Despite the deepening crisis in the eurozone, the Czech central bank believes the country will be ready to adopt the single currency in 2016, saying its economy is even likely to meet almost all of the Maastricht convergence criteria by next year. The bank may well be right in principle, but in practice eurozone membership is highly unlikely for political reasons. The latest opinion poll shows 68% of Czech voters now oppose joining the euro, and when the National Bank announced the “good news”, Prime Minister Petr Necas, leader of the conservative Civic Democratic Party (ODS), replied that it would be senseless to fix a target date for membership when the euro area risks being transformed by the fallout from the debt crisis.
Like other central and eastern European EU members, the Czech Republic is duty bound to join the euro under the terms of its 2004 accession treaty. But the timetable has always been a source of conflict between the country’s two main political rivals, the ODS and the Social Democrat CSSD. The CSSD supports rapid Czech accession to the monetary union, while the ODS leadership has long argued that there is no rush. The ODS position hardened this summer amid the political wrangling about the costly Greek bail-outs and talk of the eurozone becoming a transfer union. Prime Minister Necas claimed the euro area is no longer what it was when the Czechs negotiated their EU accession.
With this sort of reserve increasingly in tune with the popular mood, it’s hardly surprising that the Social Democrat opposition has kept quiet about the central bank. But it isn’t only the turmoil in the monetary union that concerns the political elite as there are increasing doubts about the benefits of wider European integration. One recent event in the Czech parliament illustrates their quandary.
This spring, the Czech government supported the European Council’s decision to amend Article 136 of the treaty on the Functioning of the European Union (TFEU) to establish a permanent crisis resolution mechanism for the euro area. This required unanimous approval by all EU members and the Czech Senate duly approved the government’s decision. But by July, ODS senators were threatening to vote against it because they were worried that the amendment might result in Czech taxpayers paying for the debts of eurozone members.
The plenary session of the Senate needed at least some ODS senators to support the government’s position by the required 3/5th majority, so the Senate sent the proposal back to the committee stage rather than voting it down and so derailing the entire EU. It typified Czech politics that the ODS-led coalition government supported the treaty changes, but their elected representatives in the upper chamber of parliament did not.