Flickering in the rain

In a small corner of Europe, hope for the euro

Its high inflation rate doomed Lithuania's application to join the euro in 2007. Eight years on, a great recession and a euro-zone crisis later, the small Baltic republic is about to become the 19th member of the monetary union. For the beleaguered single currency, Vilnius' determination offers a feeble flame of hope in a sea of self-doubt. No euro-scepticism here: nearly two-thirds of the population support the euro adhesion.

For the Baltic republic, the move is an act of political will, as much as a financial decision. There's some irony that it happens as the euro zone seems to be on the eve of another existential crisis, once again caused by Greece. Lithuania doesn't even stand to benefit immensely from its membership in the euro club. Its litas has been pegged to the euro since 2002, and the economy is already doing better than the rest of Europe, with gross domestic product (GDP) expected to grow three per cent next year after 2.7 per cent in 2014.

What the country will get is a seat at the European Central Bank (ECB) table, contributing to monetary policy instead of having to accept it. It also gains ECB funding for its banking system. The anticipation of membership has also already helped push yields on 10-year government bonds down to around 1.8 per cent, between Spain's and Italy's.

Lithuania may well join because it must, as do all European Union members save for the UK and Denmark. But it could have chosen to delay, as Poland and the Czech Republic are doing. Vilnius sees Europe as a home, a culture, an economy and a bulwark against Russia's economic crisis and its assertive politics. Along with Estonia and Latvia, it is anxious to be considered part of the core of Europe.

Other European governments and Brussels authorities have much to learn from Lithuania and its Baltic brethren. It is clear there that the euro only makes sense if it is a stepping stone to a closer, political union. The political climate in the rest of the continent unfortunately makes it difficult for the message to be heard.