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UPDATE 1-Polish officials display new appetite for adopting the euro
June 4, 2014 / 6:20 PM / 3 years ago

UPDATE 1-Polish officials display new appetite for adopting the euro

(Adds details, background)

By Karolina Slowikowska and Pawel Sobczak

WARSAW, June 4 (Reuters) - Poland should begin a debate next year about when to adopt the euro, its president, finance minister and central bank chief said on Wednesday, marking a departure from previous scepticism about the single currency.

Separately, Lech Walesa, one-time leader of the pro-democracy Solidarity trade union that ended communism in Poland, said the country should join the euro for its own security.

President Bronislaw Komorowski, Finance Minister Mateusz Szczurek and National Bank of Poland Governor Marek Belka all said euro entry should be discussed after a parliamentary election scheduled to take place in late 2015.

The new appetite for potential accession to the 18-member euo zone appeared to be a reaction to Russia’s annexation in March of territory in Poland’s neighbour Ukraine.

Poland, which joined the European Union in 2004 after shaking off decades of Soviet domination and Communist rule, sees membership of the euro zone as an additional form of security because it would lock the country firmly into Europe’s core.

The zloty currency reached its strongest level against the euro on Wednesday in about a year, a rise that one bank analyst attributed in part to the talk about accession.

In an address to parliament, Komorowski said euro entry was necessary for Poland to strengthen its position in Europe.

“We must face this challenge ... I have the opinion that this discussion should take place after the (2015) elections,” Komorowski said.

Asked by reporters for his view on the president’s remarks, Szczurek said: “I fully agree with what the president said about the euro. It must be a conscious process, backed by a strong economy.”

Central bank chief Belka, asked the same question by reporters, said he shared the president’s position.

POLITICAL HURDLES

Poland and other east European states committed to adopting the euro when they joined the EU, although no date was set. The staunchly pro-EU, centre-right government of Prime Minister Donald Tusk has signalled it is in no rush to join.

Polish economists say the country already meets two of the technical criteria for entry and that the remaining two, on the budget deficit and on entering the ERM-2 exchange rate corridor, are comfortably within its reach.

Some policymakers have even said they believe that in Poland’s case the requirement that the zloty enters ERM-2 for two years before entry could be waived on the grounds that it has in practice shown the required stability even though Warsaw never declared it was entering.

But there are political hurdles. Opinion polls show a majority of voters do not back euro adoption, having seen the devastation wrought by the debt crisis that swept through euro zone economies such as Greece and Ireland in recent years. Poland’s economy continued to grow throughout that period.

Adopting the euro would require a change in Poland’s constitution, to be enacted by a two-thirds majority in parliament. But supporters cannot muster the votes from lawmakers needed to push the change through.

Earlier on Wednesday, Walesa, the former electrician who became Poland’s first post-communist president in 1990, said the country needed to be in the euro to be fully safe from Russia.

“(Entering the euro zone) is the final thing that concerns me. This is not a full freedom. I will do everything, regardless of the personal costs, to help us to get to the euro zone.”

“And only then will Poland be safe and progressing. And I will be serene,” Walesa said in an interview published on Wednesday in the Gazeta Wyborcza daily.

Though Walesa has no say in government decisions, he does have influence on public opinion in Poland, especially among conservatives who have traditionally been reluctant to give up the zloty. (Writing by Christian Lowe and Karolina Slowikowska; Editing by Catherine Evans/Ruth Pitchford)

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