw to force Polish organizations in Russia to participate in anti-Russian propaganda campaigns, especially regarding retrospective assessments of Russian-Polish and Soviet-Polish relations. Polish diplomacy cites the unsuccessful Polish uprisings of the 18th-19th centuries, exiled and repressed Poles of the tsarist and Stalinist times, return of Poland’s western lands to Soviet Ukraine and Soviet Belarus following the Red Army’s Polish campaign in 1939, etc.
The Polish Institute of National Memory (PINP), being an exclusively ideological structure, is on the list of state institutions and ministries that are responsible for cooperating with Polonia. A projecttitled “The Next Stop is History” has been launched in order to promote the historical and ideological heritage of Poland. Implemented within the framework of the Polish diaspora program of the Department of National Education of PINP in several countries at once (conferences, exhibitions, symposia, film screenings, lectures, military sports games), the project has no geographical restrictions and is conducted with the participation of certified teachers.
Let us focus on some characteristic features of the Polish diaspora policy:
– the prevalence of economic aspects while establishing cooperation with ethnic Poles living in the USA, EU and South America;
– a powerful propagandistic and political emphasis and a minimal presence of economy while dealing with Polonia in countries of the former USSR;
– abandoning tactics of interaction with Polonia which presuppose acting through Polonian organizations only and which have proved ineffective;
– coverage by social, cultural and other projects of the largest possible number of ethnic Poles, in the first place, those who are not members of diaspora organizations;
– absence of heavy vertical hierarchy in disapora organizations in favor of horizontal links and shuttle diplomacy;
– contribute to the formation of a protest and opposition-minded stratum amongst the young in countries of the former USSR (Russia, Belarus, Lithuania, Ukraine) with further placement of its representatives in local government structures, the media and other socially important projects.
Summing up, we can say that Warsaw’s diaspora politics abroad are focused on strengthening its positions in the Western community and pursuing unilateral and controversial goals in the eastern direction. From our partner International Affairs
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