Photo: Flickr/European Council
The member states of the EU have finally agreed to a treaty designed to end the fiscal crisis and put Europe back on the road to recovery. But not everyone is gung-ho about the new pact. The UK had already rejected the treaty last year, and it has now been joined by the Czech Republic, the BBC reports.
What the treaty is about
The aim of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union is much closer co-ordination of budget policy across the EU to prevent the accumulation of excessive debt, which could lead to a second euro crisis. It will oblige signatories to adopt a balanced budget rule in their constitutions, and to create “automatic correction mechanisms” at the national level, should they overshoot the deficit ceiling, through legislative process, according to CTK.
The treaty will also empower the European Commission (the executive arm of the EU) to scrutinize national budgets of member states party to the pact, and the European Court of Justice will monitor their compliance and impose fines as high as 0.1 per cent of the nation’s GDP on rule-breakers.
The pact, which has been agreed to in principle by 25 of the 27 EU member states, will be signed in March.
What the Czechs say
According to Necas, Prague has withheld its acceptance of the treaty for three reasons. At the same time, he has not ruled out signing the treaty in the future.
The Czech Republic has not yet adopted the euro, but like the other new EU member states, it is committed to doing so. However, Prague has repeatedly said this won’t happen soon due to the debt crisis.
Which is why, like Poland, it can only participate in one eurozone summit a year. And while Poland was pacified with being allowed to attend certain summits, Necas was not.
“It’s very difficult for a country like the Czech Republic to sign this kind of document and to potentially contribute to loans to the International Monetary Fund for eurozone states, when it’s participation in negotiations will be purely symbolic,” Necas told AFP. “If they want us to sign up to something, if they want us to pay, we must have full rights at the negotiating table.”
Necas also said the Czech Republic was implementing many things from the pact in its own right, and the treaty was not providing the Czechs with any new benefits.
So Prague has a few, even more stringent, suggestions of its own to prevent another crisis. “We would like the strict fiscal discipline rules to apply not just to countries which have problems with a deficit in public spending, but also to those which are burdened by a big foreign debt,” the Secretary for EU Affairs Vojtěch Belling told Radio Prague.
The third reason for the Czech Republic’s reluctance is purely political: there is no consensus in the country on whether the decision to join the pact should be made by Parliament or settled in a national referendum. Even if this was decided, in order to sign the treaty, the prime minister needs the approval of the president, and the eurosceptic President Vaclav Klaus has already said he will not ratify the treaty. Of course, the deeper political reason is the unwillingness of Prague to cede greater powers to Brussels.
Necas’ decision has widened a rift in a government that has barely survived several near collapses since taking power in 2010.
Foreign Minister Karel Schwarzenberg has accused him of harming Czech national interest by isolating it from the European mainstream, even threatening to resign, according to the BBC.
However, Necas’ position has been supported by the other junior ruling party, Public Affairs (VV).
French President Nicolas Sarkozy was surprised at Prague’s U-turn on the treaty. “I’m not sufficiently familiar with the ins and outs of what is going on in Prague to be able to understand why what was acceptable in December is no longer acceptable now,” he said, Reuters reports.
The stability of the euro and the success of this rescue effort is crucial to the Czech Republic’s export-dependent economy, Radio Prague reports. Which is why the Czech prime minister will probably sign the pact — eventually — and push for a greater say for the Czech Republic.
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