Why the Czech Republic Is Unlikely to Adopt the Euro Any Time Soon
The European Union project is in crisis. The EU was always an ambitious and complicated dream, beset with obstacles both economic and cultural. The premise of the EU seemed reasonable enough: break down borders through the Schengen Agreement, and break down trade barriers throughout the continent, while facilitating ease of doing business by introducing a common currency…the glorious euro.
In the wake of Brexit, and numerous existential perils posed by the traditional North/South divide, the euro’s planned expansion throughout Eastern Europe seems to be at a standstill. Consider this: the majority of Eastern Europe, while legally obligated to eventually join the euro at some undetermined future date, appears to be content to remain in limbo.
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Take the Czech Republic, for example. A recent poll taken by Eurobarometer in April 2017 revealed that 70% of Czechs oppose joining the eurozone, while just 29% support it. Contrast that with a September 2004 poll showing 52% supporting the eurozone, and 48% opposed. Support for the euro reached its zenith in May of 2009 at 61%, and has since plummeted precipitously. It appears to reinforce a recurring theme in contemporary Europe: a technocratic bureaucratic political elite eager to push ahead with the European project against the wishes of the people.
Consider as well that six Eastern Europe nations share this “in limbo” status: the Czech Republic, Poland, Hungary, Romania, Bulgaria, and Croatia. Only tiny Slovenia, Estonia, Latvia, and Lithuania, as well as outlier Slovakia, have endured the baptism by fire that is adoption of the euro. The Eastern European nations that have joined the euro have a combined population of just 13 million people, while non-euro Eastern European nations have combined population of 90 million. Thus Eastern Europeans still using their own currency outnumber their pan-European counterparts by seven to one!
Why is this the case, and what does it mean for the future of Europe?
Certainly, maintaining a national currency gives a nation a greater degree of flexibility. In the tourism-friendly Czech Republic, for example, pricing in the local koruna, which is often believed to be an undervalued currency, allows hotels, restaurants, and bars to appear attractive to foreign visitors, especially in comparison to the steep prices in the eurozone.
With a precipitous economic climate in Greece, and serious and endemic structural problems across the Mediterranean, Eastern European countries who once appeared enthusiastic to join the eurozone, are now having second thoughts.
Milos Zeman, the center-left president of the Czech Republic, and the nation’s first directly elected head of state, has taken a pragmatic approach to the controversial euro issue. While he has publicly stated his support for joining the zone, he has repeatedly insisted that it be done by a national referendum. If polling is at all accurate, it appears that hell will freeze over before the Czech Republic, and many of its neighbors, join the eurozone.
Zeman thus has been able to appease Brussels, while limiting the political baggage likely to be associated with holding this unpopular view. And Finance Minister Andrej Babis recently reaffirmed that “we are not preparing to join the euro…we’ll leave it to the next government.” The Czech right, lead by former president Vaclav Klaus, also appears less than enthusiastic about the euro: “I am a big opponent of a single European currency for very diverse countries. I don’t see any reason why the Czech Republic should join the euro area. In addition, all opinion polls show that people don’t want it.”
Thus, it appears that the ambitious EU project is in standstill for the foreseeable future. The bulk of Eastern Europe’s population is perfectly happy to enjoy the benefits of a unified trade zone and the end to border controls afforded under the Schengen Agreement. But doing away with their individual currencies appears, for now, a bridge too far.
If another nation, most likely Greece, were to also exit the eurozone, it would likely spell the end of any expansionist dreams for the pan-European currency. As it stands now, the popular will of nearly 100 million Eastern Europeans appears to have successfully thwarted the wishes of Brussels and the bureaucratic political class it courts as it seeks to extend its tentacles to the East.