Poland remains divided on euro

By bne IntelliNews June 9, 2014

Jan Cienski in Wroclaw -

 

The euro has always been at least as much a political as an economic project, and Poland's approach to eventually joining the common currency shows that politics is still a primary driver.

With the threat from Russia looming ever larger in Polish minds, Bronislaw Komorowski, Poland's president, last week called for the country to begin moving smartly to adopting the euro. “If we want to seriously talk about the need to strengthen Poland's position and seriously treat the proposal to ensure Poland's place at the centre of European decision making and not on its margins, then we need to courageously deal with this challenge,” he said in an address to parliament on June 4.

He was backed by Marek Belka, the central bank governor, and by Mateusz Szczurek, the finance minister. Lech Walesa, the legendary leader of the Solidarity labour union, said that Poland would be “safe” once inside the Eurozone.

Poland has long seen the euro as a way to ensure that it is a core EU country; not being in the euro consigns it to the periphery – an increasingly dangerous place in today's risky geopolitical environment.

One of the greatest recent enthusiasts is Radoslaw Sikorski, the foreign minister. Sikorski is no economist, and views the common currency largely as a security issue.

The problem for the government is that the euro is deeply unpopular among ordinary Poles, dating back to the recent Eurozone crisis. A new opinion poll shows that 62% of Poles are opposed. The leading opposition Law and Justice party is also unenthusiastic, and without their votes the necessary changes to the Polish constitution that would allow the euro to become the national currency are impossible.

Donald Tusk, the prime minister, has been very aware of these limitations. He was lukewarm about the idea after Komorowski's speech, saying the euro issue raised questions for him. He said the government's main job was to meet the Maastricht criteria on deficits, public debt and other indicators Poland needs to fulfil in order to join. A key metric is driving the deficit below 3% of GDP, something Tusk should happen by 2015. “Whether we join the Eurozone will be decided in the future by a constitutional majority in parliament,” Tusk said.

Tusk has already been burned by the euro. In 2008, just weeks before the collapse of Lehman Brothers and the onset of the global economic crisis, he called for Poland to join the euro by 2012. Not being in the euro allowed the value of the zloty to fall in the first phase of the crisis – sparing the economy from the recession suffered by every other EU country.

But now the Russian threat is making economics take a back seat to politics. “Events happening in Ukraine should mobilise us to faster integration with the eurozone,” Sikoski said in his own address to parliament.

Jan Cienski is a Senior Fellow at DemosEuropa, a Warsaw-based public policy think-tank

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