Mojmír Hampl, Vice-Governor, CNB
Prague, 19th June 2014
Ladies and Gentlemen, dear Mr. Dostálek, dear Mr. Stacey,
Thank you very much for your kind invitation to this event. The proposed theme of today’s discussion is absolutely topical and I’m really pleased to participate in the debate. Moreover, I’m happy to speak here at the American Chamber of Commerce, as from numerous discussions I have gotten the feeling that American debates, or debates with Americans or organized by Americans, are rather more open, frank, short and to the point than some of our wordy European debates.
So, allow me to go straight to my points.
First, we tend to take some events to be self-evident and obvious. And they are not. The EU enlargements in 2004 and 2007 were not self-evident. They happened in pleasant economic and political times, and if they were to happen, say, in 2008 or 2009, they might not have happened at all. One should bear this in mind.
Now, 10 years after the enlargement, I would say the situation in the EU is one of fragile balance, or fragile equilibrium. None of the newcomers wants to get out of the EU. None of the old countries wants to throw out any newcomer. And together, the countries in the EU do not very much want to enlarge the EU, even though enlargement has proved to be one of the EU’s most successful policies on the whole.
Ten years on, I would say it was a good deal for all the members. For us in the Czech Republic, membership, in my eyes, remains, as the Germans say, “alternativlos”, or without any reasonable, serious alternatives. By the way, projects without alternatives always make me a bit uncomfortable.
Second, everything we do should be aimed at two simple goals: making people in a particular territory i) safer and ii) wealthier – these are the two main reasons-for-being of any state and statehood. Leaving aside the question of safety, how do these past 10 years look from the point of view of economic well-being?
Compared to other core peers (Slovakia and Poland) we haven't scored particularly well, and probably not as well as we might have hoped. Convergence, or catching-up, has almost stalled. And we are asking ourselves the questions: Is convergence over? Have we reached our potential? Even after 10 years in the EU we still suffer from German-envy as a nation, unfortunately.
Why is that? I still tend to believe that the majority of the problems in any particular country are home-based, rather than imported from abroad. Apart from evident macroeconomic policy difficulties and the impacts of the past crisis I would point out four general domestic problems that seem to be taking their long-term toll on us and our well-being. And as someone who has to communicate in the public sphere on a daily basis, some of these problems are really frustrating, as they appear again and again regardless of the political cycle:
- Free-riding and low loyalty to our common good – we Czechs have a tendency to be free-riders in our own Czech public space, and even more so in the EU public space. The way we deal with EU funds is just a logical consequence of this feature of our behavior. The problem of a “common pool” is a serious economic phenomenon everywhere, but is probably rather more serious here.
- Closely interlinked with this is the problem of myopia, or short-sightedness. In the public sphere decisions are being made with a shorter and shorter time scale in mind, and less of a long-term approach. This is also a sign of a dangerously low level of loyalty of us all towards our own public space, as well as our typical habit of snitching.
- We Czechs have a tendency to be very inward-looking – similar to other small nations. We very much share this inward-looking approach with the Austrians, mentally the closest nation to the Czechs in my view (although we have to live without their accumulated wealth).
- This all means we do not care that much about the club – the EU. It is somewhere out there, far far away. We have ridiculous debates between the so-called sceptics and so-called optimists, while often neither of these camps really cares about what is happening in the club. These labels are used for domestic debates and purposes only. I may have many problems with how the club works, but as long as I am a member, I should take care of the club. Here in the Czech Republic I am considered to be a Eurosceptic, but it is much easier for me to speak with a so-called optimist who follows what is going on than with a so-called sceptic who does not care about the club at all. Care should be the word of the day.
A very interesting feature of such debates is that even some of the biggest British euro-sceptics I know regard the EU more as their club, as something they own, than some of the biggest Czech euro-enthusiasts.
This also explains why we cannot easily become Switzerland, a small country of responsible people living in splendid wealthy isolation and neutrality surrounded by mountains. This is the secret dream of many Czechs, but we lack a critical element for it. We haven’t got enough Swiss citizens here to become Switzerland, citizens who really care very much about their public sphere and are sometimes willing and able to do things in a different – but better – way than the rest of the world. Look at us. We have a tendency sometimes – through gold-plating – to make general EU rules even worse when implementing them at home. So without the EU we would – in the end – just be copying the mistakes of others, but without having access to the single market. Clearly a loose, loose solution.
This also explains why we tend to be very inconstant or changeable in answering many fundamental questions.
I am a very strong and long-term supporter of autonomous monetary policy here. But I cannot explain the variation in the thinking of our population on this topic, which is greater than that in, say, Poland. We are much more volatile in our thinking. So, the current support for the koruna might also easily disappear.
The last topic here is competitiveness. To have any competitiveness we first need to allow for some, well, competition. So even the competition of jurisdictions within the EU for investment, taxpayers, companies, and even citizens, can be very healthy. That is why I do not share the idea that integration should mean unification and that everything should be completely unified down to the last detail, which is a strong conviction of many in the mainstream. This would mean less competition and, in the long run, less competitiveness. But first of all, it is important to participate in the debate, not just to free-ride on it.
As you can see, competitiveness is depicted on a scale of eight colors from dark red to dark green. Looking at the chart it is clear what we need. The whole of Europe needs to become much greener, and the Czech Republic, too, needs to get a bit greener. This is a task for our club. And it requires more self-confidence and long-term thinking from all those who want to influence the debate in any way.
Thank you.