A welcome piece of good news for Jean-Claude Trichet, European Central Bank president: Estonia is about to join the eurozone as its 17th member. The entry of the tiny Baltic state has significance beyond its shores. It shows that despite all the woes of the past year, Europe’s monetary union is still on an expansion course. Mr Trichet has just been speaking in Tallinn, the country’s capital, at an event kicking off the final preparations before January 1, 2011 when the euro becomes legal tender.
His comments covered the usual themes about Europe’s common destiny and the euro’s importance in the continent’s economic integration. But Mr Trichet did not speak as if Greece had never happened. There was a stern warning that future members had to do more that just meet the technical requirements for joining (although with hindsight, it is not even clear that Greece managed that).
Mr Trichet said: “A country must only be eligible to adopt the euro when it has achieved a high degree of sustainable convergence and its economy is in a position to fully reap the benefits of joining the euro area. A lack of sustainability would inevitably result in serious economic challenges for the newcomer and would possibly also have negative consequences for other euro area countries, or even for the euro area as a whole.”
That could only have been a reference to Greece. So does this mean a tougher line for future members? Mr Trichet might want to give that impression. But it will be hard to stop the entry of those who pass the tests set, for instance, on inflation rates and public finances. Mr Trichet highlighted challenges still facing Estonia, which saw a brutally sharp recession in 2008 and 2009, to re-balance its economy and control inflation. Yet Estonia was allowed to join this time with scarcely a quibble by the politicians. The dream of the euro’s architects – including Mr Trichet – is that eurozone will continue to grow.