Friday, 8 February 2013

POLAND:''The Euro Currency'': Battling the desire of joining Euro

Prime Minister Donald Tusk and the Polish business community want to boost competitiveness by introducing the euro. However, the opposition and a majority of Poles believe the country's independence and stability could suffer.

Many Polish business owners who have established companies in recent years and are now hoping for a breakthrough into the European Union agree. Since the fall of communism in 1989, Poland has become an EU member that has developed from a backward, agricultural country into a prosperous nation. 

Now liberal-conservative Prime Minister Donald Tusk wants to take the next step. He has announced his intention to hold a "national debate" in the spring over Poland's accession to the euro zone. "How should we decide?" he asks. "Do we want to be part of Europe's core in the future or remain along its periphery?"

With its national debt at only 56 percent of GDP and its currency, the zloty, relatively stable, the stability criteria are hardly an issue for Poland. The only minor sticking point is that last year's 3.1 percent budget deficit is slightly higher than the deficit-to-GDP ratio of 3 percent demanded by the Stability and Growth Pact.

The parliament is a much bigger hurdle. Replacing the zloty with the euro would require an amendment to the constitution with a two-thirds majority, which Tusk doesn't have. The right-wing nationalist opposition headed by Jaroslaw Kaczyski has announced its intention to sharply oppose the plan.

Poland is headed for the kind of culture war it hasn't experienced since it joined the European Union in 2004. The government camp argues that the country needs the euro to remain competitive. But the conservative-nationalist opposition believes that Poland's independence is at risk. It argues that if Poland joins the euro zone it will lose the national character it developed in difficult struggles that claimed many victims.

About 75 percent of Polish exports go to EU countries. If the country joined the euro zone, one of the most important benefits is that the transaction costs caused by fluctuating exchange rates would disappear.

According to the most recent polls, 58 percent of Poles are skeptical about the euro. Despite the Europe-wide recession, Poland consistently generated high growth rates, but now the crisis has arrived. Poland's 38 million people are holding onto their money, triggering a sharp drop in domestic demand.

The Polish economy grew by only 2 percent in 2012, compared to 4.5 percent in 2011.
It is mostly older Poles, the unemployed and rural residents who are afraid of the euro. They fear a drastic rise in food prices. These are the people opposition leader Kaczyski targets with his message. The polls sometimes show his Law and Justice Party dead even with Tusk's Civic Platform Party.

Kaczyski is fighting Tusk's pro-European approach. The first showdown is expected in late February and early March, when the Polish parliament, the Sejm, will vote on ratification of the European fiscal compact, the agreement championed by German Chancellor Angela Merkel that obliges signatories to implement balanced-budget legislation and accept automatic sanctions for violating the new deficit rules

Krzysztof Kawecki is one of those organizing resistance to the pro-European approach. He is the director of a private business college in Warsaw and a member of the center-right Right Wing of the Republic party. It is even more conservative than Kaczyski's Law and Justice Party, though they campaign on a joint list. Last fall, Kawecki led hundreds of demonstrators in a "march for the zloty" in front of the presidential palace.

Poles don't want a United States of Europe, but a confederation of independent national states. They believe that the fiscal compact gives Brussels a say in fiscal and budgetary policy.

By Guylain Gustave Moke
Political Analyst/Writer
Investigative Journalist