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Estonia to adopt euro at New Year

 
 
 
 
 
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Estonia will become the third ex-Communist country to embrace the euro

Estonia is just hours away from becoming the 17th member of the eurozone – the first ex-Soviet state to adopt the EU’s single currency.

The changeover from the kroon to the euro starts at midnight (2200 GMT) in the small Baltic nation of 1.3m people.

Despite market pressure on the eurozone and the bail-outs of Greece and the Irish Republic this year, polls suggest that most Estonians want the euro.

Estonia’s PM Andrus Ansip will withdraw euros from a cashpoint as 2011 arrives.

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

Estonia joined the EU in 2004 – one of eight former Communist countries that did so, including its Baltic neighbours Latvia and Lithuania.

Two other ex-Communist countries – Slovenia and Slovakia – are already in the eurozone.
Anxiety about prices

Estonia’s government says the euro will attract foreign investors because devaluation is then ruled out.

However, poorer Estonians fear that prices will be rounded up, and that food will become even more expensive. And the prospect of having to contribute to bail-outs of richer eurozone countries is hard to stomach, our correspondent reports.

In the past year Europe’s debt crisis has hit Estonia severely. The tough cuts in state spending, necessary to join the eurozone, have pushed unemployment to more than 16%.

To avoid a last-minute rush, Estonians have been able to swap kroons for euros commission-free since 1 December, the AFP news agency reports.

Kroons will be used in parallel with the euro for the first half of January. Banks will swap Estonians’ kroons for euros until the end of 2011 and the central bank will carry on doing so indefinitely.

The kroon has been pegged to the euro for 18 years and will be converted at a rate of 15.65.

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  • Estonia is joining a Euro that continues to face major problems as PIIGS can’t finance their debt. It won’t end pretty.

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