“The Euro is not in crisis, but rather, an anchor of stability”
Professor Mario Monti – president of the Bocconi University, ex European commissioner for Competition and the Internal market, during an interview granted to us in Prague – comments on the latest signs of integration weariness and indifference towards the Eurozone that are coming from the Czech Republic.
“The Euro is still an anchor of stability and it would be good for all Czech Republic citizens to become aware of this”. Professor Mario Monti has no intention of failing in his role as a defender of the common European Home. This was also demonstrated after his arrival in Prague on 18th February, on the invitation of the think tank Prague Twenty, when he took part in a conference with the title “Europe on the Background of Euro Crisis”. The meeting took place inside the Malostranský palác refectory hall, with speeches from a number of influential personalities in the economic, political and banking field and even with the participation of a few ambassadors. Such a numerous and qualified audience is quite surprising if we consider the day and time of the conference – Friday afternoon, when normally in Prague, most people have their minds set on the week-end.
It was on this occasion that we asked Professor Monti to grant us an interview, which we propose .
Professor Monti, what are your sensations to be back in Prague?
I found Prague once again full of the charm that we are all familiar with, but I also discovered a city that is now very interested in European issues and, in particular, on issues that I follow very closely, such as the single market and the single currency, even if for the moment, the Czech Republic is not part of the Eurozone.
During today’s meetings – at lunch with Foreign minister Karel Schwarzenberg and the representatives of other ministries, then at a public conference on the single currency and finally, with the Head of Government Petr Necas – the interesting topics of conversation were certainly not lacking.
The topic of the day is that of the Euro crisis and the reluctance of the Czech Republic – and perhaps also of some other countries of the New Europe – to enter the Eurozone.
First of all, I have to point out that there isn’t, at least for the time being, a Euro crisis. Perhaps there are serious difficulties for certain Eurozone countries, and this causes a malfunction of certain safeguard mechanisms that will have to be re-examined and improved. Nonetheless, the European currency has reacted well: it has defended purchasing power and maintained a good exchange rate compared with other currencies. Even surprising to some, was the prompt reaction of European institutions after the financial crisis which affected a few Eurozone countries.
However, the fact remains that a number of new European Countries, following the example of the Czech Republic, might decide to stay out of the Eurozone. What could be the outcome?
The crisis of the Eurozone has certainly highlighted the fact that participating in the Euro area is a responsible commitment to be taken very seriously, both for the single countries involved and for the overall effect on the “condominium”. Therefore, I am not surprised that joining the Euro today is a decision to be taken more seriously than was done in other circumstances in the past. I believe the current attitude of the Czech Republic is due to a sense of responsibility, just as there is – on the part of those who belong to the Eurozone – greater attention and a justifiable, critical approach towards new entries – also in view of the Greek experience.
What convincing arguments would you use with a Czech Republic pensioner or office-worker, who struggles to make ends meet and who fears the adoption of the Euro, because it might mean rising prices and, consequently, more sacrifices?
I would distinguish between two aspects: for countries with high inflation or at least, with an inflation rate that is just a little higher compared to the Eurozone – such as with the Czech Republic – the adoption of the single European currency does not pose a risk of rising prices. Let’s bear in mind that the Euro is based on the German monetary stability model with an independent central bank. If Italy for example, had not been part of the Euro, it would have had a much higher inflation rate, year after year. I am absolutely sure of that and I believe it is of great importance.
The second aspect?
On the other hand, in the short term, there is the price element that might arise when joining the Eurozone. It happened to Italy, as we know, and led some people – quite wrongly according to me – to consider the Euro as a cause for inflation. Whilst for Italy, apart from the initial price issue, it was a factor of disinflation. A great deal would also depend on the information campaign, to be carried out before joining the Eurozone. Ultimately, I believe that joining the Eurozone means entering a mechanism of stability that also acts as a safeguard against changes of political regime. I would therefore add that the Euro is an anchor of stability.
The economic crisis? Over here the recovery seems to have already started. What are your views on this?
Economic recovery does in fact seem to be underway. However, those who make predictions have become more humble after the failures of the past few years. As for the Czech Republic, we have to point out that in Europe, the closer you are to Germany the better it is, thanks to the stimulus afforded by the restart of Germany’s economic engine.
Being in Prague it is inevitable to refer to Vaclav Klaus, the Euro-skeptic par excellence
President Klaus and I have known each other for decades and I believe that, from a human point of view, we are also united by mutual sympathy. I remember meeting him towards the end of 1995 when I was European Commissioner and he was Prime Minister. Referring to Klaus, I would say that each single country displays – to the other countries and the European Union – negative traits and positive aspects that should be valued. Undoubtedly, during the ratification of the Lisbon Treaty by president Klaus there had been some difficulties. But now, it is not a question of having to modify a treaty, but to contribute so that the economic integration of Europe is not faltered. On the contrary, it should be pushed to progress even further and, in this respect, the Czech Republic is an asset for Europe. Certainly, not a negative factor.
By Paolo Colombo e Giovanni Usai