Trouble For The Euro? Not In Estonia The debt crisis among some of the 16 countries that use the euro caused a sharp drop in the currency's value. That led to speculation that the currency's very existence could be in question. But in Estonia, a former Soviet republic and now a member of the EU, many can't wait to adopt the currency.
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Trouble For The Euro? Not In Estonia

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Trouble For The Euro? Not In Estonia

Trouble For The Euro? Not In Estonia

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From the European Union last month came this news: There's a country excited about adopting the euro. It's the small Baltic nation of Estonia. Here's a bit of TV coverage of the announcement in Brussels with CNBC talking to Estonia's prime minister.

Unidentified Woman: A quick question: You are entering - your country's entering the euro zone in January 2011. Congratulations, I guess.

NORRIS: It is hard to congratulate Estonia, given how awful this year has been for the euro - a debt crisis, bailouts, even talk of the euro zone collapsing. What is Estonia thinking?

Well, with answers, here's NPR's David Greene.

DAVID GREENE: Estonia's currency today is the kroon. Five hundred kroons are worth around $50. Every Estonian knows whose face is on the 500 kroon bill.

Mr. HUNO RYAK(ph): Kulli Jacobson.

GREENE: Jacobson was a famous Estonian writer and politician. Huno Ryak told me that as we huddled under his awning to escape the rain.

Mr. RYAK: If we speak about our money, at least give me some Jacobsons.

GREENE: Come January, no more Jacobsons. This will be a huge change for Huno Ryak. He runs a currency exchange business in Estonia's capital Tallinn. It got sentimental running kroons through his bill counting machine. This became Estonia's currency in 1992. It was a powerful symbol that the Soviet occupation was really over.

Mr. RYAK: What belongs to independent country? Your own country with borders, with your own government, with your own money.

GREENE: But Ryak feels like his country of roughly 1.4 million people is still on a journey. Joining the E.U., then NATO, moved Estonia closer to the West. Adopting the Euro, he said is the next step.

Mr. RYAK: Of course we would like to belong somewhere away from Russia.

GREENE: While some European countries have decided against the euro, Estonian leaders say they have little choice. When Estonia joined the E.U. in 2004, they committed to the currency.

Mr. JURGEN LIGI (Finance Minister, Estonia): Joining euro zone is our obligation even, our agreement.

GREENE: This is Estonia's finance minister Jurgen Ligi. He explained that the kroon has long had a fixed exchange rate. Its value is tied to the German mark and then later to the euro. So...

Mr. LIGI: We are affected by things, situation in euro zone anyway.

GREENE: What's more, Ligi said his country's always been proud of its efficient economy. Living standards lag behind much of Europe, but there's a flat tax, low government spending and deficits are taboo. So Ligi says maybe the timing is actually good. Little Estonia can come in and teach countries like Spain and Greece lessons in fiscal discipline.

Mr. LIGI: Euro zone and the European Union is just now changing the policies and changing it towards Nordic countries, including Estonia.

GREENE: Not everyone's buying this.

Professor IVAR RAIG (Economist, Tallinn University): Wishful thinking, first of all.

GREENE: Ivar Raig is an economist at Tallinn University. The idea of Estonia teaching lessons, no, Raig said. Estonia may be too busy paying other countries' bills.

Prof. RAIG: There is a threat that three, five years after we have joined the euro zone, we need to pay the debt of some south European nations.

GREENE: Maybe adopting the euro is smart, he said. But why not wait? Estonia just turned a corner after suffering one of the worst recessions in Europe. The country has an economy that's growing again. The euro zone, Ivar Raig said, will mean restrictions and responsibilities that will make it hard for the government to guide a recovery. And what about the historic, meaning the argument that the euro helps Estonia integrate with the West?

Prof. RAIG: We have moved to the West already. We are in the West under the umbrella of the European Union, and especially in NATO we have very good relations with the United States of America.

(Soundbite of music)

GREENE: As if to underscore that, you could hear some Elvis on one of the Tallinn's cobblestone streets. Nineteen-year-old Yanis Grazinski(ph) was on trumpet and passersby were dropping money in his instrument case. Yanis offered a simple reason for wanting the euro - more coins. Even small numbers of kroons come in paper bills.

Mr. YANIS GRAZINSKI (Musician): We don't like it because if wind is blowing, then - whew.

GREENE: You lose the money then.

Given the euro's track record, any bit of confidence is music to the ears of Estonian leaders as they get ready for this change.

David Greene, NPR News, Tallinn, Estonia.

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