| PRAGUE, April 25
PRAGUE, April 25 When Czech President Milos
Zeman said last week his country could join the euro by 2018, he
met with little more than a shrug from the country's other
political leaders who have shied away from setting a date.
Yet his strongly pro-European views - he made a show of
hoisting the European Union's flag for the first time at Prague
Castle when he took office last month - may be a first sign that
one of the EU's most reluctant members will change its tune.
Zeman replaced the strongly euro sceptic Vaclav Klaus, who
had long campaigned against the single currency, and also
predicted some of the troubles it has encountered.
The change is likely to gather speed next May. Opinion polls
show the centre-left Social Democrats are poised to supplant
their centre-right opponents who have governed for two terms
with a policy that has resisted deeper EU integration.
"I believe the Czech Republic could join the euro zone
within five years," Zeman said in a German newspaper interview.
The former leftist prime minister, 68, is known for speaking
his mind without consulting other political leaders or without
laying out concrete plans how to proceed.
He himself cannot officially do much about the country's
euro policy. It is up to the cabinet to decide the approach to
its economic agenda, including on European affairs.
The current cabinet has refused to set any target dates for
euro entry, and the question has been off agenda given the euro
zone crisis and the remaking of the currency union's design, and
Prime Minister Petr Necas reminded Zeman of his place.
"I would like to point out that it is the government that is
responsible for economic policy and not the president, however
these opinions are legitimate and interesting," he said.
But the Social Democrats, who hold a 30 percentage point
lead over Necas's centre-right Civic Democrats in opinion polls,
have a more accommodating approach. Zeman was setting a tone.
CHANGE OF POWER
Their leader and the likely next prime minister Bohuslav
Sobotka served as finance minister in a 2003 cabinet that set
2009-2010 as a non-binding target date to adopt the euro, a date
that was later abandoned.
The party has back-pedalled on its euro-enthusiasm as the
euro zone's weaker members collapsed under a pile of debt in the
past years, but is still keeping euro entry on the table.
"I am convinced that the government that will be formed
after next year's election should set the euro entry date,"
Sobotka said on Thursday.
He told Reuters 2020 could be a date to look at, the first
time he mentioned a date since the euro zone crisis began.
Baltic minnow Estonia joined in 2011 and Latvia is on track
to adopt the euro next year. In Poland, the region's largest
economy, Prime Minister Donald Tusk has said he wants to join
"as soon as possible" and has recently signalled he could back a
vote on the issue that could complicate accession.
The Czechs could meet the conditions to join - on debt and
interest rates, among other things -- if it wanted. But it has
never been in a hurry, with economists saying the right time
would be when its economic level gets closer to main trading
partners, such as Germany.
The country of 10.5 million has been served well by the
crown's floating exchange rate, which has acted as an adjustment
tool throughout the global economic crisis.
Having reached all-time high of below 23 per euro in the
boom era in mid-2008, the crown fell to 29.7 the following year,
giving breathing room to exporters hit by the global crisis.
It has weakened again in the past months to 25.9 as the
country remains in recession and the central bank threatens to
use the crown to ease monetary policy.
While lacking outright authority to decide on the euro,
Zeman can help push his agenda indirectly.
The first way is through public opinion. It was Klaus, after
all, who used his office to reinforce scepticism even before the
euro crisis hit. An opinion poll last year showed three quarters
of Czechs oppose the single currency.
Zeman will also have some influence eventually on the
make-up of the central bank, which has an advising role in
deciding government policy, and thus can have a say in
determining when the economic conditions are right to join.
Klaus named all seven members on the central bank's current
policy board, which is one of the most trusted institutions in
the country and whose members all say Czechs should not hurry to
meet their EU obligation to swap their crowns for the euro.
No revolution is expected soon. The first member to leave
will be Eva Zamrazilova, whose term expires in 2014. The rest of
the board has mandates until 2016-2018.
Given Zeman's past behaviour, however, he will not shy away
from overhauling the bank with people closer to his way of
thinking. He has already mentioned a trade union economist and a
former Social Democrat finance minister as possible candidates.