TALLINN — Eurozone turmoil over Greece and now Ireland, plus jitters about Portugal and Spain, have failed to faze Estonia as the Baltic state braces to become the currency bloc's 17th member.
Estonia swaps its kroons for euros on January 1, with its centre-right government confident the move will boost the nation of 1.3 million as it emerges from a deep slump.
Estonia, a former Soviet-ruled republic which joined the European Union in 2004, will be the third ex-communist state to adopt the euro after Slovenia in 2007 and Slovakia last year.
"No country is fully protected from crises, but the crises that have hit Greece and Ireland do not threaten Estonia provided we stick to our policy of a balanced budget and low debt," Economy Minister Juhan Parts told AFP.
Estonia won a "tiger" label for its breakneck growth after embracing the free market with gusto following independence from Moscow in 1991.
It had a conservative fiscal policy even before its recent sharp recession which sparked a biting austerity drive. The belt-tightening was also meant to protect its euro drive.
The 1992 Maastricht Treaty on European economic and monetary union sets hurdles to adopting the currency. Estonia got a green light to join in July.
Would-be eurozone members must keep their public deficits -- the shortfall between revenues and state spending -- under 3.0 percent of gross domestic product.
Estonia had posted surpluses from 2002 to 2007.
To stay below the bar, it slashed spending as its economy shrank by 14.1 percent in 2009.
Its 2009 deficit was 1.7 percent, a shadow of those racked up in most eurozone nations. This year, with the economy forecast to expand by 2.5 percent, the deficit is expected to come in at 1.3 percent.
Maastricht limits government debt to 60 percent of output. At 7.2 percent in 2009, Estonia's was by far the lowest in the EU. This year's forecast is 8.0 percent.
Estonia cleared the Maastricht exchange-rate stability hurdle because the kroon, created in 1992 to replace the Soviet ruble, has been pegged from the outset, first to the Deutschmark and then, from 2002, to the euro.
The rate of 15.6466 kroons to the euro has never moved.
"In addition to being a stamp of quality and trust, and attracting more investments, the euro will also abolish forever the risk of a devaluation of the kroon hanging over the Estonian economy," said Parts.
Parts said the euro will also make it easier for businesses in Estonia to deal with trade partners, most of whom are in eurozone nations.
Anti Poolamets, who runs the "Save The Kroon" movement, rejects that.
The euro is "huge trouble" for Estonia, Poolamets told AFP.
"This situation is plain peculiar. A small Nordic country that has been praised so much for keeping its budget balanced and not living beyond its means is joining a union with many members doing the exact opposite," he said.
"Estonia will have to start paying for countries like Ireland who have no one but themselves to blame for their financial woes," he added.
The government and the eurosceptic camp have jousted over poll data on the public mood.
This week a monthly government-commissioned survey found that 54 percent favoured the switch, up from the previous 49 percent. The anti-euro camp dropped to 36 percent from 40 percent.
But a eurosceptic-commissioned survey in October found that only 34.3 percent were in favour and 52.8 percent against.
The government-commissioned survey found that despite a pro-euro majority, 72 percent of those surveyed feared price hikes would accompany the switch.
There have been concerns that firms could try to take advantage by playing on consumer perceptions that lower-digit euro prices are cheaper than the kroon equivalent.
To help the public get to grips with the arithmetic, the government has mailed almost 570,000 conversion calculators to households.
Market-trader Veronika, 64, told AFP she remembered with emotion the kroon's birth on June 20, 1992.
"But I won't cry on January 1 when the kroon is gone," she said.
"To be honest, we've taken euros from customers in many bars, restaurants and small shops for years, even though it's illegal," she added.
Copyright © 2010 AFP