Throughout the Europeans Union, both concerns and expectations are mounting today as Latvia is joining the eurozone. Not long after midnight, Latvia’s Prime Minister, Valdis Dombrovskis, has withdrawn the first euro banknotes from a Riga cash machine. Last night, fireworks did not only mark the beginning of the New Year, but Latvia’s becoming the 18th member country of the common currency block.
Yet, only about 25 percent of Latvians seem to be happy about the adoption of the euro. The latest polls show that about a half of the nation is scared and annoyed over the country’s second currency change in two decades. Typically, people fear mostly rising prices and even harsher austerity measures. A vocal anti-euro grouping “No Euro” even compares the “rule” of the common currency to the ruble under Soviets. The leaders of the group not only argue that entering the eurozone will allow others to rule the Latvian economy, but also claim that there are no benefits that the euro could bring.
Latvians who are happy about the euro think that it is overall a good thing for the economy while admitting that they would miss their lat adopted in 1993 and pegged to the euro in 2005, which the country hard won after the collapse of the Soviet Union. Some Latvians even think that it is truly remarkable that the country managed to enter the euro club despite numerous economic downfalls and shabby reputation as a money-laundering hub and a tax haven. Yet, the Brussels leadership praised Latvia for its tremendous effort it made in meeting the Maastricht criteria. Jose Manuel Barroso commented that the country’s determination and zeal were appreciated.
Latvia adopted a free market economy after the dissolution of the Soviet Union in 1993 and experienced hefty economic growth until 2008-2009. The crisis then threw the country to one of the worst recessions in EU28. Prime Minister Dombrovskis then called for a 7.5 billion euro international bail-out to prevent bankruptcy.
