Editorial: Welcome, Latvia!

Photo: AFP / Scanpix

Come New Year, eurozone will have added another member – starting January 1^st 2014, Latvia adopts euro, becoming 18^th user of the common currency.

Largely, Latvians have shared the worries we used to have, three years ago, during the final days of 2010. The greatest fear or ours – of prices skyrocketing – failed to materialise. According to Eurostat, the switch to euro lifted Estonian consumer price index by 0.2–0.3 per cent from December 2010 to March 2011. Broadly, such a movement was in line with what happened to Slovenia, Cyprus, Malta and Slovakia who got in riding the first wave in 2002.

Price rises are caused or kept in check by various factors; vital role may have been played by price sensitivity by consumers – in our case, two years into the global economic crisis, it was very high. Surely, also, there were the merchants who – as is true regarding Latvia, this yea – raised the prices in advance, to avoid scaring the clients away come euro. Still, the campaign Euro Won’t Rise Price sounded more positive than the Latvians’ Honest Euro User. At the same time, we must not forget the differences in domestic political backgrounds and in economic climates – with us back then and with Latvians at the moment. True, these are not glaringly large; even so, with a change as weighty as new money, details do play decisive roles.

One such aspect, perhaps a meaningless emotion in the monetary world, still a natural factor in public opinion, is the simple regret of losing our own money. Like kroon to us, so latt to the Latvians: both served as reminders of the pre-war republics. 

Nevertheless, money loves not sentimentality; adoption of euro does good to Latvia and Estonia alike. The devaluation dread, experienced by Estonia in times of the crisis, will now dissolve. Also, the currency exchange costs will go – whoever has travelled the euro area knows how much nuisance they are spared. Also, use of common currency would show a state’s economy to be trustworthy and its leadership stable. Meanwhile, though, euro itself is in need of stability and trust.

While the Maastricht criteria, a kind of a dogma for use of euro, should serve to exclude any instability and external show with all aiming to use the euro, the economic crisis revealed the criteria only to work as they are followed.

Mere promises will not help. Thus, the economic crisis has lead to a North-South confrontation within the eurozone – not to the benefit of reliability of the common currency. Thus Latvia, having suffered severely in the economic crisis, yet succeeding in getting itself in «euro shape», might come as political inspiration to other euro-users and as a hush to its ever ready doomsayers.