Prague, Sept 12 (CTK) – Having the euro is a fundamental economic interest of the Czech Republic which is a de facto 17th German federal land due to its business interconnection with Germany, David Klimes writes in daily Hospodarske noviny (HN) yesterday.
He writes that some European post-Communist countries did not have to ponder about whether to adopt the euro, or not. This applies, for instance, to the Baltic countries which did not have their own currency policy after the fall of Communism.
In addition, the euro became a sort of security project in the years of the mounting Russian threat, Klimes writes.
He writes that the Czech Republic is not in such a situation, yet it must make a decision because Europe has changed.
The country’s position should be realistic. In a situation where less than one fifth of inhabitants support the euro, politicians must find a very strong story with which to break up this scepticism. They must persuade people that the euro is economically beneficial, Klimes writes.
He writes that Vladimir Spidla, Prime Minister Bohuslav Sobotka’s chief adviser, points to the example of Slovakia, with which the Czech Republic formed Czechoslovakia until the end of 1992 and which has been allegedly increasing its lead on the Czechs.
However, this is not entirely true. The quicker pace of growth of the Slovak economy, which was weaker when the country became independent than the Czech Republic, was not due to the joining the euro zone in 2009 only, Klimes writes.
The closing of the gap between the two new countries’ economies started immediately after the split of Czechoslovakia and it has continued to date, Klimes writes.
He writes that another argument used to underline the importance of the adoption of the euro in Slovakia are direct investments, but this is not entirely clear either.
The situation varies. The overall direct investments per capita are sometimes higher in the Czech Republic while in other years, Slovakia leads, Klimes writes.
He writes that the euro helped Slovakia in one sole point. It was an anchor or goal on which the former Slovak reform government set its hopes.
Klimes writes that the Czech Republic has no reform government and the adoption of the euro will not naturally secure any pro-growth reforms.
Spidla is right when he points to the EU core’s resolve to promote integration. But this would not probably suffice to break the Czechs’ scepticism about participation in various guarantees and rescue funds for other euro zone countries, Klimes writes.
The argument to be used in persuading the Czechs of the benefits of having the euro is the need to be as close to Germany as possible, but even this may not be strong enough to overcome the Czechs’ scepticism.
However, one thing is clear. The euro supporters must argue with a western (Germany), not eastern (Slovakia) neighbour, Klimes writes.