Koruna, Safe Bet? Czech Expert Warns About Pitfalls of Euro Adoption

With the precipitous economic climate in Greece, and serious and endemic structural problems across the Mediterranean, Eastern European countries, which once appeared enthusiastic to join the Eurozone, are now having second thoughts.

“A switch to the euro would be good news for export-oriented businesses as it would stabilize prices. Not so for ordinary people whose salaries will not be able to match the European prices we are going to have here if we adopt the euro,” Zdenek Zbytek, chairman of the Czech Energy Technologies consortium, said in an interview with Sputnik Czech.

“I don’t believe that a Czech sweeper will be paid 2,000 euros a month, just like in Germany. She will still be getting 500 or 600, but the prices will be like elsewhere in the EU. The Slovaks became 30 percent poorer after they joined the Eurozone,” he added.

When asked if the euro would economically weaken the Czech Republic or make it stronger, Zbytek said that it would undermine the national economy.

“First, our Central Bank will no longer be able to regulate prices and currency rates, which means that our domestic prices will depend on the amount of euros printed elsewhere. As long as our Central Bank remains independent it is able to work for the government and the people,” he emphasized.

Zbytek added that by adopting the euro the Czech Republic will have to foot the bill for Brexit and the current crises in Greece and Spain.

“The Czech economy is in good shape and our position in Europe is strong thanks to our mechanical engineering and automotive industry, and our exports. That’s why I believe that a switch to the euro would be a mistake and this is the opinion of the majority of entrepreneurs I know,” Zbytek continued.

As for Czech companies exporting their goods to Russia, they would also suffer as a result of the EU sanctions. With the ruble to euro currency exchange rate now being one to over 60, compared to just one to 42 before, the cost of Czech exports to Russia has gone up accordingly.

“Before the embargo, our exports to Russia amounted to about 170 billion korunas (6.6 billion euros), but the figure is now down to what we had in the 1990s. Right now we can at least work with the koruna’s rate, but with the adoption of the euro our businessmen will no longer have any room for maneuver,” Zbytek said.

“Chances are high that 14 days from now Prime Minister Sobotka will have to step down, so I wouldn’t take very seriously what he says ahead of the upcoming elections. Let’s take our time and see what the next government is going to say,” he concluded.

According to a recent poll, a hefty 70 percent of Czechs oppose joining the Eurozone, while just 29 support it.