Czech republic and the fiscal treaty

Cork boy 55

As well as the Uk the Czechs have also not signed off on the FSU treaty

Why is this the case?
I have not seen much commentary on this!
We all know why the Brits did not we merely have to read the telegraph and so on :rolleyes:,

Whats up with the Czechs?
Will they sign it at a future date?

Any one got any info or comments on them? :pac:

http://www.france24.com/en/20120302-eu-states-sign-fiscal-treaty-without-uk-czech-republic-debt-crisis?ns_campaign=editorial&ns_source=RSS_public&ns_mchannel=RSS&ns_fee=0&ns_linkname=20120302_eu_states_sign_fiscal_treaty_without

later12

I know very little about Czech politics, but I think their stance as a relatively new member state which although officially still expected to join the European currency, has had recent, public misgivings about Euro membership (and which has a significant Eurosceptic electorate) makes it a particularly interesting one.

Although of course non-membership of the Euro Area does not stop any EU member state from signing up to the Fiscal Treaty, it appears that the Czechs first wish to come to a decision on the Euro before they are willing to commit to the Fiscal Treaty. Which might be rather sensible, too.

An updated news story on that situation (from Czech media in English can be found here.
http://www.ceskenoviny.cz/news/zpravy/schwarzenberg-hopes-czech-pm-necas-will-sign-eu-fiscal-pact/763803

That article deals with something that other media have thus far abandoned, and which seems less of a concern to the Irish media, which is the potential for signatories to the Treaty to increase the influence of some EU institutions domestically: most notably (alarmingly?) the EU Commission.

In Ireland,much of the dialogue seems to revolve about bondholders, Anglo and the household charge... none of which have anything to do with this important issue.

In that article, ODS appears to refer to the Civic Democratic Party.

syklops

The Czech republic currently has if not the first then the second strongest economy in Europe. Some say Switzerland has the strongest, but I am just so happy to be talking about strength again so i will concede that. The Czechs voting no is them basically saying "Ah, hello! We dont need any help getting our budget under control. We're doing ok on our own. Also, ah, hello again! we dont have the Euro."

While Ireland is basically being told, "Vote yes or no more bailout funds", the Czech Republic is actually saying to the EU, "You need us alot more than we need you right now", so they arent going to take any stick for saying no.

View

Cork boy 55 wrote: »

As well as the Uk the Czechs have also not signed off on the FSU treaty

Why is this the case?

The Czechs have a Eurosceptic President who has indicated he will block any attempt by the Czech Republic to sign up to the treaty (although most of their government apparently was in favour of doing so).

His term of office is due to expire next year and presumably the Czech government can then decide to sign up to the treaty should they so choose.

Scofflaw

later12 wrote: »

I know very little about Czech politics, but I think their stance as a relatively new member state which although officially still expected to join the European currency, has had recent, public misgivings about Euro membership (and which has a significant Eurosceptic electorate) makes it a particularly interesting one.

Although of course non-membership of the Euro Area does not stop any EU member state from signing up to the Fiscal Treaty, it appears that the Czechs first wish to come to a decision on the Euro before they are willing to commit to the Fiscal Treaty. Which might be rather sensible, too.

An updated news story on that situation (from Czech media in English can be found here.
http://www.ceskenoviny.cz/news/zpravy/schwarzenberg-hopes-czech-pm-necas-will-sign-eu-fiscal-pact/763803

That article deals with something that other media have thus far abandoned, and which seems less of a concern to the Irish media, which is the potential for signatories to the Treaty to increase the influence of some EU institutions domestically: most notably (alarmingly?) the EU Commission.

That is, to be fair, the view of one side mentioned in the article, which the other side considers to be false. The basic block seems to be, as View says, the attitude of Vaclav Klaus.

cordially,
Scofflaw

twitz

Cork boy 55 wrote: »

As well as the Uk the Czechs have also not signed off on the FSU treaty

Why is this the case?
I have not seen much commentary on this!
We all know why the Brits did not we merely have to read the telegraph and so on :rolleyes:,

Whats up with the Czechs?
Will they sign it at a future date?

Any one got any info or comments on them? :pac:

http://www.france24.com/en/20120302-eu-states-sign-fiscal-treaty-without-uk-czech-republic-debt-crisis?ns_campaign=editorial&ns_source=RSS_public&ns_mchannel=RSS&ns_fee=0&ns_linkname=20120302_eu_states_sign_fiscal_treaty_without

The brits also, it must be remembered, did not sign up to the Euro which, in hindsight, seems to have been a good move. If only Ireland had not signed up to that particular currency, Ireland would be in a much better position economically in 2012.

Cork boy 55

Scofflaw wrote: »

That is, to be fair, the view of one side mentioned in the article, which the other side considers to be false. The basic block seems to be, as View says, the attitude of Vaclav Klaus.

cordially,
Scofflaw

CZECH President ]Vaclav Klaus expressed bewilderment yesterday after his criticism of the Lisbon Treaty sparked a diplomatic storm.
Foreign Affairs Minister Micheal Martin yesterday said the comments were "an inappropriate intervention" by the Czech president.
Denouncing the Treaty, Mr Klaus claimed that it would not help to enhance freedom and democracy.

Remember a few years back when Klaus visted Ireland he got into a shouting match with M. Martin

http://www.independent.ie/national-news/czech-leader-defends-public-criticism-of-lisbon-treaty-1537156.html

stringed theory

twitz wrote: »

If only Ireland had not signed up .

Which seems to have nothing to do with the thread. ( I disagree, but see no way of proving it either way. )
Regarding the issue, my impression is that a significant minority of Czechs are a bit paranoid about Europe, perhaps because of their small size, and problematic past with both Germany and Austria, which they are sandwiched in between.
On the other hand, the foreign minister, Schwartzenberg, was highly critical of Vaclav Klaus' non signing of the fiscal treaty. Interestingly, German is probably his first language. It's a complicated place.

syklops

stringed theory wrote: »

It's a complicated place.

Its not that complicated. The gerneral concensus is, "so long as I am not harming you, let me do what I wanna do". This is why there are so many brothels and general weed usage is both accepted and tolerated even by the police. Your average czech just wants a quiet life, and fiscal treaties with Germany are not really conducive to a quiet life when your budget is balanced and there is no defecit. Financially, they are ok. All they have to do now is solve the Roma problem and crush Budwesier and they will be on top of the world.

oscarBravo

syklops wrote: »

...fiscal treaties with Germany are not really conducive to a quiet life when your budget is balanced and there is no defecit.

Under those circumstances, how would the treaty impact on them in any way?

syklops

oscarBravo wrote: »

Under those circumstances, how would the treaty impact on them in any way?

I suppose it would impact them by Berlin/Brussels seeing(or wanting to see) their budgets before the cabinet does. Something you have to put up with if your borrowing billions. Something you dont have to put up with if you are not borrowing billions and are not a eurozone member, and have a strong economy.

later12

oscarBravo wrote: »

Under those circumstances, how would the treaty impact on them in any way?

While I would imagine most people have significant doubts over the ability of the Fiscal Treaty to force signatories to enforce the demands of the EU institutions, we must remember that there are two aspects of the Treaty which (although using very vague terminology) do propose some loss of autonomy for objectively healthy member states.

The first area is in relation to economic policy convergence.

Article 11
With a view to benchmarking best practices and working towards a more closely coordinated economic policy, the Contracting Parties ensure that all major economic policy reforms that they plan to undertake will be discussed ex-ante and, where appropriate, coordinated among themselves. Such coordination shall involve the institutions of the European Union as required by European Union law.

Secondly, as was mentioned, the Czech economy is objectively in good health. Its deficit is about 3.5% of GDP, it has one of the lowest rates of unemployment in Europe, it is one of the least indebted EU countries and has one of the most secure banking sectors in the EU. Its benchmark debt trades at just 3.3%. The Czech Republic is doing really well.

And yet under the terms of this treaty, using the above metrics, the EU commission would deem the Czech Republic to be in trouble. A Corrective Mechanism would be triggered by the Commission which would require the Czech Republic as it stands to implement corrective measures as framed by the EU Commission, and any proposed measures to deal with the situation would have to be agreed by the EU Commission. Regardless of how keenly the market is buying the 47% of Czech debt to GDP, the Czech Government would be legally required to comply with the excessive deficit procedure and the response framework. That represents to some people, a loss of autonomy for a country which as I said is in good economic health from an objective standpoint.

It must be said that there are serious questions in relation to the sagacity of a one-size-fits-all debt brake for a union of European economies of such variability in both the structural composition of their economies and their respective indebtedness.

I think the debt brake could work for some of the EU economies, but this stinks of economic autopilot as opposed to real, involved, economic governance. Economic autopilot, if anyone didn't know, is a large part of what got Europe into this mess to begin with.

My last point is rather an aside. But I would suggest that even in its current healthy state, the Czech Republic would have reason to fear what people call a loss of economic sovereignty.

View

later12 wrote: »

And yet under the terms of this treaty, using the above metrics, the EU commission would deem the Czech Republic to be in trouble. A Corrective Mechanism would be triggered by the Commission which would require the Czech Republic as it stands to implement corrective measures as framed by the EU Commission, and any proposed measures to deal with the situation would have to be agreed by the EU Commission.

Regardless of how keenly the market is buying the 47% of Czech debt to GDP, the Czech Government would be legally required to comply with the excessive deficit procedure and the response framework.

The EU has already triggered a corrective mechanism for the Czech Republic which it is legally required to comply with (It has until the end of next year to do so).

later12

View wrote: »

The EU has already triggered a corrective mechanism for the Czech Republic which it is legally required to comply with (It has until the end of next year to do so).

Ah, yes the good old SGP. It and 22 other EU member states have decrees uttered against them, as far as I am aware. They must be quaking under the beds in Prague, I am sure.

The Stability and Gowth Pact, even in its present Frankenstein state (not all of it adapted by the Czech Republic), is quite a different beast to the TSCG.

That is to say, the TSCG is not only different in terms of the magnitude of the permissible deficit (0.5% vs 3%), and the nature of the corrective framework (proposed and monitored by the EU Commission) but also in the automatic nature of the response mechanism.

You will notice, I am sure, that this is only one aspect of the Treaty which I suggested may trouble some within the Czech Republic. I imagine the other aspect I mentioned (economic policy convergence for all signatories) would also be a worry for some in that jurisdiction in light of their position on the Euro Plus Pact.