Plan to save euro met with mixed reactions among officials and pundits

While the Czech Republic has not yet made a final decision as to whether to contribute 3.5 billion euros to the IMF package intended to save the common European currency and the eurozone, the Czech Foreign Minister says the country can either join the majority of EU countries in their efforts and remain in the centre of further integration, or face marginalization in the union.

Petr Nečas, photo: CTK

As Civic Democrat Prime Minister Petr Nečas is using his weeklong time limit to come up with a final decision, the Czech Foreign Minister Karel Schwarzenberg of the TOP 09 party says the Czech Republic has few other options but to chip in almost 90 billion crowns (3.5 billion euro) from its reserves and commit to a tougher debt and deficit regime and forge a fiscal union with other EU members.

“I’m sure the prime minister is aware of his enormous responsibility for the fate of the Czech Republic and that he knows that the Czech Republic cannot and must not isolate itself in Europe. That would mean embarking on a very steep downhill journey.”

Bohuslav Sobotka, Karel Schwarzenberg, photo: CTK

While the coalition Public Affairs party shares the prime minister’s reserved stance, the opposition Social Democrats back the 90-billion-crown financial contribution. According to party chairman Bohuslav Sobotka the Czech Republic would get its money back from the EU in two years’ time.

“If the government decides to join the core of European integration it can count on the support of the Social Democrats because it is advantageous for the Czech Republic. At the moment we are net recipients of EU funds and if the European Union is now asking us for a contribution to save the eurozone it will serve to stabilize our own jobs, too. The prosperity of the Czech Republic itself is at stake here.”

Photo: Štěpánka Budková

Pundits have expressed caution to the latest plan to save the eurozone arguing among other things the 200-billion-euro package will not solve much in the long term and the Czech contribution will only harm the country’s public finances. Czech National Bank Governor Miroslav Singer said on Monday the decision would not be easy for the institution as it aimed to keep enough reserves for the case of potential changes to the structure of the functioning of the eurozone. Within a week’s time, the Czech government needs to decide whether to lend some 10 percent of the country’s foreign exchange reserves and join the core of the union with Germany and France in the lead or whether to stick with the cautious Great Britain and Hungary.