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Friday 22.09.2017 | Name days: Maigurs, Mārica, Māris
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Eurozone’s problems could continue next year

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Guntars Krasts

Even though, possibly, Eurozone’s problems will persist until autumn next year and Latvia will need to make up its mind regarding Euro faster, solutions are expected to be sufficient enough to allow Latvia to make its decision, says ex-PM and ex-MP of the European Parliament Guntars Krasts.

If in the beginning of September it seemed like the weight of Eurozone crisis would reduce in size, events in the end of September and beginning of October marked the rise of dissatisfaction of debtor countries and negative thoughts within societies of creditor countries – Germany, the Netherlands, and Finland, said Krasts.

He explained that the Spanish government failed to find a way how to use the EU’s support mechanisms. Donor-countries, on the other hand, clearly are not in a hurry to come and help. They motivate countries in need to use all available internal resources and mechanisms to overcome the difficulties.

The desire not to allow ‘moral evil’ and fears about the difficulty of countries in need to continue reforms if their financial problems are not resolved from outside, prevents creditor countries from finding fast solutions for their current problems, Krasts believes.

Germany will hold elections next year. Therefore Germany may not want to turn to radical steps. Such as, writing off part of Greece’s debt. According to Krasts, Eurozone will resolve its problems, and the steps it will take could be known before Latvia’s joining of the united European currency.

Euro stabilization is a short-term objective. Krasts believes the development of a new economic model will be much more difficult for Eurozone countries.

“Europe spends more than it produces. It has a tense demographic situation. The current model creates an even larger payment burden on working people. This means the current social model needs to be changed. This also means a quite serious psychological reconfiguration in relation to vacations and social guarantees. All this will need to be changed. As we can see, residents in Greece, Spain, Portugal, and Italy do not want to accept this, even though they tend to spend a lot more than we do during the crisis,” – Krasts says.

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