While Latvia is still arguing with the EU Commission over the spelling of eiro (or is it euro), the FT today asks the much more pertinent question: will the other baltic states even be able to join? On the backs of the energy hike Estonia and Lithuania are struggling to comply with the entry conditions, especially those on inflation. Slovenia is, however, expected to join on target on 1 January 2007.
Estonia, Lithuania and Slovenia set themselves the target of being in the first wave of new euro members next January and of complying with most of the rules, including public debt levels, interest rates and budget deficits.
Estonia, however, is struggling to meet the inflation criterion, which is likely to be set at about 3 per cent this year, 1.5 per cent above the average inflation rates of the three countries with the lowest inflation….. Like in other former Soviet-bloc countries, energy has a bigger weighting in Estoniaâ€™s consumer price index because the country uses power less efficiently than the EUâ€™s older members.
â€œWe feel that itâ€™s a shame that just when we need to qualify for euro entry, the world oil prices go up,â€ said Kylike Sillaste, adviser to the prime minister….
Joaquin Almunia, the EUâ€™s monetary affairs commissioner, has said he will apply strictly the entry standards for the candidate countries, although the ultimate decision on enlarging the eurozone lies with member states.