Friday, 24 April 2009

Elections in Iceland (continued) & Baltic states: perplexing euro adoption

Yesterday I admitted to being mystified by some Icelanders’ optimism regarding adoption of the euro currency, while rejecting membership in the European Union, or even membership negotiations.

Among the reasons for my perplexity in Iceland & EU: Monetary union only? (23 April 2009) were the existing exceptions, according to Wikipedia Montenegro, Kosovo, Andorra, Monaco, San Marino, the Vatican.


FT Brussels blog

Today I see that Tony Barber of the FT Brussels blog had posted on another angle of the same problem: Hands up if you’d like to use the euro! (23 April 2009).

Barber appears to be as puzzled as I am over the fact that the Baltic states have laboured hard to become members of the European Union and to prepare for adoption of the single currency. But the European Central Bank refuses to ease the rules to let Estonia, Latvia and Lithuania in, despite the hardship caused by the economic crisis.

All the while, Montenegro and Kosovo have used and keep using the euro, without being members of the EU or subject to the rules of the economic and monetary union (EMU).



By the rules

Whether Iceland or new EU member states in Central Europe, my post yesterday only indicated the basic premises for the euro currency, by a quote from the Preamble of the Treaty on European Union (TEU).

If a country follows the rules, it has to:

1. Become a member of the European Union, and participate in economic policy coordination.
2. Fulfil the convergence criteria, also known as the Maastricht criteria (low inflation, budget deficit, government debt level, participation in the Exchange Rate mechanism, low interest rates).

Some humanity, solidarity, logic and enlightenment seem to be in order.

Ralf Grahn