f_0022611_18603 - Estonia and the Euro: They Just Did It...

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Spring 2011 The Ambassadors REVIEW 32 Estonia and the Euro: They Just Did It Michael C. Polt United States Ambassador to Estonia stonia is remarkable. On January 1 of this year, Estonian Prime Minister Andrus Ansip fulfilled one of his government’s most fervent policy goals by changing his nation’s currency to the euro. At the stroke of midnight he withdrew 20 euros from an ATM in the heart of Tallinn’s Freedom Square. It marked the latest (and one of the most important) milestones on Estonia’s two-decade journey from occupied Soviet republic to a prosperous, stable and democratic example for others to follow. The mechanics of the switch-over were handled flawlessly. Not only the Prime Minister’s ATM worked—all of the machines worked all over Estonia. Why was I not surprised? It was a much different picture when I arrived in Estonia in late 2009. The Estonian economy had shrunk by 19 percent over the previous two years. Unemployment was over 20 percent in some regions and still rising throughout the country. Analysts around the world said Estonia would not be able to meet the Maastricht criteria for joining the euro zone and would have to devalue its currency. What a difference a year makes! Despite the bad statistics and dire prognoses, those of us on the ground saw in the Estonians the same resolve that they used in their “Let’s do it!” campaign. This innovative combination of high technology and community activism brought out 50,000 people in this compact country to clean up trash on one particular day all over Estonia. “Let’s do it!” has now spread around the globe. Estonians’ sense of community, commitment to fiscal discipline, trust in government, and long-term outlook enabled the country to successfully manage an internal devaluation and stay on course to adopt the euro. Most importantly, Estonia did this without any protests or internal strife despite falling wages and very high unemployment. To put it simply, the Estonians decided on a goal, and then just did it with stoic determination. Estonia’s fiscal discipline during the boom years (Estonia’s government debt is the
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f_0022611_18603 - Estonia and the Euro: They Just Did It...

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