The Latvian government has decided to make the switch from their national currency of the lat to the Euro. As part of the former Soviet Union, Latvia is still feeling the effects of their occupation by the Soviets, as they have only been independent since 1991. They still depend on Russia for energy, and almost 30% of the population identifies as Russian. But with the switch to the Euro, Latvia is hoping to more closely align itself with Western Europe. Latvia has the fastest growing economy in the European Union, of which its been a member since 2004, but it still is considered one of the weaker economies due to the hard hit it took during the 2008 recession. Some Latvians show trepidation at joining the Eurozone, as Russia has a large stake in Latvian banks due to both legal and illegal ventures and any growth due to joining the Eurozone would surely benefit Russia too. Another concern from the Latvian people is the loss of identity that comes with joining the Eurozone. The lat is not only a currency, but a symbol of freedom as it was adopted by Latvians after they gained their independence from the Soviet Union. But most of the top political and business leaders agree that adopting the Euro will only make their country stronger.
http://www.csmonitor.com/World/Europe/2014/0125/Pride-and-trepidation-in-Latvia-as-it-swaps-to-euros
I am curious to see how this pans out in terms of their economy. Initially I think we will see a boost but I am not sure how it will do down the road especially if Turkey joins the EU and adopts to the Euro. Something else to consider will be how this effects relations with Russia. I wonder if Russia will be reluctant to help Latvia in the future but only time will tell. In my opinion this is something where I think the benefits of economic stability might outweigh the uncertainty of some of the Latvian population.
ReplyDeleteThis comment has been removed by the author.
ReplyDelete