Lithuania switched over to the euro yesterday, becoming the last Baltic nation to adopt Europe’s single currency, in a bid to boost stability despite fears of inflation and eurozone debt woes.
Baltic leaders withdrew their first euros from a Vilnius bank machine just after midnight, as the eurozone gained its 19th member and fireworks signed off a year marked by alarm over Russia’s role in the Ukraine conflict and its economic crisis.
For a nation scarred by decades of Soviet occupation, eurozone entry is an important step and a symbol of “deeper economic and political integration with the West,” Lithuanian President Dalia Grybauskaite said.
Photo: AFP
Other countries once behind the Iron Curtain now provide some of the leading figures in the EU. Former Polish prime minister Donald Tusk took over as president of the European Council last month, while Latvia assumed the rotating EU presidency yesterday.
A total of 337 million Europeans now share the euro currency.
The three Baltic states broke free from the Soviet Union in 1990-1991 before joining the EU and NATO in 2004. Estonia and Latvia became eurozone members in 2011 and last year.
“In joining the euro, the Lithuanian people are choosing to be part of an area of stability, security and prosperity,” European Commissioner for Economic and Financial Affairs Pierre Moscovici said.
However, in the run-up to the change from the litas to the euro, public support has wavered.
Fifty-three percent of the population of 3 million backed the euro and 39 percent were against, a November poll released by the central bank showed.
“I support the euro because it leads to greater integration into the EU and makes traveling in the EU easier,” 26-year-old lawyer Karolis Turcinavicius said.
However, pensioner Danute Petkeviciene was skeptical.
“The euro will not increase pensions or wages, it will only increase prices,” Petkeviciene said.
Vilnius resident Teresa said she regretted losing a symbol of the country’s statehood.
“But, it’s part of globalization,” she added.
Lithuania’s membership comes as political uncertainty in Greece is once again stoking fears that the eurozone’s debt crisis could flare up.
Vilnius has already committed hundreds of millions of euros to the eurozone’s rescue fund for struggling members.
“Financial commitments are a huge burden and increase the country’s debt. I think we should have delayed entry,” financial analyst Valdemaras Katkus told reporters.
The litas has actually been pegged to the euro since 2002, making it dependent on the European Central Bank. Vilnius had hoped to adopt the euro in 2007, but failed to meet the inflation criteria.
The global financial crisis put the goal on hold in 2009, when Lithuania suffered a deep recession.
Biting austerity measures far exceeding any applied in Western Europe turned the economy around, resulting in recent growth of about 3 percent.
However, social security cuts and other slashed public spending also encouraged record emigration to richer European nations such as Britain.
Most analysts say eurozone entry will foster export growth and encourage investment.
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