COULD Latvia, once considered a burden on the European Union, emerge in 2013 as an unlikely confidence-booster for the embattled euro zone? On the face of things, it seems plausible enough: Latvia is supposed to adopt the EU's single currency on Jan 1st 2014—and, after surviving a horrendous recession in 2008-2010, it now boasts the fastest growing economy in the EU. Indeed, it has even announced that it will make an early repayment of its outstanding loan from the International Monetary Fund of about €714.3 million.  Prime Minister Valdis Dombrovskis, having steered the country through the rigours of economic "corrections" equal to about 16% of GDP, is optimistic about the single currency’s future and is keen to follow neighbouring Estonia, which joined the euro in 2011. 

In which case, he should keep his fingers crossed: public opinion on the single currency is worsening and the opposition—trying to win over euro-sceptic voters—is demanding a referendum on whether Latvia should adopt the euro.  The Harmony Centre alliance, which draws its support mainly from ethnic Russians, maintains that only the people have a right to decide whether Latvia should abandon its national currency. Meanwhile, the highly respected chairman of the Constitutional Court, Gunars Kutris, also argues that a plebiscite is needed, saying that Latvia’s citizens voted to join the EU in 2003 without realising the consequences.

And if there is a referendum? According to one recent poll only 35% of Latvians favour the single currency. But it is a big "if": there are not enough opposition MPs to instigate the procedures for a referendum, and even if they could, President Andris Berzins is a fervent supporter of the euro and could veto a referendum on the grounds of possible legal problems.  

The coalition government, stressing that a referendum would kill the hopes of joining the euro zone on schedule, is launching a public-awareness campaign to change the climate of opinion. Initially, Latvia had hoped to adopt the currency in 2008, but that idea was dashed  by double-digit inflation. Conceivably, economic woes could intervene again: it is uncertain how long Latvia will manage to stay within Maastricht criteria that have to be met for entry to the euro zone. 

Happily, one long-standing issue regarding the euro has finally been put to rest. Latvian government institutions had been arguing how to make sure that the name of the currency would be in line with official Latvian language rules. Suggestions such as “eira” and “eiro” were fervently debated until the government settled for the latter. Too bad for the government: it was overruled by the European Central Bank, which last month forbade Latvia from using anything in official documents other than the original name of the currency.