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Greece applies for eurozone membership

ATHENS: Greece formally applied to join the euro zone on Thursday, saying membership would bring it security and stability after years of lagging its European partners.

It was the first time a country had asked to join the currency bloc since 11 European Union countries merged their currencies into

the euro at the beginning of last year.

More than a dozen other countries are expected to seek eurozone membership over the next decade, from current EU members Denmark and Sweden to likely newcomers stretching from Estonia to Cyprus.

Denmark could hold a referendum on membership as soon as September, while Sweden's leaders are pushing for a similar vote to be agreed.

But Thursday was Greece's day. Speaking in the same building where Greece signed the treaty to enter the European Union 19 years ago, Prime Minister Costas Simitis said Greece would no longer be on the margins of world events.

"Today is a historic moment for the country. A new era of security, stability, development and well-being is beginning," he said.

In Brussels, the European Commission welcomed Greece's application to join the single currency - the last phase of economic and monetary union (EMU) - seeing it as a positive development for the nascent currency bloc.

"An enlarged (EMU) area will be positive both for the eurozone area and for the countries joining," Commission President Romano Prodi and Monetary Affairs Commissioner Pedro Solbes said in a statement.

Greece's application marked the end of years of catching up with other EU countries and a concerted two-to-three year effort to meet the tough requirements laid down for eurozone entry by the EU.

Greece failed to meet any of the criteria for membership when the first wave of countries were chosen in 1998, but has since caught up, lowering inflation, cutting its deficit and debt and keeping the drachma stable.

"The foundations have been set for strong and sustainable growth with low inflation," Finance Minister Yannos Papandoniou said in a speech before Simitis.

Analysts said Greece has still got a long way to go before it fully converges with the richest members of the EU, but that its recent record has been impressive.

"Growth has accelerated... Greece has shown an ability to spend EU funds more efficiently... There has been remarkable progress on the budget," Morgan Stanley senior economist Riccardo Barbieri said.

Unlike when fellow "Club Med" countries Italy, Spain and Portugal headed for the euro zone, there is little, if any, opposition within the EU or financial markets to Greece's membership, in part because of its size.

"Its inflation performance is better than some of the countries that are actually in the euro zone and it is no more likely to cause difficulties in implementing monetary policy than the countries which are already in," said Laura Ambroseno, senior market strategist at State Street in London. Greece said on Tuesday it had met the final criterion for joining when it announced that inflation - not so long ago well into double-digits - had fallen to mainstream EU levels and was at 2.1 percent based on the EU's calculations.

It met other criteria over the last two years.

In an interview with Reuters Television broadcast on Thursday, Papandoniou said eurozone membership would make Greece prosperous and put it on a par with its richer EU partners within a decade.

"If we keep a growth rate of about 4.5 to 5.0 percent - that is, about 2.0, 2.5 percent above the European average - within 10 years we shall achieve full convergence or near full convergence," he said.-Reuters