Andris Vilks said the recent events in Ukraine, which decided at the last minute to turn down an integration agreement with the EU in favour of closer ties with Russia, demonstrated why the Baltic state of 2m people is joining the euro. “Russia isn’t going to change. We know our neighbour. There was before, and there will be, a lot of unpredictable conditions. It is very important for the countries to stick together, and with the EU,”, added the finance minister.
Latvia still has close ties with Russia, with about 40 per cent of the bank deposits in the country coming from ex-Soviet states. In the country, which is the 18th member of the euro area, opponents of the currency switch outnumber proponents two-to-one as public expectations for accelerating inflation mount, opinion polls show. Residents are also bracing for taking on new responsibilities in the currency union.
Concern that inflation will accelerate is rising even after consumer prices fell 0.4 percent in November from a year earlier, the sixth month this year without an increase. The Finance Ministry estimates prices will rise 2.3 percent next year as the economy expands 4.2 percent.
“Joining the euro marks 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,” EU Economic and Monetary Affairs Commissioner Olli Rehn said in a statement.
“Immediately after Latvia joins the eurozone, I imagine we’re going to see an actual spike in dubious money flowing in,” said Mark Galeotti, a professor at New York University who researches organized crime in the former Soviet Union.
For years, Latvia’s political and financial leaders had hoped to create a mini-Switzerland in Eastern Europe — a place where capital in unstable countries such as Russia or Kazakhstan could either park for a while or channel its way further west to banking meccas like Zurich or London.

 Members of the European Parliament (MEPs) voted 537 in favour (Conservatives, Socialists) to 126 against (Greens and radical left) to adopt the EU’s budget for 2014 to 2020.

 Known as the Multi-annual Financial Framework (MFF), it provides for 908 billion euros in payments against 960 billion euros in funding commitments, 3.7 percent and 3.5 percent less than in the previous 2007-2013 budget.

A third (37 percent) of the budget will be allocated to the Common Agricultural Policy and 34 percent to Cohesion and Regional policy.
The vote marks the end of a bitter battle in which the budget went back and forth between austerity-minded governments and the EU’s executive European Commission and MEPs, who wanted more funds to boost growth and jobs.

 Czech Social Democrats (ČSSD) won a slim victory in parliamentary election and face a tough task forming a government. A tiny 2 percentage point outcome over the new Ano party of billionaire Andrej Babiš and the inability to get more than 25 percent of the vote were a huge disappointment for party leader Bohuslav Sobotka.
In third place was the Communists Party of Bohemia and Moravia (KSČM) with a strong showing that resulted in almost 15 percent of the vote.
The Civic Democratic Party (ODS), which has long dominated Czech politics, managed just 7.5 percent of the vote, a predictable outcome that pushes them to the fringes of Czech politics. The party’s downfall was largely due to the scandal that toppled the outgoing government.
The election result leaves the central European country of 10.5 million people facing the prospect of protracted political haggling and of another weak and unstable government just as the Czech economy emerges from a lengthy recession.
“If the lower house of parliament is fragmented, we will face tough negotiations on forming government,” said Sobotka. “The Social Democrats are prepared to take on this tough negotiation and we will try to form a reasonable, stable cabinet,” he said, adding he was ready to talk to all parties except the center-right parties who led the last government.

Election results
Social Democrats (ČSSD): 20.46%; 50 seats
Ano: 18.65%; 47 seats
Communists (KSČM): 14.91%; 33 seats
TOP 09: 11.99%; 26 seats
ODS: 7.72%; 16 seats
Dawn: 6.88%; 14 seats
Christian Democrats (KDU-ČSL): 6.77%; 14 seats

From The Prague Post and Reuters

 In a set of annual reports adopted, the European Commission recommends granting EU candidate status to Albania and, for the fifth time in a row, the opening of accession negotiations with the former Yugoslav Republic of Macedonia. The Commission also assesses the progress towards EU accession made elsewhere in the Western Balkans and in Turkey over the past year. Given the Icelandic government’s decision to put accession negotiations on hold, a simplified report on Iceland takes stock of the current state of its alignment with the EU. 

Presenting the annual Enlargement Package, Commissioner Štefan Füle said: ‘Enlargement is a process in the making and despite the economic crisis it is a good policy – it constitutes  part of the solution.Enlargement continues to be one of the most effective EU policies. By addressing ‘fundamentals’ first – such as the fight against corruption, sound economic governance, freedom of expression and media, human rights and protection of minorities – it strengthens political and economic stability in the aspiring countries and the EU as a whole.”

The enlargement strategy adopted confirms the continued relevance of the fundamentals of the Copenhagen membership criteria agreed by the EU 20 years ago. These include the rule of law, which remains firmly anchored at the heart of the enlargement process. The countries concerned need to tackle issues such as judicial reform and the fight against organised crime and corruption early in the accession negotiations, to demonstrate a solid track record of sustainable results.

The global economic crisis has underlined the need for all countries to strengthen their economic governance and improve competitiveness. The Commission has set out a number of proposals to support this aim, including the introduction of national economic reform strategies and action plans for public financial management.

Recent events in a number of enlargement countries have underlined the importance of strengthening democratic institutions and making democratic processes more inclusive. All the countries in the Western Balkans and Turkey need to undertake further reforms to ensure that the principles of freedom of expression and the rights of persons belonging to minorities, including Roma are respected in practice. More robust measures are needed to protect other vulnerable groups from discrimination, in particular on grounds of sexual orientation. The Commission will increase the priority attached to these issues in the accession process, including through better targeted pre-accession funding and increased assistance to support Roma inclusion through a Roma “facility”.

Further information – European Union. Full Speech.

“A general election is likely next month after the Chamber of Deputies voted Aug. 20 to dissolve Parliament, raising the issue of how much influence President Miloš Zeman will wield over the next government.
Lawmakers voted 140 to seven in favor of holding new polls, with the Czech Social Democratic Party (ČSSD), Public Affairs (VV), Communists (KSČM) and TOP 09, along with a number of deputies without a parliamentary party group affiliation, lining up in favor of dissolving Parliament. At least 120 deputies had to agree to dissolve parliament for the vote to succeed.
With the right-leaning Civic Democratic Party (ODS), which boycotted the vote, languishing in the polls, left-wing lawmakers are likely to be able to form a government after the election, expected on Oct. 25-26.
The Social Democrats are predicted to be the largest party in the lower chamber once the results are in, so any new prime minister will likely be drawn from their ranks.
A key question, according to political analyst Jiří Pehe, the director of New York University Prague and a former adviser to the late former President Václav Havel, is whether Zeman invites the party chairman, Bohuslav Sobotka, to be the head of government.
The selection of Sobotka could reduce Zeman’s influence over the government, since the 41-year-old party chairman is not seen as an ally of the president, who was affiliated with the Social Democrats until 2007…
The influence wielded by Zeman, who took office in March as the Czech Republic’s first directly elected president, has been a key talking point in relation to the government of Jiří Rusnok, whose Cabinet’s recent lost of a vote of confidence in the Chamber of Deputies prompted the dissolution vote.
Zeman’s decision to appoint Rusnok after the government of Petr Nečas fell over a spying and corruption scandal was highly controversial, since Rusnok is a Zeman ally who is not a member of parliament nor affiliated with one of the main parties.
The move, which also saw a string of Zeman allies appointed to the Cabinet, was seen as an attempt by the president to usurp Parliament’s power, even though the Rusnok administration was set to remain in power only for a short period, with elections having to take place next year anyway.
Rusnok resigned as prime minister after his administration lost the Aug. 7 vote of confidence, but the former banker has stayed on in a caretaker role….
Sobotka indicated that, if in power, his party would scale back austerity measures and increase government spending, something the Nečas administration had been predicted to do in any case to boost the economy ahead of what would have been a 2014 election. The Social Democrats, who last held power in 2006, would be likely to increase taxes.
The country has just recorded its first quarter of growth, from April to June, after a record six successive quarters of contraction.”

 Full Article – Daniel Bardsley – The Prague Post