Why Estonia wants to join the troubled euro

Who in their right mind would want to join the euro?

The EU's single currency is giving a very good impression of being in trouble.

A huge bail-out for the Greek economy and persistent rumours that other countries could need similar help have undermined confidence and credibility.

Dithering and bickering by Europe's political leaders has not helped.

So it is perhaps something of a surprise to find that Estonia, one of the EU's newest and smallest member states, is all set to adopt the single currency in January 2011.

Last week, as they have done for centuries, Estonians marked midsummer with a celebration, known as St John's Eve.

Bands played, people danced and beer was drunk around roaring log fires.

The sun was shining, even though it was nearly 11pm.

Austerity measures

But while some traditions last, others are changing.

This was the final time before the adoption of the euro that Estonians could buy their midsummer beer and sausages using the Estonian krone.

To prepare, the country had to meet EU rules on budget deficits, so state spending has been slashed.

Massive austerity measures were put in place to ensure Estonia satisfied the EU's stability and growth pact.

Working in the government's cultural heritage department, Riin Alatalu has seen the effect of those cuts first hand.

Her department has had up to 30% of its budget slashed.

Other government employees have lost their jobs.

But she says most people still support the move to the single currency.

"I think the majority of people think that economically it's a good idea to join the euro," she says.

Symbolism

But there's still a strong emotional attachment to the old currency, a symbol of Estonian independence after years of Soviet domination.

"We are a small country with a very rough history and with short periods of independence," Ms Alatalu says.

"It's our own currency and a state symbol. And it's very symbolic for us to have our own currency."

That symbol will soon replaced by the euro, itself symbolising the hugely ambitious European project of economic and monetary union.

Estonia's problem is that in the middle of preparing for euro membership, Europe's economies went into meltdown.

The Estonian economy shrank by more than 14% last year. Unemployment stands at just under 20%.

To keep the deficit down to acceptable levels government benefits were cut and taxes were raised.

So has it been worth the pain?

Finance Minister Jurgen Ligi is in no doubt. "Yes. It is a symbol and a quality mark" he says.

"It is a political symbol as well. We believe a small country should have a strategy of being integrated into the major zones and organisations that are active here. It's a trademark - a political trademark."

Sceptics rare

One of the big hopes is that being a member of the euro will encourage inward investment.

By being part of the single currency the risk of devaluation is removed.

But some worry that political differences are fatally undermining the single currency - and now is no time to join.

Professor Ivar Raig, of the private university Nord Academy, was once a government advisor.

Now he is almost a lone voice in calling for Estonia to resist the lure of the eurozone.

He fears the eurozone is in fact not one currency zone but two - the thrifty north, based around Germany, and the southern states where spending is out of control.

"We explained to our people that budget cuts are needed and people agreed with a 20% cut and this was passed.

"But in southern countries even a 5% cut is, for them, a catastrophe. And that's why I don't believe Europe is one optimal currency area."

He also fears that by sticking to the eurozone's rules on inflation and budget deficits, Estonia will get locked into years of low growth, when in fact it needs to grow rapidly to catch up with the European average.

But sceptical voices like Professor Raig are hard to find.

The days of Estonia's own currency are already numbered.

At the midsummer festival, there were a few who would miss the passing of the old currency.

But Estonia seems ready to embrace a brave new dawn. Who in their right mind would want to join the Euro?

By Dominic Hughes - news.bbc.co.uk

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Estonian april trade deficit declines sharply

The Estonian trade balance showed a deficit of EEK 357 million in April, down from EEK 1.59 billion in the same period of last year, the Statistics Estonia said in a report on Monday. The deficit was also smaller than the EEK 2.67 billion shortfall seen in March.

Exports of goods amounted to EEK 10.6 billion, up 37% from the previous year. Exports totaled EEK 9.83 billion in March. Imports increased 18% annually to EEK 10.98 billion. In March, imports stood at EEK 12.49 billion. In April compared to previous month, exports of Estonia increased by 8%, but imports decreased 12%.

In April, the biggest share in Estonia's total exports was held by the commodities of machinery and equipment and mineral products. The largest share in imports was also held by machinery and equipment, followed by mineral products.

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Jaanipev Between History and Anecdotes

It is a magic night and Estonians have known how to celebrate it for centuries. Not much about this night is known by foreigners besides the bonfires and the big celebration; but the midsummer celebration solstice has a lot of traditions and stories surrounding it and the origins of this important event are certainly unclear.

History says that the Jaanipev celebration existed already before Christianity arrived to the country. The ancient Estonians used to light bonfires, drink, dance, sing, follow some rituals and most of these activities did not fade away over the centuries.

Although it has a non Christian origin, it was the crusaders who gave this night its actual name: Jaanipev Even if the bonfires where already part of the tradition, they acquired a special meaning in 1919 during the War of Independence when Estonian troops overcame the German forces on the 23 rd of June connecting the symbol of the fire with independence and freedom. Traditions and anecdotes : The history of Jaanipev is filled with anecdotes and interesting facts. Here you can discover something that -probably - you still do not know.

It is believed that jumper over the bonfire its a sing for good luck and prosperity. The fire scares bad spirits and guarantees a good harvest. The bigger the fire is, the better it will work. The fern flower is only supposed to bloom this night. Young couples go into the forests searching for it. The origin of this tradition is a fairy tale about a couple Koit and Hmarik, who just saw each other on this night every year. If you are single, no problem.

It is said that if a single finds the flower, then she he will have to put it under the pillow to discover the face of the one she or he will married one day while dreaming. Lennart Meri, well remembered Estonian President, affirmed that Jaanipev traditions may be connected with the Kaali Meteorite.

The first fire is lighted by the Estonian President on the morning of the 23 rd. From here, the "light of freedom" is taken all over the country to start other bonfires up.

Source http://estonianfreepress.com/2010/06/jaanipaev-between-histo~

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