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2011-01-01 11:07:35
By JARI TANNER and GARY PEACH, Associated Press Jari Tanner And Gary Peach,
Associated Press Fri Dec 31, 8:11 pm ET
TALLINN, Estonia The Baltic state of Estonia early Saturday became the 17th
European Union member to adopt the joint European currency, the euro.
The small nation's decision to change from the Estonian kroon to the euro was
the final step in a two decade-long effort to integrate its economy with Europe
after it achieved independence in 1991. It is the first former Soviet republic
to join the single currency club.
Estonian Prime Minister Andrus Ansip was the first person in the country of 1.3
million to withdraw euro notes from a cash machine specially installed for the
midnight changeover at the opera house in central Tallinn.
Ansip's example was followed by EU transportation commissioner Siim Kallas,
Lithuanian Prime Minister Andrius Kubilius and Latvian Prime Minister Valdis
Dombrovskis.
The four men waved their fresh euro notes at a crowd of some 5,000 cheering
people as New Year fireworks burst in the cold night marking the advent of 2011
and a new era for Estonia.
"The euro is first and foremost a guarantor of our security. We are now
full-fledged members of the world's second largest financial region with all
the consequent obligations that this brings," Ansip said, after withdrawing the
euros.
"The euro is a good thing. The world is now probably going to see us as being a
developed nation," said Erik Villemson, a 21-year-old university student.
The inclusion of Estonia, a minuscule $19 billion economy, in the $12.5
trillion euro area is being touted for it's symbolic importance after the
currency was battered throughout 2010 by bad news. Two members Greece and
Ireland required international bailout funds to avoid bankruptcy.
Estonia could be the last new entrant for several years as all other potential
newcomers from Eastern Europe either shy away from adopting an unpopular
currency or fail to meet criteria on budget deficits and inflation.
Hours before the currency switch, European Commission President Jose Manuel
Barroso welcomed Estonia to the euro zone, saying the euro would boost the
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 on Friday.
Leaders of Germany and France, the euro zone's powerhouses, also made laudatory
New Year's statements in support of the common currency after the worst year in
it's 12-year history.
"My dear compatriots, don't believe those who propose that we get out of the
euro," French President Nicholas Sarkozy said in a televised address to his
nation. "The isolation of France would be madness. The end of the euro would be
the end of Europe."
In her appeal to Germany on Thursday, Chancellor Angela Merkel called for
strengthening 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."
Estonia's leaders and many economists believe the country's economy, which
contracted a staggering 14 percent in 2009, 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," 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 the nation is 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 historical center.
Estonia will be the poorest member of the euro zone, a cause for concern for
many Estonians who fear they will have to cough up scarce resources to help
other member countries that failed to maintain fiscal discipline.
Celebrations included open-air concerts in subzero weather and for foreign
dignitaries a gala concert in the national opera house featuring the music of
U.S. composer George Gershwin.
The Finance Ministry said banks and information 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 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 is 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.
Latvia and Lithuania, Estonia's Baltic neighbors, are enthusiastic supporters
of the euro and could become the club's newest members in 2014.