John, while I share in your enthusiasm for Estonia’s flat tax, and am a long-time admirer both of that country and the remarkable success it is making of its restored independence, matters may be about to take a turn for the worse. The excellent England Expects blog takes up the story:

“In a desperate attempt to convince a sceptical public the Estonian under-secretary of the Ministry of Finance, Aare Järvan , has published an article in Postimees on the possible impact of Euro entry on the economy of Estonia. In a classic peice of self deception he claims optimistically that “through joining the ‘euro-zone’ we (Estonia) will have a real possibility for the first time, to participate in the decision-making process concerning the continent’s monetary policy ” . Well I suppose the good under-secretary is right, Estonia will participate, but it will have no influence. Why does he think that one voice – and a very small voice at that – would have any influence. All he has to do is to look at the damage single interest rates have been doing to significantly larger countries and economies like Ireland and Portugal to realise the level of participation the Estonians will have in Euro zone decisions.”

Indeed.

Estonia should stick with the Kroon, and do so indefinitely, and if that causes trouble with Brussels under EU ‘law’ (it might), merely point to the way that Brussels is not enforcing the debt/GDP provisos of the Growth and Stability pact that supposedly underpins the Euro (as it happens, that pact was and is a dumb idea, but that’s a different discussion ) and laugh.