The story of Greece’s bankruptcy and the Euro financial crisis took over news headlines to start the year off with uncertainty and all eyes on Europe. Overlooked, however, was the Czech Republic, quietly neighboring Eurozone countries such as Germany, Austria, and Slovakia. Not participating in the crisis but inextricably involved, how does the country feel as it witnesses the struggles facing its fellow EU members?
For European nations, modern progress is not measured by achieving industrialization, technological advances, or cultural revolutions. After the Warsaw Pact allowed Soviet communism to force itself onto smaller nations such as Czechoslovakia, political progress stalled for about 50 years while their democratic neighbors moved ahead. Today civics remain uneven throughout the region but the European Union (EU) and NATO have created new benchmarks to achieve, with acceptance into these organizations conferring eminence to a country. Holding major political, economic, and legislative power in Europe, the EU adds to their members carefully, and finally recognized the Czech Republic in 2004. The Czech Republic opted not to enter the monetary union, however, and now is grateful to be exempt of the current financial crisis currently grieving the region. However, it remains politically, socially, economically, and geographically entangled within the Eurozone itself, giving the Czech Ambassador many points to discuss when he visited Georgetown University on Tuesday.
Ambassador Gandalovič first emphasized that the Czech Republic has indeed benefitted from joining the EU. However not only is there an emotional "iron curtain" dividing older members from members of the former Soviet Union, but their concerns are dissimilar as well. Older members are more interested in anti-immigration and freedom of movement throughout the EU, while newer members seek to discuss the EU constitution reforms of late.
The Ambassador then addressed the current Euro crisis, clearly assigning most of the blame to EU financial rating agencies who are responsible for issuing fiscal reports of the individual countries. “[They] kept issuing a nice rating to countries like Greece, Italy, Spain, Portugal, rewarded just for being members of the eurozone”, even nations with a national debt above 150 percent of their GNP. He had of course expected problems with the adoption of the Euro; these 17 countries were extremely different in terms of their output and fiscal discipline. These underlying issues surfaced however when the American financial crisis in late 2007 was "imported" into Europe. Without the restrictions of the Euro, the Czech Republic averted disaster by devaluing their currency according to the economic climate and adjusted their exchange rates to their own financial means. Eurozone countries were not so fortunate.
Ambassador Gandalovič then reported on current action in Europe - rushing to print more money and issue stabilization bonds to prove they were responsible. Warning against haste he said, “We have to show the markets that we will unite more and we have the power to handle the crisis centrally. All these treaties [for unifying Europe] went in increments and took years to negotiate, took repeated referendums and all sorts of discussion, but now under the pressure of markets, change will increase dramatically.” This dramatic change would certainly be dangerous for a region that is unsure how “prepared [they are] to become a federation with a federal expense, federal budget, and federal parliament”, especially in this current situation where most countries readily blame each other.
As for the Czechs, “People are outraged and upset… there is a real worry about the result of the European currency crisis. We have not been directly involved in this but being surrounded by eurozone countries, we are involved.”
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The Czech Republic: Stuck in the Middle
April 19, 2012
The story of Greece’s bankruptcy and the Euro financial crisis took over news headlines to start the year off with uncertainty and all eyes on Europe. Overlooked, however, was the Czech Republic, quietly neighboring Eurozone countries such as Germany, Austria, and Slovakia. Not participating in the crisis but inextricably involved, how does the country feel as it witnesses the struggles facing its fellow EU members?
For European nations, modern progress is not measured by achieving industrialization, technological advances, or cultural revolutions. After the Warsaw Pact allowed Soviet communism to force itself onto smaller nations such as Czechoslovakia, political progress stalled for about 50 years while their democratic neighbors moved ahead. Today civics remain uneven throughout the region but the European Union (EU) and NATO have created new benchmarks to achieve, with acceptance into these organizations conferring eminence to a country. Holding major political, economic, and legislative power in Europe, the EU adds to their members carefully, and finally recognized the Czech Republic in 2004. The Czech Republic opted not to enter the monetary union, however, and now is grateful to be exempt of the current financial crisis currently grieving the region. However, it remains politically, socially, economically, and geographically entangled within the Eurozone itself, giving the Czech Ambassador many points to discuss when he visited Georgetown University on Tuesday.
Ambassador Gandalovič first emphasized that the Czech Republic has indeed benefitted from joining the EU. However not only is there an emotional "iron curtain" dividing older members from members of the former Soviet Union, but their concerns are dissimilar as well. Older members are more interested in anti-immigration and freedom of movement throughout the EU, while newer members seek to discuss the EU constitution reforms of late.
The Ambassador then addressed the current Euro crisis, clearly assigning most of the blame to EU financial rating agencies who are responsible for issuing fiscal reports of the individual countries. “[They] kept issuing a nice rating to countries like Greece, Italy, Spain, Portugal, rewarded just for being members of the eurozone”, even nations with a national debt above 150 percent of their GNP. He had of course expected problems with the adoption of the Euro; these 17 countries were extremely different in terms of their output and fiscal discipline. These underlying issues surfaced however when the American financial crisis in late 2007 was "imported" into Europe. Without the restrictions of the Euro, the Czech Republic averted disaster by devaluing their currency according to the economic climate and adjusted their exchange rates to their own financial means. Eurozone countries were not so fortunate.
Ambassador Gandalovič then reported on current action in Europe - rushing to print more money and issue stabilization bonds to prove they were responsible. Warning against haste he said, “We have to show the markets that we will unite more and we have the power to handle the crisis centrally. All these treaties [for unifying Europe] went in increments and took years to negotiate, took repeated referendums and all sorts of discussion, but now under the pressure of markets, change will increase dramatically.” This dramatic change would certainly be dangerous for a region that is unsure how “prepared [they are] to become a federation with a federal expense, federal budget, and federal parliament”, especially in this current situation where most countries readily blame each other.
As for the Czechs, “People are outraged and upset… there is a real worry about the result of the European currency crisis. We have not been directly involved in this but being surrounded by eurozone countries, we are involved.”
