RIGA - The Latvian Saeima’s Budget and Finance Committee on Dec. 4 approved the euro implementation bill in principle, with the parliament expected to vote on the bill in the final reading on Jan. 31, the committee’s chairman Janis Reirs said, reports LETA. Ruling coalition members of the committee voted for the bill, while the opposition members were against, said Reirs.
Before the bill is reviewed in the second and final reading, MPs may submit their proposals regarding the bill, added Reirs.
Saeima party All for Latvia!-For Fatherland and Freedom/LNNK was to decide whether to support the bill during a meeting on Dec. 12.
The euro introduction bill stipulates when euros enter circulation, when the lats and euro circulate simultaneously, and other related matters. The bill also stipulates that price tags will include prices in both euros and lats three months before the introduction of the euro and six months afterwards.
Both currencies will circulate simultaneously for two weeks after the adoption of the euro. When receiving payments after the introduction of the euro, change will be given in euros. In addition, all ATMs will cease to dispense lats.
When the period of simultaneous circulation will expire, the euro will become the only legal instrument of payment in Latvia.
Latvia is planning to adopt the euro on Jan. 1, 2014.
But outside of the ruling coalition, feelings are not so strong for the euro.
On Dec. 5, Harmony Center MPs met with President Andris Berzins to express their concerns about “one-sided and superficial” discussions about the introduction of the euro in 2014. “There has never been a serious analysis of whether and when Latvia should join the eurozone,” MP Ivars Zarins (Harmony Center) told reporters after the meeting.
The sides also discussed related matters, for example - the role of the Bank of Latvia after the adoption of the euro.
Zarins also warned that the eurozone’s regulations could hamper Latvia’s economic breakthrough. “If we rush to join the eurozone, without reaching these countries’ [economic development] level, we may never ever reach it,” added Zarins.
MP Janis Tutins (Harmony Center) explained that Harmony Center is currently considering all the pros and cons of the accession to the eurozone. “It seems that January 1, 2014 may not be the best time to introduce the euro in Latvia,” said the politician.
In addition, on Dec. 5 Harmony Center’s Saeima Group could decide whether to support staging a referendum on the 2014 introduction of the euro, said the group’s deputy chairman, Valerijs Agesins.
Harmony Center has doubts about the timing of Latvia’s move and does not want Latvia to pay for the “joys and pleasures” of Southern European nations. The party believes that it is wrong to urge Latvian residents to pay millions of lats for the country’s transition to the euro and into the eurozone’s stabilization fund.
A divided public
Forty-six percent of Latvian residents say they want a referendum on the introduction of the euro, according to the latest DNB Latvijas barometrs survey. Thirty-nine percent believe that there is no need for such a referendum, while 15 percent have no opinion.
The survey was carried out at the end of October; 1,014 residents aged 18 to 74 were interviewed.
The Latvian government believes that there does not have to be a referendum on the adoption of the euro, since the country’s accession to the eurozone was a requirement when it joined the European Union in 2004.
Finance Ministry Communications Department head Aleksis Jarockis previously said that the bloc’s ten new member states have been participating in the Economic and Monetary Union as member states since May 1, 2004. Nevertheless, they will become full-fledged members only after they meet the Maastricht criteria.
Opposition holds key
The opposition Greens/Farmers Union is leaning toward holding a nationwide referendum. Ingmars Lidaka of the Greens/Farmers underlines that his party is not opposed to the euro per say, but they do have doubts about the necessity to launch the euro already on Jan. 1, 2014. Should the ruling coalition succeed in pushing through its bill on launching the euro as planned, the Greens/Farmers intend to urge President Berzins to decline promulgating it, Lidaka warned.
All for Latvia-For Fatherland and Freedom/LNNK has said it will most likely decide in favor of Latvia’s move toward the euro. However, if VL-TB/LNNK’s doubts about the necessity of the euro gain ground, the coalition’s work will be hampered and it will be necessary to form a new coalition, VL-TB/LNNK Saeima Group Chairman Einars Cilinskis said in an interview on Latvian Radio on Dec. 4.
At least five MPs from VL-TB/LNNK are no longer sure if they should vote for the introduction of the euro; therefore, Latvia’s plans for joining the euro area in 2014 may be derailed, TV3 broadcast ‘Neka personiga’ (Nothing Personal) reported on Dec. 2.
MPs Vineta Porina, Imants Paradnieks, Inese Laizane, Karlis Kreslins and Janis Dombrava say they are no longer sure if they should support the euro.
According to the broadcast, the VL-TB/LNNK Saeima group is debating a proposal to request that the European Union write off part of Latvia’s debt borrowed during the crisis, and to oppose the euro if the EU disagrees.
Timetable at risk
If the opposition, however, initiates a referendum on the euro, Latvia risks falling behind the euro introduction timetable, which means the country will not be able to introduce the European single currency in 2014, Prime Minister Valdis Dombrovskis (Unity) said in a discussion organized by the popular Latvian news magazine Ir. In regards to the euro implementation process, Latvia must prepare a report to the European Commission in January or February. This would be followed by a review of Latvia’s bid to join the European single currency, with decisions made by several European institutions. “Everything should be decided by July,” Dombrovskis said.
Dombrovskis added that, from a legal perspective, the vote on the euro took place simultaneously during the referendum to join the European Union in 2003. He also added that five of the “new” EU members that have joined the eurozone did not organize a referendum.
Prime Minister Dombrovskis, in discussing the recently formed and so-called ‘lat support group,’ says that it is being deceptive as to its true motives. The prime minister told members of the press on Dec. 7 that this group, created by Harmony Center, leads one to question their motives, and that the actions of group members lead to many doubts. “At a time when these so-called supporters of the lats [the Latvian currency] are yelling out against the euro in Saeima, their income declarations show that their savings are in the euro currency. It is clear that this group has different motives,” the prime minister said, but did not specify what these motives might be.
Early last week three Saeima members from Harmony Center - Nikolajs Kabanovs, Aleksandrs Sakovskis and Igors Melnikovs - established a ‘support group’ for Latvia’s national currency.
The group says it will discuss the euro adoption date and the conditions of Latvia’s accession to the euro. Kabanovs pointed out that Latvia’s society is currently dissatisfied and skeptical about the adoption of the euro. The group will attract experts and diplomats, including from other European Union countries, to discuss the introduction of the euro in Latvia. The first meeting could be held already this month, he explained. The MPs also promised to inform the community about “interesting findings.”
Benefits outweigh risks
Finance Minister Andris Vilks weighs in on the discussion, saying that he does not support staging a referendum on the introduction of the euro. It is difficult for residents to evaluate all the aspects of the matter, Vilks said in an interview on Latvian State Radio on Dec. 7.
The minister added that, if Latvia is to hold a referendum on the adoption, the country should have also voted on its international loan program.
Vilks emphasized that the euro’s benefits, losses, possibilities and risks are already being explained and will continue to be explained to the public. According to the minister, in financial terms it is clear that there are more benefits than losses from the euro.
However, “If a referendum on Latvia’s accession to the euro is held, it means that the country is not ready for the eurozone and the matter is being postponed,” believes the minister.
He also drew attention to the considerable improvements that the eurozone has achieved over the past few months. Meeting with eurozone colleagues, Vilks is becoming increasingly confident that the eurozone has put the worst behind it. He also said that Latvian households will feel actual improvements next spring, when wages will be raised for most employees in the public sector.