Topolanek hammers nail in coffin of 2010 euro adoption

Prime minister Mirek Topolanek, photo: CTK

For some time successive Social Democrat governments have spoken of the Czech Republic joining the eurozone by the end of the decade - January 1st, 2010 being the date most frequently mentioned. But the new right-wing prime minister Mirek Topolanek put paid to the idea once and for all on Thursday, saying 2010 was totally unrealistic.

Prime minister Mirek Topolanek, photo: CTK
Mr Topolanek's comments came as no surprise. Economists have been saying for some time that 2010 was unrealistic. In recent weeks, several senior officials from Mr Topolanek's Civic Democratic Party started saying publicly that the Czech economy wouldn't be ready by 2010. The prime minister's comments are simply an affirmation of what most people already take as a certainty.

The Czech Republic and the other nine countries that joined the European Union in 2004 have to adopt the euro - it was one of the conditions of membership. There are, however, four criteria for doing so. These are known as the convergence criteria, sometimes called the Maastrict criteria. While the Czechs meet the criteria on interest rates for example, they fall short on the inflation criteria, and are also in danger of failing to fulfil one of the key requirements - the ratio of annual public spending deficit to GDP, which must not exceed 3%. So the chances of meeting all the convergence criteria by 2010 are - in the words of one analyst - approaching zero.

There's been a mixed reaction to Mr Topolanek's comments. Most analysts agree the Czechs shouldn't join until the economy is truly ready, warning that a shock to the system could result in a fall in living standards. However, they also point out that the predicted delay over adopting the euro is already having a negative effect on the Czech currency, the crown.

Members of the Czech business community, meanwhile, want the country in the eurozone as soon as possible, as it will make them more competitive. As for the Czech people, many polls have shown substantial opposition to adopting the euro, which obviously must be overcome.

Photo: European Commission
There's been no reaction so far from the EU itself. Neither did Brussels react to comments made by Mr Topolanek and the left-wing prime minister of Slovakia, Robert Fico, who complained the criteria were unfair. They said at a joint press conference in Bratislava that the criteria were designed for the economies of the old members, not the new ones, which, unlike the rest of Europe, are growing more quickly. They want to team up with Poland and Hungary - if anything even less prepared for euro entry - to adopt a joint approach to eurozone membership.

Meanwhile, Mirek Topolanek says he believes the Czechs will be ready to join in 2012 or 2013. That's quite a bit later than what has - up to now - been the official target date of 2010. And in a piquant reversal of roles, Slovakia plans to adopt the euro as early 2009, which for many Czechs will be a source of some embarrassment. Others will say - never mind what the neighbours say, we'll join when we're ready.