Vaclav Klaus On Front Page in Germany: The Euro Was A Mistake

April 29, 2010—The Czech President, who also gave a speech at Berlin's Humboldt University yesterday, has an exclusive interview with the Frankfurter Allgemeine Zeitung, introduced with an article on the German daily's front page (!) under the headline: "Klaus: The Euro Is To Blame For the Greek Crisis—Currency Union Has Failed." The entire interview is then printed on page 7 — in itself remarkable, as the FAZ is the mouthpiece of the Frankfurt banking center, including the ECB.

Klaus says in the interview, which runs under the headline, "The Euro Was a Mistaken Decision," among other things: "My position is the negation of this idea of an ever-closer Europe.... I do not want a Europe on the basis of supra-nationalism, I want a Europe based on the cooperation of governments and of the European states, not some Europe somewhere and then the regions of Europe."

Klaus says that he is for "integration of the markets, for the economic integration, that is for liberalization, for opening up and for the elimination of all barriers. But the political integration, which I call unification, is something completely different, and I am afraid of it. I have been saying that for a long time. Afraid, really afraid. For, what is threatened in Europe, today and especially after the Lisbon Treaty? Freedom and prosperity."

Klaus evades a straight answer to the FAZ's question whether he would rather abolish the euro, by saying that Czechia is not part of the euro, that is rather the job of the euro members to think about it. "Naturally, you can have the euro, but the costs of its existence are enormous." Czechia may one day join the euro, "on the condition that the euro-zone still exists, then."

At least the argument made by the eurocrats, that if Greece had not had the euro, its sovereign default would already have occurred, is categorically rejected by Klaus: "Greece needs a devaluation by 40%, but it no longer has the drachma. The alternative were a lowering of wages and salaries by 40%, but that is not too easy in a democratic society. The real cause of the tragedy is not the rational or irrational economic policy in Greece, it is the euro that has caused this tragedy. Without the euro, the Greek politicians could solve this crisis with the instruments that have been in use for centuries." The alternative, within the euro system, is "the transfer of tax money from other countries of the currency union," and against that, "there must be resistance—why should the German taxpayer subsidize Greece? It is a legitimate question to pose." At another point of the interview, Klaus said that IMF aid to Greece is illegal; the IMF was only permitted by its statute to help the euro-zone as a whole.

"In terms of the economic growth and the economic stability, the euro-zone has failed long ago. But if we talk about the formal failure of the currency union, we have to take into account how much has already been invested politically into this project. The politicians will not allow the euro to fail, but the costs of that will be very high."

And, Klaus fears that this Greek crisis will be misused by Brussels to strengthen its supranational control of the European countries.