HN: ČR's negative stance on EU integration will discourage investors

Prague, Oct 31 (CTK) - Investors will definitely not consider a country that will exclude itself from European integration processes a stable haven and the deputy chairman of the Czech Association of Exporters should know something about this, Jan Machacek writes in Hospodarske noviny yesterday.

He is commenting on Otto Danek's statement in Monday's issue of Hospodarske noviny that the EU banking union is "an attempted robbery" and the Czech Republic must reject it.

Machacek writes that Danek said the Czech Republic would be threatened with an uncontrolled outflow of capital from "its" banks and that it would pay for the "party" in southern Europe.

Danek said, Machacek writes, that someone will be doing decisions for the Czech Republic, while it will shoulder responsibility and the duty to pay a possible bill, deposits may disappear from Czech banks and that mothers may siphon off money from the banks, or "tunnel" them.

Machacek writes that first, the Czech Republic need not enter the banking union and it can negotiate about joining it only sometime in the future when it joins the euro zone.

But this, too, can cost something, however, the Czech government does not talk about this. It wants to use its right to veto and prevent the rest of Europe from creating the banking union, Machacek writes.

He says it should be added that the banking union will definitely be created even if the Czech Republic wanted to veto it because it can be formed on a similar ground plan like the fiscal compact.

That the United States has overcome the financial crisis more quickly than Europe is due to that the banking union exists in America. The state temporarily helped the largest banks while it let the others (hundreds of them) fall, Machacek writes.

In Europe, any small bank seems to be systemically important from the national point of view, which makes recovery from the crisis much longer and more costly, Machacek writes.

Long negotiations will be still held before the banking union is formed. One big problem is whether the European Central Bank (ECB) could at all regulate states that are not in the euro zone because they are not represented in its management, Machacek writes.

He says the Czech Republic should take part in these negotiations and participate in the union's emergence on the basis of defined and discussed national interests, and not to exclude itself voluntarily from the debate.

Machacek points to what he calls a "special schizophrenia of (Czech) economic liberals" who say "we have privatised banks, or sold them abroad, but they are still somehow 'ours'and it even threatens that someone will tunnel them."

Why should the owner damage his own firm that earns him good money in a country? Either the Czech Republic will have enough viable projects and firms that banks will gladly finance because this will bring them profit, or they will appreciate the means elsewhere, Machacek writes.

But why should the owner tunnel himself? The Czech Republic sometimes pretends to be a proponent of a free and single market without barriers, but this does not apply to banks? Machacek asks.

Caution is naturally justified, and the same applies to certain limits. The Czech authorities should realise that already now the mothers of Czech banks have the right to turn their daughter firms into branches, in which case the powers of the national regulator would be restricted, Machacek writes.

True, the situation of Czech banks is specific in the region because Czechs tend to save a lot, but why does someone think that this will last for ever? Machacek asks.

He writes that if the Czech economy continues to show such miserable growth like of late, the banks' daughters may need liquidity and capital from their mothers.

Turning to Danek's words about southern Europe, Machacek asks whether the Czech Republic is disinterested in its prosperity. The Germans alone are now surprised at seeing their car exports to the south declining and how much they need the "damned" south of Europe to maintain prosperity, Machacek writes.

He says many fear that the interest in leaving the European Union for the sake of "our country, our rules, our sovereignty" will be declared at the weekend congress of the senior government Civic Democratic Party (ODS) while the rejection of the banking union is to be one of the milestones on this "great pro-Moscow path."