Estonia enters new era with euro adoption

 People pass by a poster saying "Euro is our money" in Tallinn, Estonia, on Monday, Dec. 27, 2010. Despite a hellish year for the euro, the tiny Balti...

Estonia Euro

People pass by a poster saying "Euro is our money" in Tallinn, Estonia, on Monday, Dec. 27, 2010. Despite a hellish year for the euro, the tiny Balti...

The European Union hailed Estonia's imminent adoption of the euro as a symbolic boost for a currency that has just suffered the worst crisis in its 12-year history.
European Commission President Jose Manuel Barroso said Friday that Estonia's changeover from the kroon to the euro at midnight would boost the small Baltic nation's economy and send a powerful message to all EU members.
"It is a strong signal of the attraction and stability that the euro brings to member states of the European Union," Barroso said in Brussels.
At the stroke of midnight, Estonia will adopt the euro _ a final step in the Baltic state's dogged effort to become the 17th member of the eurozone and to integrate its economy with Europe. It is the first former Soviet republic to join the single currency club.
But the switch comes at a time of profound crisis with Europe's common currency, particularly after two members _ Greece and Ireland _ required emergency bailouts in 2010 to deal with their massive debt burdens.
That is why many feel that the inclusion of Estonia, whose $19 billion economy is dwarfed by the euro's total annual output of approximately $12.5 trillion, holds symbolic importance.
Estonia's economy contracted 14 percent in 2009, but the nation has since emerged from the crisis. Many economists believe it will benefit with the euro, though the country still has painful structural reforms to implement before reaching western European living standards.
"The euro will definitely support Estonia's trade," Prime Minister Andrus Ansip told reporters Friday, adding that 70 percent of the country's trade takes place with EU members.
Still, polls indicate that more than one-third of Estonia's 1.3 million people are against the changeover.
"I think it's bad for our economy. Prices have been rising and will keep going up," said Kaire Raitme, 20, who was selling spiced roasted almonds in Tallinn's medieval historic center.
Estonia will be the poorest member of the eurozone, a cause for concern for many Estonians who fear they will have to cough up scarce resources to help other eurozone countries that failed to maintain fiscal discipline.
But Ansip reminded Estonians that the eurozone isn't a one-way street. "We cannot talk about solidarity just when Estonia needs help," he said. "We have to help others, too."
He also downplayed the past tumultuous year for the common currency.
"I don't think it's a Europe crisis we have right now. There is crisis in some eurozone member states," Ansip told Associated Press Television News.
In her New Year's address to the German people Thursday, Chancellor Angela Merkel called for the strengthening of the euro, which is now the main currency for 330 million Europeans.
"This is not just about our money _ the euro is far more than a currency," she said. "The euro is the basis of our prosperity."
Celebrations in Estonia will include fireworks and a gala concert featuring the music of U.S. composer George Gershwin, while Ansip was due to make one of the first bank-machine withdrawals in euros just after midnight.
The Finance Ministry said banks and IT-systems were prepared to cope with the changeover as hundreds of ATM-machines were being loaded with euro notes.
Selected bank branches and post offices were scheduled to stay open over the weekend to accommodate the switch, but police urged citizens not to rush about with large amounts of cash due to robbery risks.
After Slovenia and Slovakia, Estonia will be the third East European country using the euro. Seven other countries in the region _ Poland, Romania, Hungary, Czech Republic, Bulgaria, Lithuania and Latvia _ also are required to phase in the euro as part of European Union membership, though there is no deadline to do so.

Updated : 2021-04-15 10:35 GMT+08:00