VALDIS DOMBROVSKIS is undeterred. In spite of Cyprus, Slovenia and the continuing euro crisis, the prime minister of Latvia wants his country to join the single currency on January 1st 2014. This week he flew to Paris to persuade the French who, along with the Spanish, are among the most sceptical about Latvia’s designs.On the face of it Latvia should be a shoo-in. The tiny Baltic state effortlessly fulfils the Maastricht criteria. So far the euro zone has never rejected a country that complied with all of them. Moreover, Latvia’s economy is growing robustly, its currency has been pegged to the euro for nearly ten years and as much as 90% of its private and corporate debt is already in euros. Its northern neighbour, Estonia, joined in 2011 and Lithuania, the third Baltic state, is hoping to follow in 2015.Yet Latvia has only recently become a Baltic success story. A deep slump saw GDP shrink by some 20% in 2009. In December 2008 the European Union and the IMF agreed to a €7.5 billion ($ 10.1 billion) bail-out for Latvia. A period of stringent austerity that drastically reduced public spending and wages followed. Unemployment and poverty increased. Today Latvia is the…
The Economist: Europe
