The slow death of the Eurozone

Vaclav Klaus is the mostly noble figure who is currently the Czech president, and the obviously reluctant last signatory to the dreaded Lisbon Treaty. He has a remarkable pedigree, both in economics and in surviving communism, its downfall, and the aftermath. Although often tritely pigeon-holed as “right-wing” he is really a pragmatic free marketeer who has lived through the demise of its opposing philosophy. Compared to British professional politicians he has both life experience, and what is referred to in Yorkshire as “bottom”.

So, when Klaus sums up the Euro and its implications, he’s worth reading. The whole article is not too long. An extract:

“…Europe will have to decide whether to centralize itself politically as well. Europeans don’t want that because they know (or at least feel) that it would be to the detriment of liberty and prosperity. There is, however, a real danger that the politicians will do it anyway—behind the backs of those who elected them. And this is what bothers me most. The recent dealings in EU headquarters in Brussels—literally behind closed doors—about the aid package for Greece demonstrated that there is no democracy there. The German-French tandem made the decision on behalf of the rest of the euro-zone countries, and I am afraid this will continue.

It is evident that the euro—the European single currency—and the currently proposed measures to save the euro do not represent any “salvation” for the European economy. In the long run, it can be saved only by a radical restructuring of the European economic and social system. My country had a velvet revolution and made a radical transformation of its political, economic and social structures. Fifteen years ago, I sometimes joked that after entering the EU we should start a velvet revolution there as well. Unfortunately, this ceases to be a joke now.

The Czech Republic has not made a mistake by avoiding the membership in the euro zone. I am glad we are not the only country taking that view. In April, the Financial Times published an article by the late governor of the Polish central bank, Slawomir Skrzypek. He wrote it shortly before his tragic death in an airplane crash near Smolensk, Russia. In that article, Mr. Skrzypek wrote, “As a non-member of the euro, Poland has been able to profit from flexibility of the zloty exchange rate in a way that has helped growth and lowered the current account deficit without importing inflation.” He added that “the decade-long story of peripheral euro members drastically losing competitiveness has been a salutary lesson.” There is no need to add anything to that.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s