Euro hopeful Lithuania demands fair play

By Dana Spinant

Date: 30/03/06

Lithuania is warning that if it is denied admission to the eurozone next year, it will be evidence of "double standards".

Rolandas Krisciunas, under-secretary in the finance ministry, said that there were no economic reasons for preventing Lithuania from adopting the euro. Denying Lithuania would be a sign that "some states are better treated than others and it would be very upsetting", he said.

Lithuania applied this month to join the euro on 1 January 2007, despite warnings from the Commission that the request might be turned down because of its inflation rate. Lithuania's economy is one of the fastest growing in the EU at more than 8%.

The Commission will publish a report on 16 May on whether the applicants meet the Maastricht criteria for joining the single currency. There will also be a report from the European Central Bank, with the final say going to EU government leaders. Slovenia, which has also applied, is expected to get the go-ahead, but the Commission has indicated that Lithuania is likely to be ruled out.

Krisciunas admitted that inflation was "close to the line" but insisted it was only a matter of time before Lithuania could bring its inflation in line with the EU's best three performers. He said inflation had "only recently gone up, because of external shocks, in particular energy prices".

Karl-Heinz Grasser, Austria's finance minister, who is chairing Ecofin, the Council of EU finance ministers, said that it was "very important and decisive...that all candidate countries fulfil the requirements, point by point, without any leeway, without any interpretation".

Krisciunas said: "When they [the Maastricht criteria] were designed, nobody expected the central and eastern European countries in the eurozone. We have higher growth and higher inflation."

Grasser, who is also vice-chairman of the Eurogroup of eurozone finance ministers, hinted that previous indulgence shown towards some members of the eurozone was not to be expected this time. "We want sustainable growth and low inflation," he said.

"Slovenia has a very good chance to meet these criteria," Grasser said.

A European Commission spokeswoman said: "We need more discipline, not less, in the eurozone."

A senior official from a eurozone country said that the members of the Eurogroup were reluctant at this stage to receive new members. "It is the most homogenous group in the EU. Of course they do not want new members," he said.

Luxembourg Prime Minister and Finance Minister Jean-Claude Juncker, who chairs meetings of the Eurogroup, said that he had "much sympathy for Lithuania" but he said "the Council should not take a decision which is not in accordance with the opinion of the European Central Bank and of the European Commission".

Comments by Rolandas Krisciunas, Under-Secretary in the Finance Ministry of Lithuania, who said that there were no economic reasons for preventing Lithuania from adopting the euro. Lithuania applied in March 2006 to join the eurozone on 1 January 2007, despite warnings from the Commission that the request might be turned down because of its inflation rate.