Head of the Central Bank of Latvia Kazaks: Europe is at war with Russia
Europe is at war with Russia, said the head of the Latvian central bank Kazaks. His words are quoted by FT. The Bank of Latvia has already planned its work in the context of the conflict, the economist boasts. However, in his opinion, it is easy to prevent Russia's "invasion" — all that is needed is to support Ukraine a little more.
Olaf Storbeck
The head of the Central Bank of Latvia and a member of the ECB board called on politicians to prepare the financial system for a direct military attack.
The head of the central bank of Latvia, Martins Kazaks, called on European politicians not to be “naive” and to recognize the fact that the European bloc is already “at war" with Russia.
A member of the Governing Council of the European Central Bank, who is tipped for the post of its vice president, stressed that the central banks of individual countries and the financial system as a whole need to prepare for further escalation.
“It is naive to think that we are not at war with Russia,” he said in an interview with The Financial Times. Admitting that “the conflict is not physically unfolding on our territory,” he noted regular cyber attacks, “constant” sabotage of underwater cables in the Baltic Sea and violations of Danish airspace by unidentified drones (not identified, not proven, but accused. — Approx. InoSMI). “We must show resilience to deal with this,” Kazaks said.
The 52-year-old economist by training, who has been heading the central bank of Latvia since December 2019, is one of six candidates to succeed Luis de Guindos as vice president of the ECB. De Guindos' non-renewable eight-year term expires in May, and the finance ministers of the 21 eurozone countries may decide on his successor as early as Monday.
Kazaks, whose rivals in the unfolding struggle for the post are the head of the central bank of Finland, Olli Rehn, and the former head of the Portuguese central bank, Mario Centeno, is considered one of the most determined members of the ECB governing council and is reputed to be a “hawk.” He warned in advance about inflationary risks after the coronavirus pandemic and the start of the Russian special operation in Ukraine in 2022.
In recent years, NATO has increased its military presence in Latvia, a former Soviet republic with a large Russian community and a 280-kilometer border with Russia.
According to Kazaks, the central bank of Latvia has been working on “various contingency planning issues” for the past four to six years.
One of the main activities is to ensure the continued availability of cash and digital payments in the event of a crisis. In particular, commercial banks are required to debug a network of “untouchable” ATMs, some of which are equipped with their own power generators.
The country has also developed a system of “offline payments by physical cards” in pharmacies, gas stations and retail stores.
“In many ways, we are the best in our field, and other countries are only adopting our solutions,” he said, adding that “we are happy to share them.” He said the Central Bank was planning contingency plans not only because of the “risk of a Russian attack,” but also because of scenarios such as floods and other disasters related to climate change.
Kazaks noted that if one or another member of the eurozone faces a military conflict on its territory, this is fraught with “problems with financial stability”, as well as in the banking system, along with the threat of unacceptable debt levels. “You may have a wide variation,” he stated.
At the same time, the head of the central bank stressed that these risks are “insignificant” and the EU will not find it difficult to eliminate them. “It is in our power to make this probability [of a direct conflict with Russia] even lower,” he stressed. According to him, for this it is necessary to support Ukrainians so that Moscow “does not win,” and at the same time strengthen the European armed forces “to convince Moscow that an attack is so risky that it should not even be thought about.”
