The exit of one or
more member states from the euro won’t destroy the monetary union or the
project of European integration, Czech President Vaclav Klaus said.
And a Greek
departure from the currency would be a “victory” for that country, which has
been a victim of the monetary system, Klaus said yesterday in an interview at
Bloomberg’s headquarters in New York.
The Czech Republic, which pledged to adopt the
euro as part of its agreement to join the European Union in 2004, is under no
official deadline to do so and the question of joining the common currency is a
“non-issue” in the country, said Klaus, whose second term as president expires
in March.
“I don’t think the
euro as a currency disappears,” Klaus, 71, said. “The issue is whether all of
the 17 countries and potentially a few others should be or will be in this
system or not.”
European Central
Bank President Mario Draghi said July 26 he would do
“whatever it takes” to save the 17-nation euro zone. That challenged the view
of skeptics including Kenneth Rogoff, an economics professor at Harvard University in Cambridge, Massachusetts, who said the same month he
expected Greece to leave the common
currency after undergoing the largest ever sovereign-debt restructuring.
Klaus, who as
Czech prime minister oversaw the Jan. 1, 1993 split of what was then Czechoslovakia and the subsequent
adoption of separate Czech and Slovak currencies, said the euro- zone system is
punishing some countries that would be better off pulling out.
Greece ‘a Victim’
“Greece is a
victim of the monetary union,” he said. “It would be much better for them not
to be in the straightjacket. It would be a victory for them.”
Klaus, an
economist who studied in the U.S. and Italy and worked at the
Czechoslovak central bank under communism, served as finance minister and then
prime minister following the 1989 Velvet Revolution that ended the communist
regime. He has been president since February 2003, when he replaced his
political rival, Vaclav Havel.
The president is
in New York to attend the United Nations General
Assembly and promote his new book, “Europe: The Shattering of
Illusions.”
He called himself
a “euro-realist,” saying he supports European integration while not embracing
the shift towards “unification, centralization, harmonization, standardization”
of the whole continent, including the single currency.
“We accepted with
some reluctance the prepared conditions for our entry” into the EU, Klaus said.
“We were aware of the fact that joining the euro system was one of the
conditions. But we are quite happy with the fact that there was no timing.
No One ‘Pushing’
“So perhaps in the
year 2074 we can join the European Monetary Union as well,” he said. “No one is
pushing us.”
The Czech koruna
was the world’s best performer against the euro in the decade ended December
2010, advancing 40 percent. Investor confidence in the Czech economy is
reflected in the nation’s 10-year local-currency debt, which yields 2.4
percent, compared with 4.8 percent for similar-maturity Polish bonds and 7.2
percent for Hungary’s.
Regional
apprehension about the euro has grown with Europe’s debt crisis. While
euro-zone nations purchase more than half of the exports of eastern European
nations, seven of the 10 former communist countries to join the EU since 2004
have yet to adopt the currency.
Poland, which three years ago
shelved plans to join in 2013, deems the euro “completely unattractive,” Prime
Minister Donald Tusk said in July. Hungary won’t adopt the currency before
2018, Premier Viktor Orban said in March. Bulgaria
has indefinitely delayed plans to scrap the lev, Prime Minister Boyko Borisov
told the Wall Street Journal in a Sept. 4 interview.
Economy Contracted
The European debt crisis is taking a toll on the
Czech Republic, whose economy contracted in the first two quarters of 2012 amid
weaker demand in the euro region, its main market for Skoda cars, television
monitors and other Czech-made goods. Exports account for about 75 percent of
Czech GDP.
The koruna has
increased about 2 percent against the euro this year, compared with 10 percent
for the Hungarian forint and 8 percent for the Polish zloty.
Klaus touted his
experience in dissolving Czechoslovakia into separate Czech and Slovak nations
and abandoning initial plans to maintain a common currency when Slovak
officials said they wanted to devalue after the separation. The split of the
Czechoslovak currency was a non-event because the Czech government was
prepared, he said.
Managed Departure
“It’s technically
possible,” to manage the departure from a common currency, Klaus said. “It’s
not true what all the politicians are saying about disastrous consequences. You
have to do it in an organized way. You can’t allow an anarchy situation.”
Rogoff, a former
International Monetary Fund chief economist, told Tom Keene on “Bloomberg
Surveillance” July 27 that he expected Greece to “ultimately” leave the euro
and that “the real question is what is going to happen to the broader euro.”
Chances of a
breakup of the monetary union by the end of 2013 fell to 47.1 percent yesterday
from more than 60 percent in late July, according to Dublin-based Intrade.com
data, after Draghi gave details earlier this month of a plan announced in
August to buy debt of members including Spain and Italy.
As he approaches
the end of his term, Klaus said his most important legacy is his role as
Czechoslovak finance minister after the fall of communism, when he helped open
up the economy, set a new exchange rate and create new political
and social systems.
“That moment was
the change,” Klaus said. “Everything else is really making small marginal
changes, for the better or worse.”
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