Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
DOUBLE YOUR DONATION!
We don’t run corporate ads. We don’t shake our readers down for money every month or every quarter like some other sites out there. We provide our site for free to all, but the bandwidth we pay to do so doesn’t come cheap. A generous donor is matching all donations of $100 or more! So please donate now to double your punch!
FacebookTwitterGoogle+RedditEmail

Funerals for Currency

“There’s simply no more skilled people left here [in Lithuania].”
Arvydas Avulis, CEO of Hanner, Dec 31, 2014

There was something touching in the symbolic funeral in Vilnius held for the Lithuanian currency, the litas, which received its resting notice as the country formally adopted the euro on January 1. The litas had been in use between 1993 and 2014. If you had asked Nigel Farage of Britain’s UK Independence Party about the service, he would probably have suggested they were burying the wrong one. (The colourful populist insisted on a mock burial of the euro in 2011.)

Moving over to the euro was always a thorny issue. A November poll suggested that 39 percent of the population was against it. Their grounds of suspicion were well founded. While supporters of the euro’s adoption believe – and in this, it is very much a belief – that the adoption of the currency will lead to easier foreign loans and investments – the converse may actually be true.

The Prime Minister Algirdas Butkevičius, adopted the standard line. “The euro will be a guarantee of our economic and political stability. It will allow us to more rapidly develop the economy, create jobs, increase incomes. I firmly believe that we will strengthen the European family.” In theory, at least, the more the merrier. Government borrowing rates are predicted to drop by 1 percent, while a single currency bloc does have advantages in terms of minimising investment risks.

For all that, it is a classic error to link the embrace of a widely used currency with the assumption of economic performance, either current or future. It should go without saying that various countries in the euro zone, irrespective of their use of the currency, are ailing and stuttering. Dealing in euros does not make loans any less troublesome if other parts of the economy are dragging. A collective in a currency union is only as good as its members.

Another fundamental error lies in mistaking the refusal to adopt the euro as being somehow a vote against integration. The Scandinavian countries evidence a long tradition of European institutional involvement while resisting the adoption of the common currency. Lithuanians will have woken up on January 1 to realise that their institutions will not be able to determine interest rates and the budget deficit – that aspect of sovereignty, at least, has been surrendered.

The sovereignty issue is not being seen in purely financial terms. The Russian question looms, and rushing into the bosom of the eurozone is also deemed to be a cover, however poor it may be in quality, for broader security concerns. Either you court Brussels, or end up being grabbed by Putin (AP, Dec 31).

Latvia’s Igor Pimenov, and parliamentary member, views the euro adoption as something of a mania. Those who retain their national currencies, he argues, have a better chance to right the economic ship. Then come the usual imbalances in the various economies, with Lithuania being the euro bloc’s poorest member.

Last year, Pimenov made his views against the common currency clear in his campaign against its adoption. “We are not against European integration. But we voted against the euro because we are sure that it’s not the right time for Latvia to join the eurozone” (Euobserver, May 5, 2014).

Lithuania’s admission to the euro club also comes at a time when the currency itself has been battered. The big league players are still incapable of resolving their differences, with Germany continuing on its unbending austerity platform, and France and Italy deflecting on promised structural reforms. The Economist noted in October 2014 that the entire zone was feeling the deflationary phenomenon. “A region that makes up almost a fifth of the world’s output is marching towards stagnation and deflation” (The Economist, Oct 25, 2014).

To put it bluntly, the price of admission may not have been worth it. This very point is being debated in Greece with elections scheduled for January 25. Greek Prime Minister Antonis Samaras has issued a warning that the country may well exit the eurozone altogether (Boomberg, Jan 5). The German Chancellor, Angela Merkel, is putting on a brave face, suggesting that the zone will cope.

As for Lithuania, the sense here is that the euro is a panacea, a plug that will ease emigration levels that are starting to produce chronic labour shortages. “Retaining talent,” notes a Vilnius University spokesperson Nijole Bulotaite, “is one of our most pressing problems along with demographic changes” (University World News, Feb 7, 2014).

UNESCO’s Global Flow of Tertiary-level Students data from 2012 shows that 8,230 Lithuanian students were studying abroad, with over half at British and German universities.

While such overseas enrolments are dandy, Lithuania’s Department of Social Statistics is unnerved by the annual leak of educated recruits who find work in Western Europe. During the 2008-2011 financial crisis, more than 80,000 people left annually. In areas such as construction, business owners note the frustration at being unable to hold down workers, despite massive wage increases of 10 to 20 percent (Associated Press, Dec 31).

Lithuania may well be the zone’s nineteenth member, but its arrival, in many ways, could not have been at a worse time. To put stock in a currency’s powers of salvation is never sound policy. The fractious big boys are at wit’s end about how to deal with the problem, while the small members either remain submissively silent or are seeking a noisy withdrawal.

Dr. Binoy Kampmark was as Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

More articles by:

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

October 23, 2018
Patrick Cockburn
The Middle East, Not Russia, Will Prove Trump’s Downfall
Ipek S. Burnett
The Assault on The New Colossus: Trump’s Threat to Close the U.S.-Mexican Border
Mary Troy Johnston
The War on Terror is the Reign of Terror
Maximilian Werner
The Rhetoric and Reality of Death by Grizzly
David Macaray
Teamsters, Hells Angels, and Self-Determination
Jeffrey Sommers
“No People, Big Problem”: Democracy and Its Discontents In Latvia
Dean Baker
Looking for the Next Crisis: the Not Very Scary World of CLOs
Binoy Kampmark
Leaking for Change: ASIO, Jakarta, and Australia’s Jerusalem Problem
Chris Wright
The Necessity of “Lesser-Evil” Voting
Muhammad Othman
Daunting Challenge for Activists: The Cook Customer “Connection”
Don Fitz
A Debate for Auditor: What the Papers Wouldn’t Say
October 22, 2018
Henry Giroux
Neoliberalism in the Age of Pedagogical Terrorism
Melvin Goodman
Washington’s Latest Cold War Maneuver: Pulling Out of the INF
David Mattson
Basket of Deplorables Revisited: Grizzly Bears at the Mercy of Wyoming
Michelle Renee Matisons
Hurricane War Zone Further Immiserates Florida Panhandle, Panama City
Tom Gill
A Storm is Brewing in Europe: Italy and Its Public Finances Are at the Center of It
Suyapa Portillo Villeda
An Illegitimate, US-Backed Regime is Fueling the Honduran Refugee Crisis
Christopher Brauchli
The Liars’ Bench
Gary Leupp
Will Trump Split the World by Endorsing a Bold-Faced Lie?
Michael Howard
The New York Times’ Animal Cruelty Fetish
Alice Slater
Time Out for Nukes!
Geoff Dutton
Yes, Virginia, There are Conspiracies—I Think
Daniel Warner
Davos in the Desert: To Attend or Not, That is Not the Question
Priti Gulati Cox – Stan Cox
Mothers of Exiles: For Many, the Child-Separation Ordeal May Never End
Manuel E. Yepe
Pence v. China: Cold War 2.0 May Have Just Begun
Raouf Halaby
Of Pith Helmets and Sartorial Colonialism
Dan Carey
Aspirational Goals  
Wim Laven
Intentional or Incompetence—Voter Suppression Where We Live
Weekend Edition
October 19, 2018
Friday - Sunday
Jason Hirthler
The Pieties of the Liberal Class
Jeffrey St. Clair
A Day in My Life at CounterPunch
Paul Street
“Male Energy,” Authoritarian Whiteness and Creeping Fascism in the Age of Trump
Nick Pemberton
Reflections on Chomsky’s Voting Strategy: Why The Democratic Party Can’t Be Saved
John Davis
The Last History of the United States
Yigal Bronner
The Road to Khan al-Akhmar
Robert Hunziker
The Negan Syndrome
Andrew Levine
Democrats Ahead: Progressives Beware
Rannie Amiri
There is No “Proxy War” in Yemen
David Rosen
America’s Lost Souls: the 21st Century Lumpen-Proletariat?
Joseph Natoli
The Age of Misrepresentations
Ron Jacobs
History Is Not Kind
John Laforge
White House Radiation: Weakened Regulations Would Save Industry Billions
Ramzy Baroud
The UN ‘Sheriff’: Nikki Haley Elevated Israel, Damaged US Standing
Robert Fantina
Trump, Human Rights and the Middle East
Anthony Pahnke – Jim Goodman
NAFTA 2.0 Will Help Corporations More Than Farmers
Jill Richardson
Identity Crisis: Elizabeth Warren’s Claims Cherokee Heritage
FacebookTwitterGoogle+RedditEmail