European countries supposedly aiming to join the euro currency bloc were warned on Tuesday that they had to increase efforts to meet the membership criteria.

Progress reports issued by the European Central Bank and European Commission highlighted the patchy performance by nine countries formally committed to joining the euro. "Many of the countries under review have made progress with economic convergence, but in some countries there have also been setbacks," concluded the ECB.

The 12-country eurozone - created in 1999 - was envisaged as encompassing most of the EU's 25 members. But in the latest round, just one country – Slovenia, the tiny former Yugoslav state – qualified to join from January 1, 2007. Some countries, such as Estonia and Lithuania, which came close to qualifying have since seen the prospect of membership receding.

Joaquín Almunia, EU monetary affairs commissioner, on Tuesday argued that the discipline required by would-be members was beneficial to their own economies. But he accepted that some countries were finding the going much tougher than expected, a fact illustrated by the slipping timetable for euro entry in many of the 10 countries which joined the EU in 2004.

"The road to the euro is proving more difficult than some may have thought originally, but the reward is well worth the effort," Mr Almunia said. Among those countries that no longer have a target entry date is Hungary, which has one of the worst fiscal records among EU countries.

Mr Almunia is also irritated by the proposal by Poland, another of the 2004 intake, to hold a referendum on euro membership, a plan regarded as risky and unnecessary in Brussels. Poland scored relatively well in the Tuesday's report on the economic tests set for would-be members but the ECB in particular remains concerned about what it sees as Polish disregard for the principle of central bank independence.

To join the euro, countries have to meet criteria on inflation and interest rates as well as fiscal policy. Inflation, for instance, cannot exceed that of the three best performing EU countries by more than one and a half percentage points. But countries have also to have been in the EU's "ERM II" fixed-but-floating exchange rate mechanism for two years and there are also legal requirements – including on the correct spelling of "euro" in legislation.

Mr Almunia's spokeswoman reminded the new members that euro membership was a "right and an obligation" and that adopting the single currency was "part and parcel" of joining the club.

"Most new member states ratified their accession treaties through a referendum so they have voted already on the single currency," she said, adding that the euro was as much a part of EU membership as farm subsidies and regional aid.

Mr Almunia's spokeswoman added that the 10 new members plus Sweden had a treaty obligation to join the euro and that the two countries with "opt outs" from the currency union - Britain and Denmark - would be better off in the long-term if they joined too.

Eight of the 2004 intake of new EU members came from the former Soviet bloc in central and eastern Europe. Cyprus and Malta were the other new members.

Source:  Financial Times