Transcript Searching European Identity Latvian 3rd Year of Membership in the

Searching European Identity Latvian
3rd Year of Membership in the
European Union
Andzs Ubelis
MSC Eco. student Cardiff University
Deputy State Secretary, Ministry of
Finance, Republic of Latvia
EPRC
Glasgow, 20 March, 2007
Content of Presentation
I.
Past - EU accession – success story
II.
Present - Resume after 3rd year in
EU
III.
Future – in the search of new
European identity
2
I. EU accession – success story
9 years of reforms (1995-2004)
economic transition (Free Trade Agreement with EU,
Russian crises 1998) and shifting trade from East to
West
market liberalisation
harmonisation of the legislation
building institutions and improving governance
3
I. EU accession – success story
Accession process
proving commitment for reforms
getting on a fast track – escaping from the group of
2007 enlargement (1999 Helsinki)
4
II. Resume after 3rd year in EU
Status of a new member state
newcomers in an old club – EU15 vs EU10 (EU12):
 EU6 vs Cohesion countries
 Donors vs Beneficiaries
 Liberal economies vs Social Model
5
II. Resume after 3rd year in EU
Costs and Benefits
good financial package for 2007-2013
little success with EU agenda (constitution, legislation
on free movement of services)
limited influence at European scale:
only one clearly visible political leader from Latvia
on European / International scene
poor representation in EU institutions
joining Euro zone becomes a challenge
6
II. Resume after 3rd year in EU
Baltic tiger walking on the edge
 high real GDP growth rates (10% and more)
 inflow of FDI and capital





high inflation
current account deficit
indebtedness
risk of overheating
risk of devaluation of national currency and financial
crisis
7
II. Resume after 3rd year in EU
Baltic tiger walking on the edge 
Macroeconomic policy “trap” for the
Government and the Central Bank
 EU accession  economic growth  higher demand for labour
 higher wages  higher prices  inflation
 EU accession  agenda for joining Euro zone  pegging
Latvian Lat to Euro  the Central Bank loosing control over
monetary policy (interest rates, exchange rates)  can’t control
inflation
 EU accession  opening EU labour market  outflow of labour
force (e.g. to UK, Ireland)  Government has to rise salaries and
reduce taxes to motivate people stay in Latvia  can’t control
inflation
8
II. Resume after 3rd year in EU
Baltic tiger walking on the edge  Structural
changes in economy required to sustain the
growth
rising productivity
higher value and less labour intensive added services
and production
less capital intensive production
more export oriented services and production
smart use of EU funding
9
III. Further perspectives – in the
search of new European identity
Why new European identity needed for Latvia
setting medium term development targets for the
nation – also requires searching for a new global /
regional (e.g. Europe, Baltic Sea Region) role
mobilizing and targeting scarce resources (human,
intellectual, financial) for action at international / EU
scale
10
III. Further perspectives – in the
search of new European identity
Possible identity scenarios - endogenous
from fast growing economy  to most competitive
economy
standing for liberal values - free movement of
services, reducing tax burden
building knowledge based economy
benefit from having 2 most competitive European
economies at our door step - new identity for Baltic
Sea Region
from periphery and buffer zone with Russia to the
bridge with Russia and former Soviet Union
11
III. Further perspectives – in the
search of new European identity
Possible identity scenarios - endogenous
from beneficiaries of extensive EU assistance  to
effective manager of public financing in EU
from a country dependent on supplies of fossil energy
from Russia  to front runner of sustainable energy
policy in Europe
12
Conclusion
Latvian accession to European Union
proved to be success. However accession
itself does not grant to a country a status
of a successful member state. It’s now in
the hands of Latvians to prove their ability
to become successful Europeans.
13