Portraying the Baltic states in their current mess requires more than words and numbers. Only an old-fashioned chart, with a sea monster, a whirlpool, or perhaps a skull and crossbones, would begin to do justice to the plight of what were until recently the shining success stories of the ex-communist world. Eating a meal in a deserted restaurant in one of the fine old capital cities of Tallinn, Riga, or Vilnius gives a sense of the collapse. So does the silence of the half-finished construction sites, the rock-bottom rates in the glitzy hotels that shot up during the boom years, and the fall of a Latvian government under the weight of the current troubles. The Baltic states today are prime candidates to be the new basket cases of Europe, with their double-digit economic declines, beleaguered governments, and shriveling state spending.
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But 20 years ago, when I first visited what were then still the Soviet Baltic republics, the current problems would have seemed an almost inconceivably desirable state of affairs. The Baltic states, for almost all intents and purposes, had ceased to exist to the outside world for nearly half a century. As a youngster in Britain in the 1970s, I had read of Estonia, Latvia, and Lithuania as one might read about the mythical land of Atlantis—a fabled place of the distant past, submerged by an unimaginable catastrophe. In the early 1980s, I huddled with demonstrators in London, their banners reading, "Estonians out of Siberia! Soviets out of Estonia!" It was hard to know which seemed less likely. In London, I met elderly, dignified survivors of the Baltic lost world in dusty rooms that reeked of irrelevance and desperation. Even just visiting the Baltic states during their years of Soviet rule was near impossible.
Then came the small miracle of the 1990s. When I lived in the Baltic states for the final two years of the Soviet era, I did not just discover Atlantis: I watched it rise out of the sea and join the United Nations. As the editor of the English-language weekly The Baltic Independent, I chronicled what happened next: how the reborn republics cleaved to the West, shrugging off the economic and political legacy of the occupation.
Today, Atlantis is buffeted again by cruel and threatening tides. One is the sharp downturn in the domestic Baltic economies, which began two years ago when their reckless credit bubbles began popping. These had been inflated by the belief that the Baltic markets were rapidly converging with Europe’s. Property prices and consumer spending rocketed, creating huge current account deficits as Estonians, Latvians, and Lithuanians took advantage of the easy credit offered by banks keen to increase their market share in Europe’s most dynamic new region. Square foot for square foot, prime apartments in the Baltic capitals were costlier than in Copenhagen.
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