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Latvia puts final touches on eurozone bid

Latvia passed legislation Thursday to finalise its bid to become the eurozone's 18th member next year despite polls showing little public enthusiasm to adopt the euro.

Riga now plans to formally request European Commission and European Central Bank approval to join on January 1 the single currency union, which is battling back from its long debt crisis.

The Commission and ECB are expected render their decisions by the middle of the year.

As about 40 hardcore euro opponents rallied outside parliament as lawmakers approved a transition plan drawn up by the centrist government of Prime Minister Valdis Dombrovskis.

The plan covers details of how the currency switch is to take place, such as the length of an interim period during which prices will be displayed in both currencies.

The national currency, the lat, has already been set at a fixed rate that makes it worth 1.42972 euros.

Recent polls however show that few Latvians support the euro switch, as they worry it could bring more hardship to the nation of two million people that is still recovering from the world's deepest recession in 2008-9, which resulted in a cumulative economic contraction of 25 percent.

Speaking in parliament ahead of the vote, Dombrovskis argued that eurozone membership would offer financial stability, boost investment and guard against Latvia's currency being attacked by speculators.

"The alternative to the eurozone is being relegated to the periphery of Europe... joining the eurozone is in Latvia's best long-term interests," Dombrovskis said.

Latvia will probably make its formal request for ECB and Commission approval in February, or in March at the latest, he added.

Opposition lawmakers, however, questioned the wisdom of entering a currency bloc plagued by debt crisis.

"We are the third poorest country in Europe (...) Our pensioners will have to support Greek pensioners whose pensions three times larger than theirs," Iveta Grigule of the opposition ZZS party told lawmakers.

A December survey by DNB bank showed just eight percent of Latvians backed rapid euro adoption: 42 percent preferred to wait, while 41 percent opposed the move outright. The remaining nine percent were undecided.

Latvia is obliged to eventually join the euro under the terms of its accession to the EU in 2004.

But many Latvians are now afraid it will further hurt incomes squeezed by austerity measures that the government imposed under an EU-IMF bailout to stabilise public finances and meet the criteria to adopt the euro.

"Everyone expects prices to rise, and lots of people can barely make ends meet as it is," said Jana, who runs a florist stall at a Riga market.