PM Nečas hints Czechs might stay out of EU’s effort to save the euro

Petr Nečas, photo: CTK

The EU’s plan to save the euro has in recent days divided the Czech political scene. While the fiercely eurosceptic President Václav Klaus said the country should stay out of the planned loan to the IMF, Foreign Minister Karel Schwarzenberg noted the Czech Republic would have little choice but to approve it. On Tuesday, Czech Prime Minister Petr Nečas came out to clarify the government’s position – and hinted that if it were up to him, the government would say no.

Petr Nečas,  photo: CTK
Prime Minister Petr Nečas represented the Czech Republic at the crucial EU summit last week that outlined the way for saving the euro by tightening fiscal rules for euro zone members, and by lending 200 billion euro to the International Monetary Fund.

On Tuesday, Mr Nečas became the last Czech political heavyweight to specify what course of action his country is likely to take. As he told reporters, his centre-right cabinet will wait for more details on both the new euro zone treaty, and the planned loan.

“Right now, when there is not much more than a blank sheet of paper and even the name of the future treaty might still change, I think that it would be politically short sighted to come out with strong statements that we should sign than piece of paper.”

In the Czech prime minister’s view, the new treaty would establish different conditions for euro zone members on the one hand, and EU member states outside the monetary union on the other. In Mr Nečas’ words, the new treaty would only offer the proverbial stick to the countries without the euro that will join the pact.

“For euro zone members, there will be a carrot in that they will be able to draw funds from the EU’s stabilization tools. But for those countries outside the euro zone, all that’s left is the stick – the obligation to adhere to the new fiscal rules, without the option of relying on the EU tools.”

The Czech Republic will also soon have to decide whether or not it will provide some 3.5 billion euro to a new loan to the International Monetary Fund, which is one of the steps agreed at Friday’s EU summit in Brussels.

After Czech President Václav Klaus warned against it, and the governor of the Czech National Bank, Miroslav Singer, even indicated that the central bank might not approve the loan, Prime Minster Nečas made it perfectly clear that the decision would be the government’s alone.

“Either the Czech government decides to stay out of the loan, and will say so openly without blaming anyone else, or the government decides it will take part – though personally, I’m against such a move. In that case, the government will have to guarantee it will find the necessary means.”

Photo: European Commission
According to the prime minister, the Czech Republic, Denmark, Poland, the UK, and Sweden are the only EU countries outside the euro zone that can take part in the loan to the IMF as the remaining five are already taking part in the fund’s relief programmes.

When asked whether he was concerned a Czech refusal to take part in the loan to the IMF would place the country on the periphery of the EU, Mr Nečas said this was certainly something to take into consideration.

“Yes, I admit that if the Czech Republic remains the only country out of the five non-euro zone member not to take part in the loan, it would be a serious political issue which could in fact be the only reason why we should join, provided the UK takes part as well. On the other hand, the Czech government does not now have the necessary data to make a decision.”

Photo: CTK
The prime minister ended his appearance in front of the media with an appeal to his colleagues, asking them to refrain from simplifying the issue. But his words on Tuesday did little to overcome the division of the coalition government over if and how the Czech Republic should take part in saving the euro.

The government remains split between the TOP 09 party which favours Czech participation in the EU strategy, and the Civic Democrats and Public Affairs parties which would most likely prefer the country stays out as long as it can.