Estonia May Be Eurozone Last Member, Bulgaria Unwary

A clock like euro coin in Swedbank in Tallinn 31 December 2010. At the stroke of midnight, the small Baltic state with a population of 1.3 million became the 17th member of the pan-European monetary bloc. Photo by EPA/BGNES

Uncertainty surrounding the eurozone in the wake of the Greek and Irish debt crises has forced analysts to say Estonia may be the last new entrant to the currency zone for some years, but Bulgaria is still flying the flag against all odds.

Estonia became on January 1 the 17th member of the eurozone and the first former Soviet state to embrace the EU single currency.

The changeover from the kroon to the euro started at midnight (2200 GMT) in the small Baltic nation of 1.3m people.

Prime Minister Andrus Ansip marked the event by withdrawing euros from a cashpoint, saying this is a small step for the eurozone and a big step for Estonia.

But not everyone is that optimistic.

Poland and the Czech Republic have indicated they will not rush to join the currency bloc, saying this would not be to the country's advantage for a long time.

Bulgaria however, the tiny and poor Balkan state, has consistently pursued European integration with enormous zeal and has made clear that the single currency woes and doomsayers' warnings of a possible crack-up will not give it a pause.

The country has repeatedly changed the time frame for adopting the euro. Ambitiously scheduled initially for 2010, the country's entry into the eurozone was first set back for some time around 2012 with experts saying it is conditional on continued fiscal prudence and lower inflation.

The new center-right government, which swept to power last summer, was very enthusiastic about adopting the single currency only to be forced to put off plans after the country's 2009 revised budget gap exceeded the three percent EU threshold.

Now it is back in the game, saying it plans to apply to join ERM II in the second half of 2011 after it has, hopefully, demonstrated that next year's budget deficit will fall below the European Union's ceiling of 3% of gross domestic product in line with the Maastricht criteria.

The failure of previous governments to take that step earlier is often attributed in Bulgaria to behind-the-curtain maneuvers by European officials - Eurozone President Juncker and European Central Bank President Trichet in particular – who allegedly created their own tools for managing the EU.

Fiscally sound Bulgaria may well prove to be the only euro aspirant country, which will manage to cut its budget deficit under the EU's cap of 3% of gross domestic product, a requirement for qualifying to join the euro zone. It is forecast to rebound in 2011 and 2012.

Finance Minister Simeon Djankov's belt-tightening policy however has drawn criticism of creating the illusion of a healthy economy on the back of the people, who are three times poorer than the average EU citizen and are just getting poorer.

Public support for eurozone membership however has not been seriously dented following the troubling developments in the monetary union. While at the beginning of 2009 the Bulgarian society was cut in two over calls for immediate introduction of the European single currency, an October survey by the German Marshall Fund found that 40% oppose adoption of the euro.

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