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Polish PM takes gamble by endorsing euro referendum

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Published 27 March 2013

Poland's prime minister paved the way for a referendum on joining the euro, dropping objections to a ballot that could all but extinguish emerging Europe's waning love affair with a currency that has lost much of its lustre.

Adopting the euro has been a central goal for Donald Tusk since he came to power in 2007, and he said that failure to join the currency bloc could leave Warsaw stuck on the periphery of European affairs.

He has consistently opposed a popular vote on the issue, but said on Tuesday he would endorse one as part of a wider bargain with the eurosceptic opposition for changes to a constitution under which only the zloty can serve as Poland's currency.

"I would be in favor of reaching an agreement to change the constitution, where there would be a referendum about joining [the eurozone]," Tusk told a news conference.

Surveys suggest that - mindful of four years of economic turmoil in the likes of Greece, Ireland and Portugal- most of the country's 38 million people would say no.

That makes the thinking behind Tusk's move - whether part of a longer-term plan to adopt the common currency or to shift government policy towards keeping the zloty - not immediately clear.

With Cyprus fighting a costly battle to avoid exiting the eurozone, there may be increased reluctance within the bloc to explore letting a country like Poland, the largest of the European Union's ex-Communist members, join soon.

But the flexibility the zloty provides has been a major factor in Poland maintaining more than two decades of growth, even through an economic crisis in which every other EU country suffered a contraction.

"It looks like the government is trying to push the euro entry date into the future, given the lack of public support," said Rafal Benecki, chief economist at ING Bank Slaski. "And the Cyprus case could only make it worse."

Among Poland's ex-communist peers, Slovakia, Slovenia, and Estonia have already joined the euro. Latvia has asked Brussels to start the process, and Lithuania's central bank has said it could join as early as 2015.

Other countries, however, and particularly the Czech Republic, have no plans to join soon and see their freely convertible currencies as one of their main tools to stay competitive and fight economic crisis.

EurActiv.com with Reuters

COMMENTS

  • If you view the euro as an economic project, rather than a political one, this development is surprising. Poland is one the few large countries in the EU for whom it is sensible to have a currency union with Germany. It is very dependent on the German market and it's labour markets seem to have the flexibility to cope with a strong currency.

    Unfortunately, the currency union is a political project so absurdly we have Italy within the union and Poland outside. What a strange world the Euro federalists have created!

    By :
    Martin
    - Posted on :
    27/03/2013
  • Let´s get rid of the artificial and extremely unbeneficial Euro which is going to destroy the good relationship within Europe. If the Euro stays, Europe will fail ! It does not fit with single countries and nobody wants a bad thing as the "United countries of Europe"

    By :
    Ulli
    - Posted on :
    28/03/2013
Background: 

All EU countries, except Denmark and the United Kingdom, are required to adopt the euro. To do this they must meet certain conditions known as 'convergence criteria'.

The convergence criteria for joining the eurozone are formally defined as a set of macroeconomic indicators which measure:

  • Price stability, to show inflation is controlled;
  • Soundness and sustainability of public finances, through limits on government
  • borrowing and national debt to avoid excessive deficit;
  • Exchange-rate stability, through participation in the Exchange Rate Mechanism (ERM II) for at least two years without strong deviations from the ERM II central rate;
  • Long-term interest rates, to assess the durability of the convergence achieved by fulfilling the other criteria [more].

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