Austerity Advocates

The Euro's Hard Core

grybau
Dalia Grybauskaite, the president of Lithuania, leads a group of Baltic and eastern European countries that are increasingly advocating for a hard euro.
  • Why it matters

    Why it matters

    Increasingly confident euro members like the Baltics could re-shape some of the long-held alliances in Europe as they throw their weight behind Germany’s more conservative “northern” way of thinking.

  • Facts

    Facts

    • The Baltics are the euro zone’s newest members: Lithuania joined in 2015; Latvia in 2014 and Estonia in 2011.
    • All three Baltic states went through a tough phase of austerity, shrinking their economies and budgets in order to join the common currency.
    • Bordering Russia, the three Baltic states have also been outspoken about the geo-political risks facing Europe.
  • Audio

    Audio

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Lithuanian President Dalia Grybauskaitė isn’t one to mince words. A black-belt in karate, she is one of Europe’s most outspoken leaders on issues ranging from dealing with Russia to same-sex marriage.

She’s also taken a hard line in the recent talks over whether Greece should remain in the euro. Ms. Grybauskaitė, who leads the latest country to enter the euro currency bloc, has offered some of the toughest words of any leader in the past few weeks.

“The Greek government still wants to party, but the bills have to be paid by somebody else,” she complained in a tweet last month, ahead of a make-or-break summit on whether Greece should get its third bailout in five years and avoid exiting the 19-nation euro.

Ms. Grybauskaitė leads a confident and tough-talking group of leaders and ministers from the euro’s newest members – the Baltic states of Lithuania, Latvia and Estonia, and Slovenia and Slovakia, which are increasingly preaching a new kind of fiscal tough love.

Their influence is re-shaping some of the continent’s long-held alliances.

The bloc is giving Germany a new set of conservative economic allies who are demanding that E.U. governments stick to the rules, exercise budget discipline, and resist the siren call to spend their way out of slow growth or a debt crisis.

“The leading policymakers here are clearly behind the Germans. You could argue that they are more German than the Germans,” Karsten Staehr, a former official at Estonia’s central bank and now an international finance professor at Tallinn University of Technology, told Handelsblatt Global Edition. “We here would like to think of ourselves as part of ‘northern’ Europe,” he added.

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