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Latvia submits bid to join euro in 2014 (2013 03 06)

The Latvian government on Tuesday (5 March) officially submitted a request for the EU commission to assess its readiness to join the euro on 1 January 2014, despite public opposition to the move.

"Latvia's decision to request entry to euro area shows how much progress the country has made to get its economy back on track after the 2008-9 crisis," EU economics commissioner Olli Rehn told reporters after receiving the application.

Latvia in 2009 was the first EU country to ask for an EU-IMF bailout due to the financial crisis that made its economy shrink by 10.5 percent.

Its economy has recovered since, with Rehn noting that Latvia now has the highest GDP growth rate and the second-highest export rate in the EU.

Unemployment, which spiked above 20 percent in 2009, is "steadily falling, even if still high," Rehn said. Last year, Latvia's unemployment rate stood at 14 percent, according to Eurostat.

The European Commission and the European Central Bank are expected to publish their report on Latvia's euro-worthiness by June, with finance ministers set to decide in July whether the tiny Baltic nation can become the 18th member of the eurozone on 1 January.

Rehn's praise for Latvia's "success story" indicates that the report will be positive, the only irritant being public opinion that has grown increasingly negative, with about two thirds of the population now opposing the euro.

The government is not required to hold a referendum, but other member states may point out to the lack of public support when taking the decision, Rehn said.

"Public opinion is always important in democracies, the higher the public support, the more convincing it is for other member states. This is not a membership criteria, but other member states will take it into account," the commissioner explained.

As for the Latvian finance minister, Andris Vilks, he insisted that getting Latvia into the single currency will benefit the rest of the club.

"A new, fiscally prudent country with huge experience in the previous crisis, which has learned a lot of lessons could be a very strong value-added for the eurozone."

By Valentina Pop, © EU Observer, 06 03 2013

Skaitytoju komentarai

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2013 04 02 Fekete

one of the reasons America set up the Marshall Plan was to build mrekats for its industries. We need to build all the eurozone's economies to build a market for the goods produced. Some of the old industrial towns of eastern Germany need this support as much as say Greece. 6) Build up potential eurozone membersWe need to build up these economies, some of which have been badly managed, so that they can be readily integrated. Euro Structural PartnershipSo the ESP has two short term projects and a number of long term projects. Short termSet up a management structure and a eurobond issue to prevent debt crises and the talk of defaults. Long termSet up either an integrated euro financial system or an enforceable monitoring and controls on all euro-members to prevent the series of problems we are experiencing. In addition it needs to offer further bond issues to support the weaker economies and to develop growth. Long term aims for the euroThe management of the euro should have the following goals. 1) Stable so investors will see it as a good investment.2) Safe so that investors are confident that they will get their money back.3) Relatively low value to encourage exports and tourism and therefore growth.4) Potentially a world reserve currency the dollar can no longer be considered a safe, long term currency because of its deficit and the potentially erratic behaviour of some of its politicians. I am aware that some commodity producers, eg oil, have looked at the potential of pricing their products in euros as an alternative to the dollar. My speculation is that the dollar will gradually lose its dominance and that other currencies, including the euro, could be used in some regions. Will ESP get support?I note that China and some of Middle Eastern Sovereign Funds are, even with our debt crises, looking at investing in the euro as a way of balancing their investments. I feel that if we offer a constructive way of resolving the immediate debt problems, with a structure that looks like a reasonable long term strategy for stability and growth the funds will flow into the eurozone as a very safe haven. The risk will be that they may flow too fast risking an over-valued euro. Will the German voters buy ESP?I personally think that a long term strategy for sorting out the immediate debt problems will gain more support from voters than the continual bail-outs and the threat of defaults etc. If this can be done within a framework that will improve productivity and financial stability of the weaker economies and boost growth throughout the whole eurozone, particularly in the weaker areas of even the stronger economies would be easier to sell.

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