Euro Unhappiness in Latvia

Latvia is joining the euro zone – but many Latvians are not too happy to be the 18th country to join the monetary union. Nearly three in five Latvians were thought to prefer continued use of the old lat to the new euro.

“Lasting gloom from [the 2008 recession in Lativa] is one reason why outside plaudits are not matched by the mood inside the country: Latvians are not greeting the euro with much enthusiasm,” noted the Economist’s Cassandra columnist. “Some mourn the lat, as a cherished symbol of restored statehood. But the main reason is a general cynicism and mistrust of the political class. Many tens of thousands of people have left the country since independence. Although the economy is now the fastest-growing in Europe, this has yet to tempt many people back. Nevertheless, optimism for 2014 is still to be found in Riga, the country's capital, as seen in our video above.

Some wonder these days why the euro is attractive. The Wall Street Journal’s Simon Nixon noted that “two of the euro zone’s largest economies – France and Italy – have made the least progress in terms of improving their competitiveness and productivity through the crisis, reflected in very weak growth outlooks. It is an open question whether Paris or Rome has the will to undertake essential reforms—or face down the inevitable resistance from vested interests.”

“Latvia, with its large ethnic Russian minority, is often seen as having closer economic ties to Russia than its fellow Baltic states Lithuania and Estonia. Russia remains an important export market while its banking system attracts substantial deposits from clients in other ex-Soviet states,” noted the BBC.

“While most of the European Union’s 28 member countries are obliged eventually to ditch their national money for Europe’s single currency, skepticism among European citizens about the euro union is still alive in many corners,” wrote the New York Times’ Liz Alderman. “Lithuania is on track to be next in adopting the currency, in 2015. Like Latvia, its neighbor and fellow former Soviet republic, it is eager to link itself to the West, an imperative that has grown starker as Russia seeks to keep a grasp on Ukraine despite recent pro-Western protests there.”

Still, one weapon Russia has to use against the European Union in eastern Europe is euro-fatigue. As the Economist’s Cassandra noted, “joining clubs is one thing. Enjoying their benefits is another. Even at today's 4% growth rate, it will take many years before Latvians overcome the legacy of their four decades of enforced isolation and backwardness - and the reckless and incompetent policy-making of some of the years since.”