Tallinn’s ‘sacred cow’ offers an excellent exchange rate as Estonians trade their kroons for euros In the square of Tallinn’s Tammsaare park, a queue of cold but curious Estonians stretches round in a small circle, waiting to get their turn in front of a giant plastic cow.
The “sacred cow”, as it’s called, is a new work of art apparently designed to symbolise the importance Estonian policymakers attach to membership of the eurozone.
But that is not what is drawing the crowds on this chilly winter’s day.
For a short while only, this cow will exchange 1 old Estonian kroon for one freshly minted Estonian euro coin.
That is about 15 times better than the official exchange rate.
The Kroon goes in the cows mouth and then, as if by magic a new euro coin appears from the cows behind.
It is not completely clear what the artist is trying to say and the cow has apparently suffered repeated mechanical problems.
Estonians are fear being short changed by their country’s euro entry Fortunately, this is not the only way to get hold of the new currency.
Estonians are proud of their country’s IT infrastructure. Tallinn was the original home of Skype, after all, and all agree the introduction of the new currency has gone off without a hitch.
But there is nostalgia for the outgoing kroon, which symbolised hard won independence.
Estonians will miss their “beautiful” currency, which featured, amongst others, the countries leading chess players.
The biggest problem appears to be the new euro coins’ single-digit figures.
“The change seems so little,” says Elen, a government worker.
Others complain they will need a new wallet to fit the change.
To help the transition, the government issued almost every household with a “euro calculator”, a move not welcomed by critics such as economics professor Ivar Raig.
“What are they saying about Estonians?” he asks. “That we cannot use a normal calculator?”
The idea behind the calculator was to ensure prices are not marked up – as has happened in the past when other countries have adopted the single European currency.
With an exchange rate of 15.64 kroons to the euro, almost nothing in Estonia is now priced in round numbers.
Inflation tied to the change is one worry, but there are more serious concerns.
Some Estonians say adopting the euro is a bit like boarding the Titanic The kroon has never been a flexible currency in its 18 years, as it has always been pegged to either the Deutsche Mark and then the euro.
Nevertheless, insists Professor Raig, the kroon has helped shelter Estonian companies from excessive competition.
“Companies thought it risky to come [and sell] in Estonia and this meant that small producers had work,” he says.
Despite the peg there was always the option to devalue if the government wanted to.
The euro also comes with rules designed to limit inflation, which Estonia has struggled with in the past.
With Estonia now the poorest country in the eurozone, some say limiting inflation will limit growth.
And then there are the problems in the eurozone itself.
Posters around Tallinn suggest Estonia has just purchased the last ticket to board the Titanic.
Others compare the new currency to the Soviet era Russian rouble.
The minister of finance, Jurgen Ligi, accepts that inflation is inevitable if Estonia is to catch up. The country’s economic growth rate has accelerated of late and the government forecasts around 4% in the next year.
“We can’t really avoid a little bit of inflation”, he admits, “but at the same time we are much more experienced after the crisis and such a consumption and loan boom can’t happen again.”
Indeed, Estonia suffered as much as anyone, seeing its GDP fall by 14% from its peak.
Despite that, the government refused to devalue the currency.
Mr Ligi believes that as most of Estonia’s exports also relied on imports it would have had little benefit.
But he accepts his new currency is in need of work – even adopting the boat metaphor favoured by his opponents.
“For us you have to understand there is no fleet on the sea, we have only one boat, we have to try and make it better and if it sinks, it sinks anyway. But we have all the knowledge how to avoid it.”
Across town from Mr Ligi’s soviet era ministerial building sits the rather more laid back home of Skype, the internet telecoms company.
The company was founded in Estonia, and maintains its largest office here with more than 400 staff.
Their general manager in Estonia, Sten Tankivi, says he thought the change would be mostly psychological – convincing investors that Estonia is indeed a safe country in which to invest.
Skype is Estonia’s most famous start up, but it is by no means the only one.
As the economy has recovered in the last year, the country has once again started winning awards for its new IT firms.
This is why Mr Tankivi shares his finance minister’s optimism about his country and its abilities.
“Estonia as a country is a start-up,” he says.
“There are no limits. You can achieve anything and make things happen.
“Those sorts of characteristics are important, besides economic issues.”
As the euro enters another testing year, European governments may well want to adopt the Estonian mentality.
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