Common sense
The wise ancient Romans used to say 'festina lente', what means hurry up slowly. Only EAPL and its leader Valdemar Tomaševski are keeping calmness and common sense regarding the adoption of euro in Lithuania. The rest of Lithuanian politicians are running unconsciously towards the financial carnage, because when one day the great crisis knocks on the Lithuanian door, the government will not have basic tools to fight it. The only thing that could be done is to beg Germany for alms as Greece is doing. It is doubtful that during the recession of the European economy euro would help Lithuania, rather the opposite would happen. Therefore the Tomaševski's opinion in which he suggests to talk about the adoption of euro after the end of the crisis in the European Union, is the most correct and on the spot.

Euro deepens divisions
The experiment of replacing national currencies with euro has been going on for more than ten years. The common currency was introduced into electronic circulation, public finances, and companies' accounts in early 1999 when the European Central Bank in Frankfurt has taken over the monetary policy. Notes and coins were drifted into physical circulation in the beginning of 2002. All this has happened against the law of economics on monetary integration, discovery of which was awarded the Nobel Prize in 1999. Now it is known that the experiment was not a total success. Today euro does not unite anymore but deepens the divisions even within the group of the countries which have adopted the single currency. Euro does not strengthen but exhausts the European Union as the only region in the world rapt so much in the recession. EU economic collapse has many reasons including bureaucracy which is detached from reality; but still the single currency is the main reason. Euro intensifies crisis in the countries which are beyond the wealthiest circle of the north-western Europe. In the south and east of the EU it evokes the recession and a huge unemployment. Euro had broken the Union into three parts which are moving away one from another. An obvious winner is only the group of countries which have not adopted the single currency. An independent national currency and monetary policy facilitates their growth and economic development. At the same time they serve as a protection against external threats. Admittedly, this barrier is not fully tight, but it helps to partially stop the transmission of the crisis effects from the euro zone. Those who have not fulfilled its subsequent announcements of the adoption of the euro are belonging to the group of the winners: United Kingdom, Poland, and Sweden.

The second group of states is composed of the most developed economies in the euro area, led by Germany and France. As follows from the laws of economics, these countries benefit from the single currency at the expense of lower-developed part of the zone. Because euro has deprived the weaker countries of competitiveness and resilience to threats, stronger countries take over the production and enjoy low unemployment, but fall in the economic stagnation as a result of vulnerability to the transfer of the consequences of the crisis. The third group, which includes less developed countries of euro zone like Italy, Spain, and Greece bears only losses over the common currency although the thirds group is much richer than Lithuania and was formerly regarded as economic tigers not only in European scale. They lose production, are stuck in a deepening recession and in an increasingly catastrophic unemployment which amount to 50 percent among young people in average. Forecast for the weak countries in the euro zone is a drop in GDP in the next year of the endless crisis which destroys not only the economy but also the entire life of the people, social ties, and civilization.

The euro zone crisis
After the outbreak of the crisis, the situation in the euro zone has quickly exacerbated. The highest price was paid by those EU countries which were leading a wasteful financial policy for a long time. This development has led to an unprecedented behaviour of the European Central Bank, which with the help of custom operations in the financial markets has tried (and is still trying) to save the euro as a functional currency. At the core of 'rescue plans' for the euro area is a belief of political and economic elites of Europe that it is not allowed to let the country which is a member of the common currency area bankrupt. That means that the euro area member states are required to pay a specific amount of money at a specified time to the appropriate fund and commit themselves for further payments if necessary. Understandably, such system is a subject of criticism because all the countries of the euro area and the EU in general are indebted and first of all have to pay their own debts. Instead of that they have to become even more indebted and have to hope that bankrupting states would somehow repay their 'loan of rescue'. The aforesaid actions completely changed the nature of the euro as an independent currency. During the first decade of its operation, it turned out that rules are only scraps of paper that no one takes seriously. The best evidence of that is the fact that Maastricht's convergence criteria currently are being fulfilled only by Luxembourg out of all EU member states.

Independence or protectorate
Today Lithuania should set itself a question whether euro is a credible currency and whether it would not be better to stick to its own currency at least until the situation in the euro zone is clear and predictable. It seems that the postponement of the adoption of the euro would be the best solution in the current situation. And what is the most important it would be safe for the residents of Lithuania, as it would protect them from a drastic increase of real prices of goods and services after the possible entering to the area, what has taken the place in almost all of the states which were adopting euro. It is true that according to the accession treaties states are required to adopt the common currency, but they do not have a designated date. Maybe it is worth to benefit from this and to think what the 'euro project' is actually about? The whole process is based on the objective of further radical centralization of decision-making in the EU, in the sectors so far reserved for the Member States, for example in the field of taxation.

Bankrupting countries have to become a kind of dependant 'protectorates', on which Brussels will impose rules of correct behaviour in exchange for a financial rescue. It is a very risky moral hazard. Moreover, even the existing protection mechanisms are not ultimately able to cover the debts of the euro zone countries. At least partial restructuring will have to be done in a foreseeable future. This development of the situation will lead to the loosening of the European banking sector. The consequences of that for the stability and credibility of euro are too obvious.

Litas or dictate
The situation in the euro zone is currently very unstable. This state will linger still for quite a long time. In this situation, the Lithuanian entry to a common currency area would be a mistake. Own currency allows for a relatively good protection against the negative consequences of economic and financial crisis. In turn, rapid adoption of euro would immediately cause problems which are currently plaguing a monetary union's countries, including the requirement of large amounts of money to rescue Greece, Ireland, Portugal, and perhaps also other countries. An independent monetary policy allows a flexible response to the economic situation in Europe and in the world, and it is a good tool to pursue own interests. Adoption of the euro would mean that Lithuania would have to give in to a monetary policy dictated by Frankfurt. Maybe that is what all the fuss with euro is about?

Dr. Bogusław Rogalski, Political scientist
ECR Advisor for the international affairs at the European Parliament