Gitanas Nausėda: We have lost our compass

According to SEB chief economist dr. Gitanas Nausėda, who leads in the expected future president and most influential business figure ratings, people’s welfare and declining social segregation should be directions for Lithuania’s future because the state cannot be sustained if 10% in it are happy, while 90% grieve, lzinios.lt writes.

In his interview with LŽ, between talks of forecasts, evaluations of current government and G. Nausėda’s personal life details, talks always turn to the coming presidential elections. But we quipped that we did not pose the key question – will he or will he not run for president – due to two reasons. Firstly, because G. Nausėda has earlier stated he would not announce his decision before September and second – few doubt that he will say yes.

A president of the times

– Every time requires its president. Valdas Adamkus was truly suited to be the leader of a state, which had just regained independence, as a builder of roads to the world and as a moral authority. Dalia Grybauskaitė was elected for her first term during a crisis because there was need for a president, who is familiar with economics. What time, according to you, will the coming five years be?

It will be a decisive time. Of course, every term has certain traits of fate, incredibly important matters, the resolution of which decides the country’s future for decades ahead – be it entry into the EU and NATO or the global financial crisis, when Dalia Grybauskaitė won the elections.

This time it will be geopolitics with tensions between the main powers of the world – the USA and Russia, also the EU will continue to seek its place in the puzzle. Second, it could be we will face another crisis. I do not think it will arise from matters here in Lithuania, but externally we can see hints that the economy has reached a summit and will start descending in the long term.

The third challenge is linked to the reduction in EU support: questions arise, whether we are prepared to transition to a qualitatively new situation. Sometimes gifts are not adequately valued – due to this reason, after entry into the EU, much funding has been used for by far not the most necessary or effective for the public projects. We will now need to learn to live with a smaller amount of EU funding – to manage to draw a larger result from a relatively lower sum. We must dedicate less funding to the exterior image of cities and towns, which has already improved in many cases. But a beautiful view does not inherently create jobs. If we want people to remain in their place of residence, they need work and income. For this, we need to seek business, investment, invest in the newest technologies.

Relations with our neighbours will be important, especially our Baltic sisters, Poland – I would like for relations to improve with it and in this respect there are certain good beginnings. We must not forget Ukraine, Georgia and other post-Soviet countries we have traditionally maintained friendly relations with.

And of course, we must define our relations with Russia based on values – answer to ourselves, whether we can sacrifice some of our security for our economic interests at times. In my opinion, today it is primarily security [we need], thus we must carefully monitor, what is happening in Ukraine and arrange our responses based on it. As a person, who was once greatly interested in chess, I know that the same player cannot make two moves in a row. There was a Russian move in Ukraine, the a US move, EU and Lithuania’s move as part of the EU and now it is once more Russia’s turn. Some politicians are starting to talk that we can once more create a spring of good relations with Russia. While the situation is what it is, only when Russia makes its move can we think of how to improve relations with a neighbour that is very important to us. But this does not mean we must separate ourselves in terms of culture and society or that we can freely watch sometimes misleading information in Russian news media. You do not have to shoot at one another on the information front, but you must present true information and prevent false information from spreading everywhere.

– So what sort of leader would be most suitable for the country to resolve these challenges?

No university nurtures an internationalist and financier, and economist at the same time. We need a person, who would be prepared to willingly deal in all areas of these matters, in which, despite lacking a university diploma, they took interest, was in rhythm with the country. Today, it is unlikely someone would elect an uncivic person, one who took no interest in these questions.

Teaspoon reforms

– Is the Seimas and cabinet reacting to the challenges you mentioned suitably? You criticised the prime minister’s idea to combat inflation with police methods.

When promises are made that prices will not rise, but there are no talks about competition, I as an economist cannot settle for this and not say the truth – bar competition, we do not have any leverage to rein in price increases. You can muse how prices are rising by the rising welfare of some, increases in purchasing power allowing retailers to raise prices and not fear a decline in demand. However, under such circumstances inflation becomes a very painful social phenomenon, which is truly hurtful for a major part of citizens. In Lithuania, the level of poverty is rising in social groups, which are already vulnerable because they are dependent on the government, its decisions on pensions and social welfare payments. And the size of these, at least to this year, were rarely reviewed, were behind the times, thus inflation would race ahead.

– How do you view the tax, pension and other reforms?

I cannot claim that the proposals will make things worse. But I do not see arguments, why these reforms could not have been implemented from the start of this year, without wasting a whole year. The implementation of reforms will drag on until the end of term, when fundamental tax reform should be done, shifting wealth, real estate and car taxes. However, with the nearing elections and fears of loss, key reforms are abandoned. Thus, there will be only a teaspoon of redistribution from one container to another. These are not reforms, only a small step in trying to increase the net incomes of working society at least a little. Whether the extra 40-50 euro per month in a family’s wallet will lead to significant changes or whether this is fundamental reform or just teaspoon politics, let them answer.

Decisions on pension indexing were long due because there was need to depoliticise the assignation of their sizes. Sometimes it was bound to no logic, for example pensions were raised right before the crisis, then lowered, it turned out unconstitutionally, thus compensation was to be made. We are wasting time and most important – worsening people’s situation. Indexing makes for conditions for pensions to rise alongside inflation and incomes. However since pensions are linked to the labour wage fund, they are significantly dependent on the situation in the labour market. Over the past few years, the number of those in employment rose in Lithuania and in turn, the labour wage fund rose, the average wage rose. However, we are entering a stage, where the number of those in employment will decline, which will lead to a decrease in the labour wage fund in turn. Due to the indexing methods, pensions could begin to lag behind the average wage, thus poverty may continue increasing and not because people’s wages are declining, but because the labour market and demographic situation is worsening. Such aspects show that the rules of the automatic game are good in terms of depoliticising, but at the same time are not at all enough for a major improvement in people’s welfare.

– You emphasise aid to those in difficulty. Is it easy to be socially sensitive when you are as wealthy as you are?

I am a representative of the middle class, a hired employee, I do not have any stock portfolios, have not invested abroad or bought a house in other countries. Yes, I earn a notably larger than average wage. But I have to sustain my family, home and home loan from it and when all the commitments are counted, I certainly do not count millions. I understand what it means to live from one wage to the next because my situation was certainly not what it is now.

In 1993, as a doctorate student in Vilnius University, I earned a wage of 100 litas. It was very difficult to balance the family’s income and expenses, especially when my wife raised our daughters, the family had no other income. Thus, I understand very well what social segregation is.

But I am talking about reducing social segregation not even from personal experience. Often we say in Lithuania: let us bake the economic pie and then we can share it. However, the cycle of economic growth began in 2010. We have been baking that pie for so long, but we keep promising it will be shared tomorrow. But there may be another crisis tomorrow. Then we’ll say it’s time to tighten our belts. I wish to say – there was a time to bake the pie, now is the time to share it.

– You hint that a lean time may soon reach our doors. How should the state prepare for it?

First, it must learn to live based on its income. In this area, there have been positive shifts – since 2016, we no longer have a budget deficit. But this is more likely a minor fiscal surplus, not a true one because it is measured in tenths of a percentage of the GDP and it is clear that we would need to accumulate it for a long time until it amounted to anything much, which would allow to face a crisis as, for example, the Estonians did in 2009.

– By the way, have you ever been greatly mistaken with your predictions? Prior to the earlier crisis, you predicted it would not be as large as it turned out.

That I would have completely missed the mark, that I would have said that something would increase, but it decreased, I do not recall over the past eighteen years. But I truly remember that in 2008 I imagined the crisis as far gentler than it was. There is an easy explanation for this: no econometric models could project and calculate people’s actions. In 2008, we started with a very modest recession prognosis – 1.5% of GDP, but it had to be corrected a number of times until it reached 15%. However, back then I was bickering with the then Prime Minister Gediminas Kirkilas, who then radiated Olympian calm and claimed that the crisis will wholly bypass Lithuania. Politicians yield to epaulette optimism. The same occurred in 1998, during the Russian crisis, when the then Prime Minister Gediminas Vagnorius claimed that the crisis would strike painfully elsewhere, not in Lithuania.

Trust does not fail to please

– For a number of years, you have been ranked as one of the most influential business representatives in the country. Do you feel your impact on the government?

I have never been concerned over how the influence materialises. Though even now when talking about the potential response to price increases, government officials initially started from peculiar phrases of we’ll show you, we’ll start limiting premiums. But after economists’ statements that we should first look at competition and everything else is derivative, I can see how the rhetoric changed, now there is talk about limiting the working hours of large retailers during holidays in order to create better conditions for smaller ones to compete. Not much, but better than some sort of police methods.

– Your ratings have grown eightfold over the past three years and continue to rise. Is this important to you, does it oblige you, please you or perhaps do you not care at all?

It cannot fail to please. I have always been in the open with people they see that if you talk honestly, sometimes make mistakes, but do not deceive, then it means you are just the same as them. My public professional activities make the basis of these ratings because I see no other reason for my presence on those rating charts alongside politicians, who are backed by massive financial resources, whole parties – who are adorned, figuratively, with generals’ epaulettes. And then, among them you suddenly find some economist.

– You represent a commercial bank. Conservative MP Žygimantas Pavilionis appealed to the stockholders of the SEB bank half a year ago, stating that “it is an ambiguous and dangerous situation when one of the most famous economists in the country at the same time represents the SEB bank and is identified as one potential candidate to Lithuanian president.” Is the opinion of a private business hired employed not dependent on business interests?

Pavilionis’ letter highlighted one matter – if you work in a commercial bank and enter politics, you certainly cannot work there. If I choose to enter politics, my career in the bank will end there and then. But up to then, I certainly see no conflict of interests. I seek to analyse economic processes honestly and objectively and the bank is uninterested in providing misleading information to the public because this way it would breach its image as an expert institution. If I were to jabber on nonsense, my reputation would be ruined and then not only would I not be elected to any lists of the most influential, I wouldn’t be listened to at all.

– Have you ever considered joining a party or participating in elections with one?

There’s been politics in my life – I actively participated in the electoral campaign for Valdas Adamkus when he sought his second term and my role in the electoral headquarters was by no means insignificant. It was a very interesting time. I did it out of ideals because I greatly sympathised and continue to sympathise with President Adamkus, I was glad that he won the elections. If I contributed to it, I am very glad.

But I have never been keen on aligning myself with any of the parties because I view it as a danger to my reputation as an expert. If you become a member of a party, can you objectively comment on economic and social processes? Similarly, I am left with doubts on the independence of political scientists, when they join a party.

– Has seeing the political kitchen not deterred you from considering entering politics?

There are certainly many matters in politics that I do not like and will never be able to come to terms with. But this is a question of cost and benefit – if you see that being in politics can bring more benefit than you will experience unpleasant situations, then it is worth going. If you believe that it will bring more harm to your family and you will not bring adequate benefit to the public, it is better remaining outside of politics.

Sins for three Hail Marys

– When considering whether to run for office or not, is there any influence from how not only your, but also your relatives’ biographies will be thoroughly investigated?

If anyone really wanted to investigate, I could do them a favour and investigate myself. Looking back, I do not see any major sins of mine.

– There really has been nothing to hear of any major public scandals, except regarding your house, which is viewed as the sore of Pūčkoriai Outcrop by environmentalists and conservationists, even having to take matters to court.

Yes, there were legal proceedings and if anyone wishes, I am ready to tell the story of my house from A to Z.

– Nevertheless, it is said that you can find a “skeleton” in any person’s closet

If I went for a confession with a priest, I would have something to say. But he would certainly have nothing to be shocked about. Those sins could be redeemed by three Hail Marys.

– Do you go for confession, are you religious?

I am an irregularly practising Catholic. Church to me is a sort of rock, which maintains the axis of coordinates in the contemporary world, which rapidly loses direction and sometimes, in my opinion, is headed nowhere. When we have the church and principles, which have not changed in centuries, some could criticise their inflexibility and clumsiness, but if you wish to understand whether you are not losing your path, you need to have an unchanging axis of coordinates.

– You have been married for 28 years and even have the same education as your wife. Is that your influence?

I am a very loyal citizen – I have changed neither wife, nor country. My wife wanted to improve herself – she had an excellent engineering education, but an economic component was lacking. Perhaps we could talk as equal discussion partners in the evenings? I jest, of course. She is currently a lecturer at the School of Business.

My daughters declared they do not wish to be economists early on and I told them – great. One finished her bachelor’s studies in Vilnius Gediminas Technical University and is now studying in Architecture in Gent University. The university has currently sent her to Nepal to help establish a school. Soon, as one of the best students in the course, she will travel to Beijing University, which is ranked eighth in the world, in an exchange programme. She will defend her master’s thesis in half a year.

The other is in a sort of crossroads. This year she finished her Far East Culture (Koreanistics) bachelor at Vytautas Magnus University and is considering, what she wishes to do. Thus for now she will work for a year in the international relations department of Paris University, will aid foreign students. She knows English, French and Korean, thus it will aid her greatly.

Peaceful politics appeals

– You are a famous collector, especially of historical books on Lithuanian history. What time period of Lithuania is the most beautiful to you? And which should rather not be repeated?

The best is the XVI century as a time of enlightenment – cultural, legal and even economic. A university was established in Vilnius, the city was beautified, defensive walls built, brick palaces. Meanwhile the XVIII century is the least appealing. The XX century is both sad and happy: the facts of 1918 and 1990 are happy, but the large portion was spent under terrible conditions of occupation.

– How do you find the XXI century?

It started decently – we entered the vitally important for Lithuania organisations of the EU and NATO. But we have now somewhat lost our compass and no longer know, what the clearly most important goal that we should consistently seek is.

In my opinion, this is people’s welfare. It should be the basis, which would allow to dismiss the wrong paths, decisions, which yield nothing; we should focus on this goal. When I talk about welfare, I also have social segregation in mind. If 10% in the state are happy and 90% grieve, then like in a family where the husband is happy and the wife is not – no, I don’t know if such a family can be called stable. The same applies to the state.

– Your Facebook profile displays what a wide spectrum of hobbies you have – Pažaislis Music Festival, history, track and field championship. You have admitted that earlier, when reading only professional literature, you realised you are becoming a professional idiot, thus you decided to no longer read economic texts in our free time. However, did you feel that competent in the topic of theatre that after the Lithuanian National Drama Theatre play Trys Seserys (Three Sisters), the audience was invited to hear out your opinion? Some interpreted this as the start of your presidential campaigning.

Some said I am out of my depth, but I did it in the past as well, just now when aspirations have appeared that I could supposedly participate in the presidential elections, people’s eyes are different. It was only amusing that in the same portal, which gently mocked me, there was a review published from Aušra Maldeikienė the next day for a classic music concert. So what is this with double standards? As for the play, I commented as a member of the audience, not a theatre critic. I have no ambition to become a theatre critic.

– You seem to be a sort of gentleman of fortune – excellent career, people’s trust. But it is no secret that in your entry exams to university, you failed during the maths exam and had to start your “career” from being an orderly at a medicine warehouse. Yes, entering university after a year, you finished it as the best student in the course, gained work experience in Germany, earned your PhD and had a career in the Bank of Lithuania until your current position. You said that the fiasco in the entry exams was the first shove. What sort of shoves have you had in recent times?

Sometimes it is even intimidating that I do not get enough of them because I like shoves that do not kill you, but urge you to make good conclusions. I’ll face difficulties if I choose to enter politics, but I am not a person, who would just give up.

– By the way, who among world leaders impresses you?

It would be easy to answer about Lithuanian politicians – it is Valdas Adamkus. As for the world, in recent times it has been a pleasure to watch Emmanuel Macron. Not because he was once a banker, but because he has many ambitions linked to the future of the EU. It is interesting to watch, how he does not act blindly, but with a certain philosophy, ideology.

Often it happens in political history that in order to achieve something, you must let loose rivers of blood. I find cases where the opposite is done appealing. Mohandas Gandhi, the Dalai Lama show that there are other means in politics than just war such as seeking compromise with one’s opponents.

– At the start of the talk, you drew a parallel between politics and chess. Is politics chess, a game to you?

I have no doubt that chess has a fundamentally positive influence on people’s lives. If I were in politics, I would seek for chess to be a mandatory or at least selective discipline in school, same as it is in some countries. But politics is much more than chess. You cannot say that it is a game when the lives of 3 million people depend on it. It is a very complex matter and it is the reason why I am taking a long time to analyse myself so that I could answer myself, whether I am suited to take the office of president, whether I am ready for it.