The President of the Czech Republic, Vaclav Klaus, is in New York for the United Nations General Assembly.
In an interview yesterday he made some very valid points regarding the peripheral countries and those on the outside looking to enter.
He called himself a “euro-realist,” saying he supports European integration while not embracing the shift towards “unification, centralization, harmonization, standardization” of the whole continent, including the single currency.
The term Euro-Realist would be a very good term to apply to those who have the vision to turn this potentially catastrophic situation around.
Realism is sadly lacking but that is the stock in trade of many politicians. The issues facing Europe do not span a single term in office for any of the leaders so they continue with short term fixes that do not hinder their chances of being re-elected.
The Czech koruna was the world’s best performer against the euro in the decade ended December 2010, advancing 40%. Investor confidence in the Czech economy is reflected in the nation’s 10-year local-currency debt, which yields 2.4%, compared with 4.8% for similar-maturity Polish bonds and 7.2% for Hungary’s. I simply use that data to illustrate Mr. Klaus’ economic credentials.
He feels Greece is a “victim of the monetary union” and it’s better for them to not to be in the Union. “Leaving would be a victory”. This simply illustrates the flaws in the plan and failure of the whole system. What applies to Greece certainly applies to the rest of the PIIGS.
Looking at those countries with a commitment, however loose, to join the Euro, the view of those outside looking in is very interesting.
Regional apprehension about the euro has grown with Europe’s debt crisis. While euro-zone nations purchase more than half of the exports of eastern European nations, seven of the 10 former communist countries to join the EU since 2004 have yet to adopt the currency.
Poland, which three years ago shelved plans to join in 2013, deems the euro “completely unattractive,” Prime Minister Donald Tusk said in July. Hungary won’t adopt the currency before 2018, Premier Viktor Orban said in March. Bulgaria has indefinitely delayed plans to scrap the Lev, Prime Minister Boyko Borisov told the Wall Street Journal in a Sept. 4 interview.
The Czech Republic has an open ended commitment to join the Euro and Mr. Klaus concluded by saying “We accepted with some reluctance the prepared conditions for our entry into the EU. We were aware of the fact that joining the euro system was one of the conditions. But we are quite happy with the fact that there was no timing.
Perhaps in the year 2074 we can join the European Monetary Union as well,” he said
“No one is pushing us.”
What does this mean for the Euro? The conclusions I have drawn from this are here