Czech PM to announce euro adoption date November 1, 2009

Slovakia became the 16th country to join adopt the single European currency on January 1st, and there were great scenes of celebration across the country. Perhaps surprisingly, however, their old partner the Czech Republic is very far from adopting the euro – the government has yet to adopt a convergence plan. But as Rob Cameron reports, that could soon be about to change.

Slovak Prime Minister Robert Fico shows Euro bank notes he withdrew from an automated teller machine set up at the Slovak parliament in Bratislava, photo: CTK

Slovakia’s prime minister Robert Fico, surrounded by a scrum of TV cameramen and photographers, withdrew the first 100 euros from a cash machine in the Slovak Parliament building in the opening minutes of 2009. Outside in the streets of Bratislava there were lavish fireworks displays and scenes of jubilation as Slovaks celebrated the adoption of the single European currency.

Slovakia is the 16th European Union member to join the Eurozone, and the first – not counting the former Yugoslav republic of Slovenia – in the former Soviet bloc. New EU members have to adopt the euro – it’s required under the terms of membership – so it’s a question of when, not if.

But with Germany, Austria and Slovakia already using the euro and Poland hoping to follow suit in January 2012, the Czech Republic forms something of a hole in the centre of Europe. So far the present centre-right government has refused to set a firm target date for adoption. But that could be about to change, after this surprise announcement from prime minister Mirek Topolanek on Czech Television.

Photo: CTK

“Look - we are the first government that has actually done something towards adopting the euro. The public spending deficit for 2008 will be around 1.3 percent. Inflation is going to fall. It is self-evident that we will meet the Maastricht criteria. And after discussions with Finance Minister Miroslav Kalousek and others, I can say with certainty that on November 1st, 2009, this government will announce the date for euro adoption.”

Just what that date will be remains unclear. The Czech Republic’s euro co-ordinator Oldřich Dědek – who described Mr Topolanek’s announcement as a “positive shock” – believes 2013 is the most realistic target. Analysts agree with him, but say even that is in doubt, given the fact that the Czech Republic has yet to experience the full force of the global financial crisis. The crisis may slow down expansion of the Eurozone, and some believe Slovakia is joining at just the right moment.

Photo: European Commission

Slovakia and the Czech Republic spent 70 years together as partners in a single state, in a relationship that was sometimes strained by a rather patronising Czech attitude to their Slovak brethren. So now the tables are turned, some Slovaks are barely able to conceal their delight at getting one over their “older brother”. Though you won’t find such triumphalism on an official level. Igor Barat is Slovakia’s chief coordinator for euro adoption.

“Euro adoption is not a competition. We are proud of having the euro in Slovakia, but it has nothing to do with Czechs having or not having the euro in their own country. It is not a competition.”