Fri, Dec 08, 2017 - Page 9 News List

Anti-euro movement triggers backlash from EU businesses

Companies worried about rising nationalism call for euro entry, after leaders in Poland, the Czech Republic and Hungary denounce the single currency

By James Gomez, Konrad Krasuski and Krystof Chamonikolas  /  Bloomberg

When Poland’s main business lobby hosted a debate on the pros and cons of euro membership last month, the country’s former central bank governor Marek Belka surprised the audience by issuing a ringing endorsement for joining the euro.

For a man who resisted a switch to the single currency during the Greek crisis, his call for deeper integration now — echoed by attending executives — revealed how alarmed eastern Europe’s corporate elite is by the nationalism running through their governments and on the streets.

It is the same story in Hungarian business circles and in the Czech Republic, where Czech Prime Minister Andrej Babis rose to power by rejecting the French and German drive to make the currency union the engine of the EU.

Businesspeople worry about the economic costs of forgoing a seat at the table.

“We should take our EU membership, and EU affairs in general, very seriously,” Radek Spicar, vice president of the Confederation of Industry and Transport, a lobby group representing 11,000 Czech companies, told a business forum in Prague on Nov. 22.

“If you’re so vitally dependent on something it’s good to be able to have maximum influence over it,” he said.

Given how heavily the three countries rely on the EU for exports, foreign investment and subsidies, there is good reason to be nervous, especially against the backdrop of Brexit.

Without the anchor of euro membership, some companies fret that the deepening wedge between their governments and the EU will leave the nations with less clout in making decisions that affect their economies.

This risk is becoming more pronounced as the 19 nations in the bloc prepare to lay the foundations for a more complete financial and economic union, including possibly a eurozone finance minister, a budget and a monetary fund.

Poland — the EU’s biggest eastern member and largest net recipient of its subsidies — needs to have a strong voice in Brussels as this unfolds, Belka said on a panel about the future of the euro hosted by business group Lewiatan, which represents 4,100 companies.

He said adopting the single currency would lower corporate financing costs, prod businesses to boost their competitiveness and drive up wages.

“Joining the euro would trigger an innovation drive on a mass scale,” said Belka, who also happens to be a former IMF managing director.

A fellow panelist, Polish Deputy Minister of Finance Leszek Skiba, argued Poland is better off waiting until after the euro-area reform to make any decisions — a view common among the region’s populist politicians and their voters.

Like Babis, a Slovak-born billionaire who controls an agriculture and media conglomerate, Hungarian Prime Minister Viktor Orban and former Polish prime minister Jaroslaw Kaczynski oppose yielding any more national sovereignty to the EU. They have refused to set target dates for euro adoption, a condition of membership when the countries joined in 2004.

Their hesitation partly stems from the economic crises that drove the euro to its breaking point in the past decade. They do not want to be liable for bailing out countries like Greece, especially since they are less indebted than many euro members.

Having independent currencies also serves them well during crises because they can weaken them to improve export competitiveness — something Italy and Spain cannot do.

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