RIGA – Unemployment, recession, debt, crisis and bailouts have associated with the euro over the past few years. So it may come as a surprise to hear that a relatively poor country on the edge of the European Union is hurtling toward full membership within the year.
Latvia is the country in question, and its lawmakers passed legislation Thursday that brings membership one step nearer in spite of widespread worries among the population.
Latvia, which became independent from the former Soviet Union in 1991, intends to send a formal request to the European Union next month asking permission to adopt the euro — a request that, if approved, will make it the 18th EU country to use the common currency, which over the past few years has been ravaged by a debt crisis that at times has threatened its very existence.
Latvia’s center-right government believes that becoming a member of the euro bloc will attract investors to its open economy, which between 2008 and 2010 saw economic activity collapse by nearly 25 percent.
The country had to borrow €7.5 billion ($10.2 billion) in bailout funds from such lenders as the EU and International Monetary Fund to avoid bankruptcy. In return, the country had to enact painful austerity measures.
Addressing lawmakers Thursday, Prime Minister Valdis Dombrovskis said introducing the euro is a part of Latvia’s strategy to cope with the economic crisis.
“From an economic standpoint, right now Latvia is at the crisis’ finish line,” he said. “Introducing the euro symbolically ends the period of tough economic reforms and secures the state’s further development.”
The prime minister said Latvia will benefit from the euro, arguing that foreigners will consider the country a more attractive proposition to do business and local entrepreneurs will save money on currency transactions.
Opinion polls in the country of 2 million do show that a majority believes there is no need to rush, since Latvia — which will be the poorest euro member in terms of GDP per capita — may have to contribute to the bailouts that have become such a feature of euro politics. A poll in December showed that 60 percent of adult Latvians were against adopting the euro.
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