Latvia: The land that still loves the euro

The European single currency may currently be unloved by many of the people using it thanks to the ongoing debt crisis on the continent, but there remains one small outpost of euro-enthusiasm. Far away from the corridors of the European Commission and European Central Bank, the Baltic state of Latvia is gung-ho about swapping its currency, the lats, for the euro. The plan is to meet all the Maastricht criteria governing euro adoption by the end of this year in order to qualify to switch from the lats to the euro in January 2014. "We have to be ready, regardless of what happens with Greece or in other countries," Finance Minister Andris Vilks told AFP. "We are focusing and have a good chance to enter a eurozone that will be much more disciplined and prepared for shocks in the future," he said. "Everything that's happening at the moment is good, whether it's fiscal union, in banking or whatever. We cannot miss this opportunity." Struck by the world's deepest recession in 2008-2009, Latvia imposed a draconian austerity drive in part to ensure it could hold its course to meet the Maastricht criteria, which are meant to ensure robust public finances. Another goal was to maintain the lats' peg to the euro, a longstanding plank of Latvia's economy policy. But even if Latvia meets all the criteria so routinely flouted by existing eurozone members, the European Commission and ECB must both give their assent. The fact that neighbouring Estonia was admitted to the troubled eurozone in 2011 under similar circumstances would make any refusal highly controversial. Euro-enthusiasm is even stronger at the Latvian central bank than it is in government. This week the bank hosted a discussion of the subject that emphasised the expected benefits of eurozone accession, with little time given to possible risks. "We are now placed quite comfortably in terms of meeting the Maastricht criteria," Uldis Rutkaste, the bank's head of monetary policy, told AFP on the sidelines of the event. According to Rutkaste, more effort needs to be made to spread the message about the benefits of euro adoption. "Every day we get mostly negative news from Europe. Many people don't follow it that closely and don't understand all the issues but they see that something negative is coming from Europe and that affects their attitude towards the euro as well," he said. While getting the euro is the obsession of Latvia's policy-making elite, the public appears sceptical -- on the surface at least. An August survey of more than 1,000 Latvians by the Latvijas Fakti pollster showed that just 35 percent supported adopting the euro, with 59 percent declaring themselves against and six percent undecided. However, most analysts agree that what looks like a high degree of euro-scepticism may not be as strong as it first seems. University of Latvia expert Ivars Ijabs says the question of euro adoption is seen less as an issue of economics than of reinforcing a European identity and national security -- further anchoring the former Soviet-ruled nation of two million in the European Union, which it joined in 2004. "According to opinion plls we are rather euro-sceptic, but there has been no call for a referendum (on adopting the euro) and even if there was, there would be a large campaign stressing security issues," Ijabs told AFP. "Probably Latvia will enter the eurozone as it entered the European Union -- without much debate as it is more or less self-evident that Latvia has to be there." There is similar pragmatism in the business sector. Dainis Senbergs of the Valmieras Stikls fibreglass manufacturer says that joining the eurozone will place exporters in a more efficient environment. "It will be easier to manage risks and will help in negotiations with other countries such as India and America who understand the euro, instead of having to explain about the lats," he said. "The euro question is really not so critical to ordinary people," he claimed. "They don't like the idea of having to bail out people who are richer than them, and that will have to be answered, but it basically comes down to which side of the world we want to orientate ourselves -- is it Europe or some other part?"