Eurozone entry plans leave Latvians cold

With the clock ticking until Latvia gets a green light to join the eurozone in 2014, the Baltic state's leaders are pulling out all the stops to demonstrate just how ready it is.

But while officialdom is gung-ho, away from the corridors of power the mood is unenthusiastic in this nation of two million, which has emerged from the world's deepest recession and remains locked in an austerity drive.

Polls suggest that ordinary Latvians are far from thrilled about joining the troubled eurozone, even though the centre-right government argues that it makes sense to be anchored in the same currency bloc as key trade partners.

In the small town of Cesis, some 90 kilometres (60 miles) northeast of the capital Riga, even those in industries used to using euros are underwhelmed.

In the cosy "2 Locals" cafe on the town square, owner Jolanta Sausina says customers ask regularly if they can spend cash they have brought from neighbouring Estonia, which adopted the euro in 2011, or from farther afield, rather than pay in Latvian lats.

"Strictly according to the law we are not allowed to accept euros for cash payments," she told AFP. "We do let them pay in euros if they don't have any lats, but then we have to change the money at the bank and lose money by paying a commission."

While a switch might make transactions easier, Sausina is not getting excited, given Latvia's complex history of gaining, losing and regaining its independence in the space of just seven decades.

"I am 38 years old and this will be the fourth time the currency has changed. First we had Soviet rubles, then Repsinieki [a temporary currency after Latvia won freedom from Moscow in 1991], then the lats returned after 50 years away and now it will be euros," she said.

"People aren't very attached to any particular currency as none of them stay around long," she added.

At the Orchideja travel agency across the square, manager Liena Karklina was even less enthusiastic.

"It's only a big thing for the government," she said.

"It won't be good because it will make our lives more expensive. Ordinary people don't care about currencies, they care about prices, and from speaking to colleagues in Estonia, we expect prices to rise when we join the euro because that is what happened there."

The government's pro-euro stance is boosted, however, by the fact that the only outright opposition is limited for now to the political extremes.

The left-wing group "Anti Globalisti" and the far-right "Perkonkrusts" -- whose name comes from a Latvian form of the swastika -- have formed an unlikely anti-euro alliance.

On their shared website, eirone.lv (Euro No), they accuse the Latvian government of being "puppets" of an international elite, with one section laced with anti-Semitic invective.

Latvian officials insist that thanks to its austerity measures the country already meets the European Union's Maastricht criteria for switching to the euro -- covering inflation, debt and deficit levels, and roundly breached by most members of the 17-nation currency bloc.

The only obstacle appears to be whether Latvia's economy -- marked in the last decade by extreme swings between breakneck growth and recession, and an international bailout -- is deemed to be on a "sustainable" path.

Latvia hopes to get a green light in the first half of next year from the bloc's executive European Commission and the European Central Bank to adopt the currency in 2014.

But with months left before Latvia's euro fate is decided, pressure is building for a referendum, even though eventually adopting the currency was part of the package when the country joined the EU in 2004.

Latvia's constitutional court head Gunars Kutris has signalled that he would be prepared to consider the legality of a challenge to euro adoption if it were filed.

The main opposition party, the left-leaning Harmony Centre, has yet to officially back a plebiscite but the Riga city council, which it jointly controls, is raising the idea with increasing frequency.

"Adopting the euro is estimated to cost 400 million euros ($509 million) and that is a cost that will fall onto the shoulders of residents," said senior councillor Vadims Jerosenko.

"In a democratic country the government is supposed to take into account the views of the majority," he added.

An August survey of more than 1,000 people by the Latvijas Fakti pollster showed that just 35 percent supported euro adoption, with 59 percent against and six percent undecided.

--

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