Czechs welcome outcome of Greek elections, but remain cautious on fiscal compact

The Czech crown firmed upon news of the election victory of pro-EU parties in Greece and all the day’s papers commented on Europe’s palpable sigh of relief. Although not a euro-zone member, the Czech Republic has nevertheless watched the Greek drama unfold with considerable concern.

Leader of the New Democracy conservative party Antonis Samaras (bottom left) speaks during a press conference, photo: CTK

Although Prime Minister Petr Nečas’ warning that Czechs might have to brace for the repercussions of a Greek exit from the euro-zone no longer seems an imminent threat, political analysts are watching developments with cautious optimism. Michal Mejstřík, from the government’s advisory council says that accepting Europe’s tough bailout conditions for fear of being shown the door is one thing, but delivering on those promises in the long-term is another.

“If you look at the problems that Greece is facing it is something that goes beyond the elections. Of course it is a step forward because a functional government in Greece is a crucial necessity but at the same time it will face many challenges. The problem of many Greeks is that they are still not ready to realize the fact that there is over-consumption that more cuts are needed. That is the main challenge for the government-to-be which was supported by a significant part of the population but by far not by everyone. And therein lies the risk.”

The euro-skeptic Czech president Vaclav Klaus has poured scorn on the idea that a pro-EU victory in Greece could help the euro-zone resolve its debt problems. In an interview for Czech Radio Mr. Klaus noted that Greece had not precipitated the euro-zone crisis, Greece was its victim. The president said there was no good solution to the euro-zone crisis since the euro-zone as such was not a viable project.

Václav Klaus, photo: archive of the Czech Government

Although the centre-right Czech government is visibly more moderate in its pronouncements, the country has taken a cautious, wait-and-see approach regarding the future of the euro-zone and its own role in it. Although the government approved a 1.5 billion euro loan to the IMF earlier this year, the Czechs have opted to stay out of the emerging fiscal union. This Friday Prime Minister Petr Nečas is to host a summit of heads of government of the Višegrad 4 –Hungary, Poland, Slovakia and the Czech Republic(of which only Slovakia has adopted the euro) to consult their positions ahead of the upcoming EU summit on June 28th. At the summit the block’s leaders are expected to try to develop a road map towards fiscal union and try to get on board as many members as possible in order to secure greater fiscal stability. According to Michal Mejstřík the Czech government will maintain its negative stance to a formal commitment, stating that it should be enough for it to fulfill the conditions of the deal.

“Many countries which have shown a willingness to sign the fiscal compact do not do their homework at home. I can only say that the main priority for the Czech government is to deliver what would otherwise be required by the fiscal compact. This is the best possible contribution we can make and I think it can strengthen the Czech Republic’s position in future negotiations with the EU-27.”

Photo: European Commission

It should be said that the government's reserved stand reflects the views of the general public. In March of this year Czech confidence in the European Union hit an all-time low, with fewer than one in two Czechs now trusting the respective institutions. According to the Mediafax agency two out of three Czechs appreciate the government’s decision not to set a target for euro adoption during its term in office.