EU celebrates Slovenia's transition to euro zone

SLOVENIA:European leaders gathered in Slovenia yesterday to congratulate it on becoming the first former communist state to adopt the euro, 15 years after its independence from Yugoslavia was recognised by the EU.

Since Sunday night, Slovenia's two million people can no longer use their familiar tolars and must exchange them for euro, which is now the only legal currency.

German chancellor Angela Merkel and José Manuel Barroso, president of the European Commission, were due in Slovenia last night to join the country's leaders in marking its swift and successful adoption of the single currency.

"Not only did Slovenia perform exceptionally well in its convergence process to the euro area, but the last bit, the cash changeover, was also exemplary so far," said European Central Bank chief Jean-Claude Trichet in the capital, Ljubljana.

He said Slovenia's success in becoming the 13th country to adopt the euro was "clearly a sign that economic developments can happen very fast if a country is determined to make rapid progress". This was an apparent nod of encouragement to neighbouring EU hopeful Croatia and other former Yugoslav states.

Before the demise of Yugoslavia, Slovenians complained that they were being held back by less productive and less efficient parts of the communist federation, and the country has thrived since winning independence after just a few days of sporadic fighting.

Of the 10 countries that joined the EU in 2004, only Slovenia has been allowed to adopt the euro, thanks to annual inflation of about 1.9 per cent, which is close to the EU average and well below the figure in Lithuania and Estonia, countries that had also hoped to start using the single currency this year.

Slovenia also prides itself on its political and financial stability - the economy grew by some 5 per cent last year. In addition, it is due to take over the presidency of the EU in January 2008, the first ex-communist state to do so.

Polls show, however, that many Slovenians fear the euro will herald rapid price rises, and officials have told vendors not to "round up" prices when converting from tolars. Slovenians are also angry that many EU nations - including Germany - have placed restrictions on workers from new member states.

"We call for the free circulation of Slovenian citizens," Mr Trichet said, calling free movement of labour "absolutely of the essence" and a "natural feature for a single currency market".