Klaus on Greek debt crisis – euro chickens coming home to roost

Uncertainty reigns in Europe as Greek leaders wait anxiously for Germany to agree on a bailout plan for the country’s debt-laden economy. Analysts fear if Germany’s Chancellor Angela Merkel continues to dither, the euro could be pulled into the abyss as other debt-ridden countries such as Spain and Portugal follow suit. But one man telling Europe ‘I told you so’ is President Václav Klaus, who says the euro is the cause of Greek woes.

President Klaus has long been a critic of European integration, saying it’s going too far, too fast, at the expense of freedom and democracy. He repeated those concerns once again in a speech on Thursday morning at Berlin’s Humbolt University. He told students it was time to re-evaluate the European integration model, and, if necessary, embark on a new one.

Václav Klaus

Mr Klaus has over the years repeatedly singled out the euro as a perfect example of misguided European policy, saying it was a doomed project which ignores fundamental economic sense. If Greece still had the drachma, he wrote in a recent article for Germany’s Frankfurter Allgemeine Zeitung, the Greek government could merely devalue its currency by 40%. Because of the euro, it can’t. The euro, he said, was the real cause of the Greek tragedy.

Václav Klaus is not alone in those views. Michal Semin is the director of the St Joseph Institute, a conservative and eurosceptic think-tank.

“The common currency was introduced for political reasons. The aim was to foster the political unification of the EU member states, but it didn’t take into account the vast differences between the member states, in terms of their economic growth, infrastructure, social conditions and so forth. A single currency works when you have not just a single market, but when the differences are not so big between the regions. Greece lived beyond its means in the last decade. If you compare Greece with northern European member states, or Germany, these are such different countries. It’s almost impossible for them to have a functioning single currency.”

Michal Semin says in his view the EU will have no option but to prop up the euro by any means necessary, as letting it fail would essentially mean the failure of European integration as a whole. He fears that the only way to save the euro is creating a single European government capable of enforcing a single European fiscal policy – the dreaded ‘superstate’ as feared by Václav Klaus. Czech commentators in favour of European integration - and normally sympathetic to the euro - say it hasn’t come to that. But reading the opinion pieces in the newspapers they are remarkably short on optimism.