Euro in Lithuania – when and what for

When another and another country from the eurozone finds itself on the verge of bankruptcy, Lithuanian government still wants to adopt euro as the common currency.

On Wednesday, prime minister Algirdas Butkevicius once again repeated that adoption of euro in Lithuania is one of the priorities of his government. He also announced an information campaign which would convince the public that Lithuania needs euro „as soon as possible”. And even though the political establishment, both the current coalition in the government and the opposition, is in agreement that Lithuania has to adopt euro, when it comes to the questions of when and for what price – the opinions are divided.

Professor of economics, member of Parliament Povilas Gylys does not agree with the haste. He warns that if the future of the common currency is uncertain, the haste of its adoption in Lithuania is unnecessary and can even be dangerous.

One of the journalists at British ‘The Economist’ has noticed this danger and graphically described it two years ago. The journalist observed that a lot of participants of the public debate who are against the introduction of euro in Great Britain compared the common currency to the legendary ‘Titanic’. According to the author, this comparaison is wrong and misleading because ‘Titanic’ went down quickly and rested at the bottom of the sea without causing a bigger turbulence on the surface. Meanwhile, a prospective ‘going down’ of the euro not only will have catastrophic results, but also these results will be noticable for years, even decades to come.

„So, to illustrate the euro situation better I propose to compare it to Chernobyl instead of ‘Titanic’.”, wrote the British journalist.

That’s why member of Parliament Povilasa Gylysa believes that Lithuania should wait for the perspective of eurozone to clarify itself and then make decisions.

„Going aboard the ship that is bursting at the seams and at the storm-tossed sea is not sensible. Let’s wait for the storm to quiet, and for the ship to stop floating. Let’s wait for it to sail independently.”, professor Gylys also graphically describes the plan of entering the eurozone.

In the meantime, the government has its own plan of adopting euro without having to wait for the situation of the common currency to clear up. Accoriding to the governmental programme, we will be using euro since January 1^st 2015. A special governmental commission with prime minister at its head is supposed to control the preparation for the euro intrduction. And a specially created working party under the supervision of financial department will be responsible for the coordination of the activities. In particular, a specially created working party will coordiante the work of 6 other working parties which have the task of adjusting the legal and economic situation in order to introduce euro in time and without any problems and losses. One of the working parties is responsible for the public debate about the adoption of euro. Wheras professor Gylys remarks that such a debate was needed before the decision was made. „Today, first the decision is made and then we have a debate.” points out professor Gylys.

On Wednesday, in the interview for „Lietuvos zinios” prime minister  Algirdas Butkevicius says that a huge information campaign that is being prepared should resolve any doubts about the adoption of euro.

„De facto, we already have euro, so I don’t understand why there are protests.”, says prime minister.

„If we already have it, we don’t need to introduce anything.” – professor Gylys tries to find logic in prime minister’s statement. „This is not how it is. Because despite the fixed exchange rate of litas to  euro, we still have our own currency, we can manage our own financial policy and influence foreign policy. Adopting the euro, however, means a step toward federation and political integration.”, observes professor. In his opinion, the adoption of euro in Lithuania would be justified only when the situation in the common currency zone is stabilized, provided the zone will survive.

More and more European countries, including the countries in the eurozone, are pessimistic about the common currency zone. Portugal, Spain, Italy, Greece and recently Cyprus – this is the biggest problem of euro area. It is said there are some financial troubles in France, the biggest country in the eurozone after Germany. Germany seems like the only guarantor of the euro survival right now. That’s why a political movement that demands the exit from eurozone is getting more and more popular there. Unless the country gets back the Deutschmark, they postulate that Germany together with financially disciplined northern countries creates a kind of eurozone two. A driving force for these politicians is a growing euro-pessimism in the German society. To say it simply, the German people are tired of paying somebody else’s bills. If there is going to be a transformation of the current eurozone, a question arises – which zone will our country join in 2015 – the rich and stable north or bankrupt south? Professor Gylys notices here another important aspect: „Current situation of southern countries proves that euro doesn’t prevent potential economic and financial problems.”
Because of the situation in eurozone and in European Union in general, a lot of economists, including these from Western Europe, says „everybody should stay where they are”, at least until the storm in euro area will pass.

EURO area

Currently, there are 17 member states in the eurozone – Austria, Belgium, Cyprus, Estonia, Finland, France, Greece, Spain, the Netherlands, Ireland, Luxemburg, Malta, Germany, Portugal, Slovakia, Slovenia and Italy.

The Euro was introduced in 1999 and at first it was an accounting currency in non-cash transactions. On January 1^st 2002 euro coins and banknotes entered circulation.

Becoming a member of European Union on May 1^st 2004, Lithuania commited to introducing the common european currency after fulfilling other requirements. 

Source: http://kurierwilenski.lt/2013/03/20/kiedy-euro-na-litwie-i-po-co/

Tłumaczenie Justyna Kaczmarek w ramach praktyk w Europejskiej Fundacji Praw Człowieka, www.efhr.eu. Translated by Justyna Kaczmarek within the framework of a traineeship programme of the European Foundation of Human Rights, www.efhr.eu.