Thursday

23rd Feb 2017

Lithuanians back euro amid Russia tensions

  • Lithuania will be the 19th member to join the euro (Photo: FromTheNorth)

Lithuania on Thursday (1 January) will adopt the euro with a majority now supporting the currency change amid heightened tensions with their former Russian masters.

A mid-November poll found more than half support the euro as opposed to only 41 percent at the start of 2013.

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The survey suggests economic benefits and stability are among the reasons why some back the new currency despite the fact that the eurozone region is suffering from poor growth and high unemployment.

The country of three million has one of the fastest growing economies following years of turmoil caused by the global financial crisis.

In June, the European Commission noted that Lithuania’s per capita GDP rose from 35 percent of the EU average in 1995 to a projected 78 percent in 2015.

It is also the only member state to have had its currency ambitions turned down by eurozone officials when it attempted to join the euro in 2007. The application at the time was rejected largely due to high inflation rates.

But the New Year's turnaround means the southernmost of the three Baltic states will now share a currency already adopted by Latvia earlier this year and by Estonia in 2011.

Lithuania’s chairman of the board of the bank, Vitas Vasiliauskas, said that broader support for the common currency “was affected by greatly increased awareness of the public, since uncertainty is a regular cause of various fears”.

Recent tensions with Russia, following Moscow’s annexation of Crimea in March, are also likely to have contributed to the euro backing.

The former Soviet republic, which joined the European Union and Nato in 2004, is a strategic base for the alliance’s Baltic air policing patrols.

The past year has seen Nato scramble jets some 150 times to ward off approaching Russian fighters and bombers along the Baltic nations.

German media in December reported that all three nations have signed up to large defence contracts after Russia boosted its military presence in the region.

Lithuania recently signed a €34 million contract for a Polish anti-missile system, reported Spiegel Online.

Border tensions with Russia have also marked the country.

In November, Lithuania’s foreign ministry summoned Russia's ambassador over tightened Russian cross-border procedures that saw traffic piling up on the Lithuanian side.

All EU member states, with the exception of the UK and Denmark, are required to join the euro.

Lithuania will become the 19th member of the eurozone.

Greece and creditors break bailout deadlock

Athens agreed on budget cuts worth up to €3.6 billion and extracted some concessions from creditors, but the IMF warned the package might not be enough.

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