Happy New Euro

Estonia became the 17th country to join the Euro at midnight Dec. 31, and the third formerly Communist European state to adopt the common currency.

Despite a growing Euro crisis, the small Baltic state with a population of 1.3 million and a gross domestic product of euro 14 billion ($19 billion) celebrated the occasion on New Year’s Eve. Estonia is now the second-smallest Euro economy after Malta.

“It is a small step for the euro zone and a big step for Estonia,” said Prime Minister Andrus Ansip, who was the first to take euros out of a specially installed cash machine.

Estonia will likely notice joining the euro club more than the club will notice its new member. The country’s GDP amounts to 0.2 percent of the current euro zone GDP of euro 8.9 trillion ($11.84 trillion).

It will be the club’s smallest member but its debt and deficit levels are among the lowest of all euro member states.

Many in the country see the change from the kroon to the euro as the way out of an economic downturn that in 2009 lopped 14 percent of its economy.

Estonia has had a long preparation for joining the currency, having pegged the value of the kroon against the euro – at a rate of 15.65 kroons to one euro – since 2002. It was previously pegged to the deutschmark, but switched when a reunited Germany adopted the euro.

There’s still been a vocal anti-euro campaign that kept up its rhetoric until the last minute, saying Estonia was “getting the last ticket for the Titanic.”

Some poorer Estonians still fear that prices will be rounded up and that food will become even more expensive.

“To meet the Maastricht criteria [to join the euro], Estonia of course had to go through severe cut-backs in the state budget, combined with tax increases, but now the state budget is in balance and I’d say this has a value on its own,” Tallinn Music Week organiser Helen Sildna told Pollstar. “I believe the euro will provide stability and provide the way for further interaction and integration into the global market.

“At the same time as Estonia joined the euro, Tallinn also became the European capital of culture, so it’s an important year for us.” Tallinn Music Week is March 24-26.

For many Estonians, 20 years after breaking away from the Soviet Union, the euro is proof that they have fully arrived in the West, according to the BBC’s Baltic region correspondent Damien McGuinness.