KFURT (AFP) - European Central Bank president Jean-Claude Trichet hailed on Monday Estonias efforts towards eurozone membership, saying they showed the 16-nation bloc was not a closed shop.
Trichet also used an address given in Tallinn to reiterate calls for strengthening the eurozones foundations to avoid the sort of debt crisis which jolted Europe earlier this year.
Estonia is to become the eurozones 17th member on January 1, demonstrating that the euro area is not a 'closed shop but is open to those countries and economies that are fully compliant with the entry criteria in a convincing and sustainable manner, Trichet said.
Like other Baltic states, Estonia witnessed strong growth from 1995 to 2007, but was then hit by problems fueled by an excessively rapid rise in wages and a deteriorating trade position.
Soaring unit labour costs outpaced productivity gains and had a negative impact on the competitiveness of the economy, the ECB chief noted in a copy of the speech made available in Frankfurt.
Similar problems helped fuel a debt crisis in Greece which hit confidence in the entire eurozone as trouble emerged in other countries as well.
The experiences of Estonia and various euro area countries over the past few years highlight the importance of rigorous and effective surveillance inside the single currency area, Trichet said.
Although the European Union approved a rescue package for debt-laden EU states worth 440 billion euros (575 billion dollars), fresh fears about problems in Greece, Ireland and Portugal have pushed their borrowing costs higher again, threatening their long-term finances. The ECB has drawn up proposals for reinforcing eurozone economic governance and presented them for consideration by a task force chaired by EU President Herman Van Rompuy.
Trichet warned that unsustainable economic policies 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.
The success of the euro depends on all euro area countries seriously engaging with the responsibilities that go hand in hand with the considerable benefits that euro area membership offers, he said.