(Bloomberg) -- The French-German plan to overhaul the euro zone received its first objection Wednesday from Poland -- one of the countries most concerned it will get left behind.
The government in Warsaw, which hasn’t set a date to adopt the single currency, signaled it will oppose plans to carve out a separate budget only for those nations that share the euro. Poland and other countries that have held on to their zloty, forint, and koruna have resisted steps that they say will lead to a "two-speed Europe."
While the proposals for an exclusive euro-member spending plan won’t be defined until December, the concept may play a central role in negotiations in reworking the wider EU budget for the fiscal period that starts after 2020. Poland is already at the center of that debate, both because it’s the biggest net beneficiary of EU development funds and also since it’s been accused by the bloc of eroding the rule of law.
“We don’t know the details as to when it will be introduced and how it would be financed, but plans to create another budget within the EU budget are clearly a concern,” Polish Finance Minister Teresa Czerwinska said in Warsaw. Investment Minister Jerzy Kwiecinski said all EU members must back the bloc’s next budget and that talks would take “many months.”
With Britain leaving, the European Commission’s proposal for the post-2020 EU budget envisages cutting Poland’s take by nearly a quarter as the focus shifts to southern members with high youth unemployment. That could prove devastating to a country that’s slated to have received 230 billion euros ($266 billion) from its 2004 entry to the end of this decade.
"A lot of details are still missing but this appears to be another indication of the emergence of a two-speed Europe,” said Esther Reichelt, a currency strategist at Commerzbank in Frankfurt. "With a number of nations skeptical of further political integration and the EU losing Britain, the result of the budget talks will clearly impact eastern Europe’s growth outlook."
Poland’s government hasn’t given other EU states much reason to fight on its behalf, saying that the EU poses the biggest threat to its sovereignty since the fall of the Iron Curtain. Whether the plan by German Chancellor Angela Merkel and French President Emmanuel Macron for a euro-area budget will use funds from the wider EU pot and if non-euro members such as Poland, Hungary and the Czech Republic will even have a say in that debate has yet to be decided.
But its mere proposal puts Poland “in an ever weaker position” regarding future funding, as it’s likely to be used as a bargaining chip against Warsaw, said Piotr Buras of the European Council on Foreign Relations, a pro-EU think-tank.
“Luckily, the times when France and Germany could jointly decide about the rest of Europe are ending,” Zdzislaw Krasnodebski, a deputy head of the EU parliament from Poland’s ruling Law & Justice party, told daily Rzeczspospolita. Poland won’t ditch the zloty because “nothing indicates” that the euro region will resolve its economic problems “in the foreseeable future,” he said.
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