Plenary Session 14-17 June

Despite the current economic crisis and tensions in the euro, Estonia is set to adopt the single currency in January.

Estonia's bid to join the Euro was backed by the European Parliament on Wednesday (16 June) with 589 votes in favour, 40 against and 52 abstentions.

"It is very significant that such a small country knocks at the Eurozone's door at the time of the worst financial, economic and social crisis.  It says a lot about the prospective member.  It also says a lot about the Eurozone itself", said rapporteur and Maltese Socialist MEP Edward Scicluna in the debate preceding the vote.

"This new accession to the Euro shows that the Economic and Monetary Union is fully functional.  In parallel to expanding we must also strengthen economic governance however.  It is the only way to continue building a strong EMU", said Economic and Monetary Affairs Commissioner Olli Rehn, also in Monday's debate.

"Estonia's interest in the Euro in these difficult times is the Eurozone's light at the end of the tunnel", said Estonian MEP Ivari Padar (S&D). "Small countries would be lost without the European Central Bank and the fellowship of other countries", added Irish MEP Gay Mitchel (EPP). "Estonia symbolises the ever-present interest in what the EU has built", said German Liberal Wolf Klinz.

The resolution notes that Estonia has fulfilled the criteria as a result of the hard work of its government and people.  It also notes the Commission's statement that Eurostat has verified the validity of all relevant statistics supplied by the Estonian authorities.

The Estonian authorities should speed up practical preparations for a smooth changeover and ensure that the Euro's introduction is not used as a pretext for "hidden" price increases, adds the resolution, which also reminds the government not to rest on its laurels, since price stability risks and macroeconomic imbalances always need to be addressed.

Finally, the resolution notes the differences between the Commission and ECB reports with regard to the issue of the sustainability of price stability.

Like all the countries that joined the EU in 2004 and 2007, Estonia must join the single European currency once it meets the criteria for membership.

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During an economics committee hearing in Strasbourg on 20 May, Edward Scicluna, the Maltese Socialist Member who drafted the report on Tallinn's euro ambitions said, "it is very significant that such a small country knocks at the eurozone's door at the time of the worst financial, economic and social crisis". His report will be put to the vote by all MEPs in June.

Pre-requisite stable prices and low budget deficit

As well as low inflation Estonia's "Kroon" has been stable and the country is strongly integrated into the wider European economy with most of its trade being with fellow European Union countries.

Irish MEP Gay Mitchell of the centre right European People's Party welcomed the fact "that such a small country becomes part of the euro at such a time of wild speculation". Praising the country's "impressive performance", he said that Estonia could be a "flagship for the region", showing other Baltic countries that if "you do meet the criteria, you can join".

For some MEPs, the knock-on effect for Estonia's neighbours Latvia and Lithuania was the most striking aspect. Latvian MEP Artūrs Krišjānis Kariņš said, "Kudos to our Northern neighbour", adding this will be "an important signal for the region".

Swedish Liberal Olle Schmidt said "congratulations to Estonia - if it only could have been my own country".

"High unemployment, low wages"

However, some thought the price of euro membership was too high. Speaking to us after the hearing Greek MEP Nikolaos Chountis of the leftist (GUE/ NGL) bloc deplored "the economic policies implemented by the Estonian government, in order to meet these criteria (which) led to high unemployment, low wages and social inequality"

Estonia's former minister of finance, Socialist MEP Ivari Padar said Estonia had previously embraced measures which the European Union is now urging on others. "We took control over the budget to be able to join euro zone," he said.