Election Fever Wipes Out Euro Debate in Most Reluctant Candidate
Campaign Noise Drowns Out Euro Talk in Most Reluctant Candidate
(Bloomberg) -- For a moment, it looked like the European Union country that’s most skeptical about joining the euro might be changing its mind.
After talk of a two-speed Europe prompted Bulgaria to step up its efforts to join the euro area, Czech Prime Minister Bohuslav Sobotka ended years of stonewalling last month and suggested it was time to set an adoption date. That crashed to a halt this week as campaigns heated up before October general elections. The two main parties vying to lead the next government rejected it out of hand.
“This is clearly a pre-election bet,” Jan Bures, a political scientist at Metropolitan University in Prague, said by phone. “Economically, we’re completely ready. So until the politicians come around, it won’t happen.”
The Czech turnaround highlights a sharp divide among the 11 ex-communist countries that have joined the EU since 2004, all of which are obliged to adopt the euro. Bulgaria and Romania, the poorest EU members, have renewed their drive to seek entry to avoid being left on the bloc’s periphery after Emmanuel Macron’s election victory in France fueled discussions over closer coordination among the richest members.
‘No Euro’
Andrej Babis, the billionaire leader of the Czech ANO party that’s most likely to win the elections, showed no concerns over being left out of the core.
“No euro. I don’t want the euro. We don’t want the euro here,” Babis, who was fired by Sobotka as the finance minister last month, said Friday in an interview on the sidelines of the reSITE cities conference in Prague.
Babis’s strongest anti-euro statement to date contrasts with last month’s push by Bulgarian Prime Minister Boyko Borissov to secure support for his country’s bid to adopt the euro from Macron and German Chancellor Angela Merkel. Last week, Romanian central bank Deputy Governor Liviu Voinea said his country has no other option. Currently five other countries from the former eastern bloc -- Slovakia, Slovenia, Estonia, Lithuania and Latvia -- use the same currency as France and Germany.
Poland isn’t as eager. Its ruling Law & Justice party declared in March that it won’t adopt the euro for the next 10 or 20 years, arguing that doing so would rob the country of independent policies and make it a “peripheral nation for good.” In Hungary, Prime Minister Viktor Orban’s government has said the economy needs to be much more competitive to avoid negative effects.
The Czechs have long taken a similar tack. Despite selling a vast majority of exports to euro countries like neighboring Germany, Austria and Slovakia, politicians in Prague bridle at the idea that they may be on the hook to help fellow members like Greece. Public opposition remains high, with a poll from Eurobarometer showing 72 percent of Czechs don’t want the euro, the most in the EU. The Czech currency has gained more than 20 percent against the euro since the country joined the EU, appreciating about 3 percent from the start of this year. It traded 0.1 percent stronger at 26.270 to the euro as of 11:32 a.m. on Tuesday.
“If we could first raise salaries, have a stronger koruna exchange rate; those would be more favorable conditions for joining the euro zone,” Lubomir Zaoralek, the ruling Social Democrats’ candidate to replace Sobotka as premier after the election, said Monday when asked whether he’d support setting a euro-adoption target date. “I don’t think that this would make us a second-class country. Denmark and Sweden are outside the euro zone and they’re developed countries.”
Zaroralek’s chances to be prime minister are slim. ANO would win 34 percent of the vote if ballots were cast in June, up from 33 percent in May, according to a survey by CVVM pollster published on Monday. The Social Democrats fell into third place with 12 percent, behind the Communist Party.
--With assistance from Peter Laca
To contact the reporters on this story: Ladka Bauerova in Prague at lbauerova@bloomberg.net, Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net.
To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Celeste Perri at cperri@bloomberg.net, Michael Winfrey, Andrew Langley