Sunday

22nd Jul 2018

Czech election stalemate on joining euro

  • Andrej Babis is the Czech Republic's second-richest man and likely next prime minister - but wants to keep his millions in korunas, not euros.

Jean-Claude Juncker is likely to be disappointed by the Czech elections next week.

Last month, in his state of the Union speech, the European Commission president said that he hoped that all EU member states - except those with an opt-out - would soon adopt the euro.

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The Czech Republic, however, seems to have no intention to do so.

As eurozone membership has become one of the campaign hot topics ahead of the legislative election, on 20 and 21 October, the majority of political parties are excluding such a move in the foreseeable future.

The frontrunner to become the next prime minister is Andrej Babis, a former finance minister and the second-richest person in the country.

Babis, whose Association of Dissatisfied Citizens movement (ANO, a word that means Yes in Czech) is a member of the liberal Alde group in the European Parliament, used to be in favour of the EU common currency.

 But now he stresses that the Czech Republic should keep its koruna.

"We don't want the euro here. Everybody knows it's bankrupt," he said in an interview with the Bloomberg news agency. "I don't want another issue that Brussels would be meddling with."

"The main reason is how unpopular eurozone membership has become in the Czech Republic," Vit Dostal, research director at AMO, a think tank, told EUobserver.

Three-to-one against

According to a survey by the CVVM agency, 72 percent of Czechs are against the adoption of the euro.

But Babis' opposition to the euro is not definitive, Dita Charanzova, an influential MEP for ANO, told EUobserver.

The party's programme says that the Czech Republic "will not adopt euro if the eurozone does not go through significant reforms," she pointed out.

She however admitted that "inside the party, we have not discussed what those reforms should be."

She added that the "problem" of Czech politicians is that they are "not able to define and defend our views and interests in the EU. This has to change regardless of whether we are members of the eurozone or not."

The social democrats, who lead the government in which Babis' ANO have been participationg since early 2014, formally support euro membership, but do not seem to want to establish a firm course towards it.

Recently, the party has started to stress that Czech entry into the eurozone would be desirable only after the gap between Czech and Western wages became smaller.

Some other mainstream parties either share this reluctance, or are implacably opposed to euro-adoption.

The right-wing Civic Democratic Party (ODS), which has been in government for the majority of the period since 1989, even wants to negotiate a Czech opt-out from the single currency.

"For now, the EU says that it's our own choice if we adopt the euro or not. But this can change and it is entirely possible that the EU might want to force us to enter the eurozone," claims Jan Zahradil, an ODS MEP. His party is a member of the conservative European Conservatives and Reformists (ECR) group in the European Parliament.

According to all the opinion polls, ANO is expected to win the upcoming elections but fall short of overall majority in parliament, after a campaign marked by scandals involving Babis.

On 9 October, Babis was formally charged with fraud in a case involving a €2-million subsidy a decade ago. He denies all charges and claims that the case against him is politically-motivated.

Last month, the Czech parliament voted to lift his immunity. But his likely reelection as MP would renew his immunity. Parliament would then have to vote again to lift it to allow the prosecution to go ahead.

Several Czech political parties have said they will not enter any government of which Babis would be a member.

Political analysts say the margin of the expected ANO victory in the election will be an important factor in the horse-trading that is to be expected after the vote.

Unity … against refugee relocation

Another main point in Babis' programme is the refusal to accept refugees in the Czech Republic.

The issue has been a stronger consensus between the main political parties than the opposition to euro membership.

Babis has repeatedly stressed that he is not only against mandatory relocation of asylum seekers, but that he does not want to accept any refugees at all. He claims that all people fleeing to Europe are economic migrants.

Charanzova insisted that Babis is not a eurosceptic, despite this rhetoric.

"In our programme for elections, that has been approved by Andrej Babis, we don't say that the Czech Republic should never adopt the euro or that it should not accept any refugees," she said.

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