Latvians forced to join the euro

by N. Peter Kramer

While Latvians overwhelmingly oppose joining the euro, on January 1 Latvia will be the 18th EU memberstate to enter the Eurozone. In spite of millions of euros spent by the European Central Bank on an information campaign to convince Latvians of the benefits of the euro, nearly sixty percent of them oppose the single currency, according to the French news agency AFP. ‘Latvians have endured steep wage cuts rather than Lat (= the national currency) devaluation, as the government sought to get the country out of economic crisis while keeping on track to join the jury’.  Latvians were not allowed a referendum on joining the euro, since the government was afraid the public would reject it.  

Latvia’s Baltic neigbour Lithuania will be next. Its President Dalia Grybauskaite, a former European Commissioner, probably still excited by having the rotating EU Presidency in the last half year, predicted that her country will be number 19 and enter the Eurozone Januari 1, 2015. Let’s hope she has learned the lesson from Latvia and will give her compatriots at least the chance of a referendum.

In any case, EU leaders will celebrate the expansion of the Eurozone as an endorsement of the battered single currency, even though Latvia has a population of only 2 million. The European Central Bank, governed by an executive board of six and the heads of the euro countries’ central banks, will welcome Ilmars Rimsevics, the Latvian national bank president. According to the system, he will have as much say as Jens Weidmann, head of Germany’s Bundesbank, even though Germany’s economy is over 100 times bigger than Latvia’s. Another reason for Germans to fume about the euro? 

Nobel prizewinner economist Joseph Stiglitz said recently: ‘the euro was expected to bring economic growth, prosperity and unity. It became stagnation, instability and division’…