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Estonian report Estonian report
by Euro Reporter
2011-01-03 08:22:04
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Estonia enters euro zone amid nostalgia for kroon

It was a moment the Estonian government - one of a line of liberal, pro-Western coalitions that have ruled the country since 1992 - had been awaiting for years. At midnight on New Year's Eve, Estonia abandoned its post-Soviet currency, the kroon, in favour of the euro - its last remaining big policy goal since securing membership of the EU and NATO in 2004. But with the future of the European common currency seeming less certain, some are inclined to see it as a pyrrhic victory. The bittersweet nature of the moment was not completely concealed by New Year's festivities or the pageantry of Tallinn becoming European Capital of Culture 2011.

''The kroon just turned 18 last summer,'' says Tea, a nursery school teacher in Tallinn. ''Like a youth, there's a feeling that it should have a long life ahead of it.'' A December poll by the Estonian Institute of Economic Research showed only 25 per cent supported the euro. Nostalgia for the outgoing currency is already in the air, although the kroon remains in parallel circulation for 14 days after the changeover. The crisis of confidence in the euro has inspired some to protest. On December 28, one of Tallinn's main squares was papered with posters of the euro as a sinking ship. Protest organiser Anti Poolamets distributed T-shirts with the slogan ''European rouble'', reminiscent of criticisms made in 2004 that Estonia had left the Soviet Union only to join the European Union.

Andrei Tuch, a political blogger, points out Estonia scrapped the independence usually enjoyed by a sovereign currency back in the early 1990s, when the kroon was pegged to Germany's currency. ''The kroon was always meant to be a Deutschmark in all but graphic design.'' Estonia's Prime Minister Andrus Ansip has called the euro ''essential'', and says it will attract foreign investment. But Estonian officials do not expect it to be a panacea. Finance Minister Jurgen Ligi said last year: ''It is correct that the euro will not improve our quality of life and export capacity the day after the changeover. It improved it before the changeover.''

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Estonia sees surge in birth rate


The increase in Estonia's birth rate is being seen as a positive move for the Baltic state. According to the country's prime minister, the birth rate increased in November - the first time in two decades. Andrus Ansup added that there has also been an improving death rate in recent years as the country embraces a number of new measures, including focusing on reducing car-related accidents.

He added that 2010 has seen the lowest level of traffic-related fatalities in 60 years, with the figure falling to less than 100. "This is due to the hard work of the road administration and the police. Investment into roads has begun giving results and surveillance has improved significantly. We need to thank the people," explained the prime minister.


Estonia recently introduced a speed limit of 90km per hour on national roads as part of ongoing motoring safety measures.

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Krugman: I send Estonia congrats and condolences

"Congratulations to Estonia but condolences too. This wasn’t the glittering euro entrance you were promised," writes well-known economist and Nobel Prize laureate Paul Krugman in his blog yesterday evening.

"If I’ve got this right, Estonia will join the euro in about 40 minutes. It is an impressive achievement, a symbol of the country’s transformation from Soviet province to good European citizen.

But the cost of the adventure so far has included a Depression-level slump: GDP is growing again, but only after falling 18 percent. The IMF projections only go out to 2015 — and even then, the Fund expects GDP still to be below its 2007 level. Unemployment, having risen to almost 18 percent, is expected to remain above 10 percent into 2014."


       
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