Latvia Joins Eurozone

Today, 1st January 2014, Latvia joins the Eurozone, becoming the 18th country which uses the Euro as its currency. The small country struggled financially during the economic crises, however it is now one of the fastest growing economies in Europe.

Being a former Soviet republic, Latvia has relied greatly on Russia, but the incorporation of the Euro is expected to reduce this dependency and gain greater financial independence – credit ratings (an estimate of the ability of a country to fulfil their financial commitments, based on previous dealings) should increase and more foreign investors are expected to be attracted. Olli Rehn, the EU Commissioner, said joining the eurozone marked “the completion of Latvia’s journey back to the political and economic heart of our continent, and that is something for all of us to celebrate”.

Olli Rehn, Jeroen Dijsselbloem, Valdis Dombrovskis

Despite this, opinion polls have suggested approximately 60% of Latvians do not want the Euro. One Latvian, Zaneta Smirnova, said she is “against the euro” and that they should have kept the Lat. But, the governor of the Latvian central bank, Ilmars Rimsevics, said the “euro brings stability and certainty, definitely attracting investment, so new jobs, new taxes and so on. So being in the second largest currency union I think will definitely mean more popularity.”

What do you think about Latvia joining the Euro?

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Iceland Elections – Your Questions Answered

Today Iceland held a vote in their elections where a defeat is expected for the current coalition government, who first made it into power after economic difficulties in the country. The two parties who were partly blamed for the economic difficulties are expected to form a coalition to replace the retiring prime minister, Johanna Sigurdardottir. The two centre-right parties are eurosceptic; this could prevent the government’s efforts to secure EU membership.

Who Is Competing? 

The Progressive Party, normally thought of as Iceland’s third party, has grown in popularity as a result of its opposition to the government’s to use the people’s money to repay British people/banks for money lost in their banking collapse. Their leader, Sigmundur David Gunnlaugsson, hopes to get approximately 20% of their debt waived by foreign company’s whom they own money too.

The Independence Party, their conservative party, fell from power in 2009 after being the key party since after World War 2. The main reason for this was because much of the blame of the economic crises was put on the party and their leader, Geir Haarde, was put on trial – but he was only found guilty of minor offence. Currently, their leader, Bjarni Benediktsson, hopes for increased economic growth in the country by encouraging investment and reducing taxes.

The current coalition, between the Social Democratic Alliance and the Left-Green Movement, are low on opinion polls and unlikely to gain re-election. Bright Future, a pro-European party, and the Pirate Party, a pro-digital rights party, are also both low on opinion polls.

Iceland-sm20130427003955

Why Is The Current Government Not Popular?

The simple answer is because they are blamed for the economic collapse 2008-2009. Since then the country has experienced some economic growth and unemployment has dipped below 5%. Unfortunately, Iceland still has high debts and owes a lot of money to other countries and companies. The governing coalition made matters worse by declaring that they would pay of these debts using the citizen’s money.

The EU

The residents of Iceland wanted to join the EU after the economic crises because it is seen as a protection for the country from future economic difficulties. Although the government did start some negotiations they have been slow and nothing much has come from it.

Their Electoral System

They have a 63 member parliament (Althingi). The members are elected proportionally, which means seat are elected proportionally to the number of votes received. A key aspect of a proportional electoral system is that it prevents any one party gaining too much power (a tyranny of the majority), but can lead to smaller, more extremist, parties gaining representation.

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