Mad Latvia defies its own people to join the euro … EU finance ministers have just given the go-ahead for Latvia to join the euro in January 2014. No matter that the latest SKDS poll shows that only 22pc of Latvians support this foolish step, and 53pc are opposed. This is a very odd situation. The elites are pushing ahead with a decision of profound implications, knowing that the nation is not behind them. No country has ever done this before. The concerns of the Latvian people are entirely understandable. Neighbouring Estonia found itself having to bail out Club Med states with a per capita income two and a half times as high after it joined EMU. Latvia may find itself embroiled in an even bigger debacle if the contractionary fiscal and monetary policies of the eurozone push Slovenia, Portugal, Spain, and Italy over a cliff, and push Greece and Cyprus into yet deeper crisis. – UK Telegraph
Dominant Social Theme: Joining the European Union is always a sincere and positive action.
Free-Market Analysis: This article takes a position of shock regarding Latvia's joining the EU. In fact, it states that such a situation has never taken place before. We would beg to differ.
The populations of various countries have been indicating their dissatisfaction for years with EU policies but have often been deprived of the ability to state them via the voting booth. Instead, various parliaments have been consulted, which only shows that parliamentary democracies are vulnerable to pressure in ways the larger electorate is not.
In some cases, the electorate has made its dissatisfaction known (Ireland comes to mind) and then has been forced into a "revote." This is a ludicrous event, one that cannot be justified, and further illustrates EU dysfunction and the undemocratic regime that it has become.
We are not surprised that Latvian officials in concert with Brussels have decided to drag Latvia ahead even though most citizens emphatically do not want to embrace the EU and its potential encumbrances … for good reason.
We are not shocked; we believe it has happened before.
Latvia has become the poster child for the EMU policy of internal devaluation – ie wage cuts. It is cited time and again by EU leaders, and by EU bail-out chief Klaus Regling, as the clinching evidence that austerity a l'outrance ultimately pays off. But let us be clear about what Latvia has achieved, and not achieved, and whether it offers any meaningful example for the Club Med pack.
It is worth reading the European Commission's report earlier this year on poverty and social exclusion. Latvia stands out – with Bulgaria – as the country that has seen worst increase in "severe material deprivation", with the rate surging from 19pc to 31pc since 2008. (Bulgaria also has a fixed exchange rate, by the way). Poland did far better with a floating Zloty through the crisis.
While Latvia's unemployment rate has dropped to 11.7pc from a peak of 20.5pc, this is not the full story. Another 7pc have dropped off the rolls (one of the highest rates of discouraged workers in the EU). Roughly 10pc of the population has left the country. The blue collar working classes have borne the brunt of the deflation strategy, while the affluent middle class with foreign currency mortgages have been protected.
Policy has been shaped for the class interest of the elites (sorry to sound like a Marxist, but Marx was good at spotting this kind of abuse). Many who lost their jobs in the crisis – often Russian ethnics – have not found work, and may never do so again in Latvia if they are over 50. This is how internal devaluations work. They break the back of labour resistance to pay cuts by driving the jobless rate to excruciating levels.
… Latvia should be a post-Soviet tiger economy with turbocharged rates of growth. It should be 10pc above its 2008 peak by now. What Latvia has achieved is to survive its deflation ordeal without losing its democracy – though the government did play the race card against ethnic Russians to clinch the last elections. It has held its pre-euro exchange rate peg in the ERM. Congratulations.
This may be a desirable political and strategic outcome, if your objective is to lock into the EU system as deeply as possible to protect against Vladimir Putin. But it is not an economic success. Latvia's entered the crisis with public debt of just 17pc of GDP in 2008. It never faced a debt-deflation threat. It could deflate without the risk of exploding debt dynamics. This is entirely different from Italy or Portugal, with debts above 120pc, or Spain with debts nearing 100pc (including arrears).
… The country's recovery does not vindicate EMU austerity doctrine in any way at all. It merely shows that states with low debt and high exports can survive such a policy. A low bar, surely? As for joining the euro, you must be mad.
The points made here are good ones so far as they go. We learn Latvia has been subjected to punishing austerity measures even in advance of joining the EU. And we learn that austerity's success was probably because Latvia didn't have economic problems that were as severe as those of Greece or Spain.
Beyond this, we learn that Latvian residents, having been punished by austerity, are reluctant to join the EU because they understand they might soon have to shoulder the burden of various bankrupt EU countries. This is also a fear of German citizens who are fighting the creeping communalism of EU debts.
Finally, there is nothing special, unfortunately, about the Latvian case. EU officials have been browbeating, bribing and otherwise pressuring officials of various countries to join or cooperate for decades. It has just become more obvious now because the EU is in such bad shape that it is obviously illogical for countries to continue to join or otherwise expand their involvement.
The EU stands revealed as a coercive mechanism for elites' expansion of empire. It is run by an Anglo-American axis that seeks global hegemony, and the EU is a steppingstone in that regard.
Latvian citizens are right not to want to join.
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