Czech Republic delays final decision on eurozone

More than 10 hours of negotiations in Brussels, lasting well into the early hours of Friday morning, were not enough to produce agreement by all 27 EU member states to back key changes to the EU treaty in the face of the eurozone debt crisis.

Jose Manuel Barroso, photo: CTK

As it stands, 23 member states – including the eurozone countries – will instead forge ahead on their own with plans for an inter-governmental accord introducing a stricter deficit and debt regime. Following the decision, here is what European Commission President Jose Manuel Barroso had to say:

“We believe, if it is properly drafted, it will indeed increase our main goal that was governance, credibility and also the rules we have today for the Euro area. Of course, I have to be very honest with you: we would have preferred a unanimous agreement.”

Against are Great Britain and Hungary, while Sweden and Czech Republic have not taken final decisions to sign on. Instead, the latter are taking a wait-and-see approach and will debate the accord eventually in their respective parliaments, with the possibility of a public referendum in the Czech Republic also mentioned. At five in the morning on Friday, after emerging from the talks, here’s what Czech Prime Minister Petr Nečas said:

“At this moment in time I think it is absolutely premature to take a final decision. Based on the information I have, I personally would recommend a cautious approach.”

Petr Nečas, photo: CTK

The decision to tread carefully has already received praise from some quarters, namely from Czech President Václav Klaus who on Friday called the result of the Brussels summit “pragmatic” but questioned the wisdom of defending the euro “at all costs”. Certainly, the time is coming for the country to take a final decision: either in favour of further integration and saving the eurozone and common currency – or opting out. I spoke to political analyst Jiří Pehe:

“In effect what I think is shaping up is a two-tier Europe and that is of course a major challenge for a country like the Czech Republic which will have to take a decision very soon.”

Do you think that this was something that was, in the end, expected? Many leaders after all warned exactly against this kind of future for Europe...

“Well I do think that it was expected: many considered it unrealistic that all 27 member states would accept a deal in which everyone would try to save at this point only the eurozone and that all countries not in the eurozone would want to take part. A pan-European solution was always in danger of being rejected.

Photo: European Commission

“That said, I think it is encouraging that leaders of the EU and the eurozone seem to have the courage at this point to have an agreement that would involve only the eurozone countries plus those countries that want to enter soon. Maybe that is the only solution at this point and quite frankly if Great Britain doesn’t want to participate in this process there should be a mechanism eventually that allows countries that want to move faster to leave Great Britain behind.

“The decision is London’s, Budapest’s, Prague’s: they have to make up their mind. They will have to decide whether they can really afford to stay out of the eurozone and the main decision-making process and be on the outside. In the Czech Republic the question has never really been posed in this way: so far Czech politicians have been either silent or not have reflected these scenarios deeply.”

At the same time Jiří Pehe is critical of the accord plans so far agreed – in his view they are only a first step. The analyst again:

“At this point there was no other option but I do think that the measures proposed at the summit were half-baked to say the least. I think, quite frankly, in the not-so-distant future, the eurozone will have to move towards a common fiscal government simply because sanctions will not work, especially if the EU will try to sanction countries that fail to meet their deficit commitments. Given the fact that such countries would already be in economic trouble it is very difficult to imagine that they could pay or face additional sanctions from the eurozone.

“So I think this is just a temporary measure, a more symbolic measure to calm down the financial markets, and in the future I expect that the only solution for further progress is towards greater federalisation and a fiscal government.