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Latvia joins Eurozone as 18th member

Latvia’s ushered in 2014 by joining the eurozone Wednesday as its 18th member. Latvia’s government believes that euro will help attract investors to the Baltic state which suffered massive debt crisis but recently emerged to become the EU’s fastest-growing economy.

According to the Irish Times, Latvia’s economy increased by 5.6 percent in 2012 after the government introduced one of the harshest austerity programs in Europe. All these happened after a bankruptcy-bailout of €7.5 billion from the IMF-EU.

“The euro became Latvia’s official currency after midnight local time Tuesday (2200 GMT Monday) as New Year’s rockets exploded in the skies over the capital, Riga,” the Washington Post reported.

Latvia entered the eurozone without a permanent government after Prime Minister Valdis Dombrovskis resigned in December following a supermarket collapse in Riga that reportedly killed 54 people.

Caretaker Prime Minister Dombrovskis said the decision to join euro is part of Latvia’s strategy to cope with the economic crisis.

The switchover to euro signifies another stage of Latvia’s cessation from Russian influence to a full-fledged member of Europe. Latvia ceded the Soviet Union in 1991 and joined the European Union and NATO in 2004.

The BBC quoted the governor of the Latvian central bank, Ilmars Rimsevics:

“Euro brings stability and certainty, definitely attracting investment, so new jobs, new taxes and so on. So being in the second largest currency union I think will definitely mean more popularity.”

While the government and businessman rejoiced the development, ordinary Latvians criticized the move.

According to reports, half the Baltic state’s population oppose switching to euro. A large section of Latvians consider their own currency, “lats,” as a symbol of independence.

For middle class Latvians the eurozone’s financial woes in recent years is a cause of concern. Further there is strong resentment toward the government-imposed harsh austerity measures to fulfil the bloc’s stringent membership criteria

For the European Union too, the addition of Latvia shows that the euro has managed to survive despite the slowdown in Europe.

According to the New York Times, “The European economy has stabilized and the euro is actually appreciating in value. The euro rose 4.5 percent against the dollar in 2013, its best showing in years. The euro is now worth $1.38.”

Welcoming Latvia into the eurozone Tuesday, EU President José Manuel Barroso said, “This is a major event, not only for Latvia, but for the euro area itself, which remains stable, attractive and open to new members.”

The euro, launched 15 years ago, now becomes the official currency of 333 million Europeans, according to reports.

Estonia joined the eurozone in 2011 and Lithuania aspires to become a member in 2015. That would complete the Baltic States’ economic, political and military merger with the West, symbolizing distance from Russia’s power influence.