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Czech Pres. Vaclav Klaus on Europe without illusions

Tuesday 12 June, 2012

As a follow-up to the NATO conference in Chicago, the Chicago Council on Global Affairs hosted Vaclav Klaus, President of the Czech Republik, who discussed his views on the current situation in Europe.

Klaus opened by saying that Americans are privileged, whereas Europeans suffer from a false integration which is dragging demand down. Klaus is an unabashed free market proponent. Europe’s problems have been longstanding, just not recognized until recently. The sovereign debt crisis is just the tip of the iceberg. The Europeans have been irresponsible in underestimating the scope of the problems & shame on them for not wanting to hear any more about their problems.
To put this in historical perspective, the 1950’s opened barriers & expanded trade across the continent. The foundations differed as they shifted to Brussels. Supernationalism weakened sovereignty, which was replaced by a centralized bureaucracy to create & enforce standards & harmonization, of which Europe had no need. Their democratic deficit has become a straitjacket. The tale of the Euro was inevitable because the economies where it rules are so diverse. what would you think of the prospects of a common NAFTA currency? Likewise, the Euro was unnecessary, if you were paying attention to the fundamentals. It’s been costly & won’t last, but there is high solidarity among many members.
The world blames Greece, but they are just a victim. It would be better if Greece leaves the Euro. There is no imminent solution for long-term stagnation. The politicians dream of economic growth, but that requires magic. The reality is fiscal cuts are required in the medium- & long- term.

The European industrial model is only 1/2 the problem. The social system & it’s policies are the other 1/2 which results in skewed income distribution & the following differences in values; holidays over hard work, security vs. risk, social democracy vs. capitalism. These differences are deeply rooted & can’t & won’t change quickly because they require deep systemic changes.
The Czech Republik still has it’s own currency & can thus use it to manage it’s exchange rate, interest rates, & economy. There is no advantage to managing exchange & interest rates by jumping in with the Germans & Greeks. They have no plans to adopt the Euro-only 5% of the Czech population want it now, 14% eventually, 76% say no, & 5% don’t know what they want.
Here’s how Europe’s social & institutional systems must be changed:
get rid of paternalism
accept economic accounting practices with political micromanagement, which takes time
prepare comprehensive spending reductions
eliminate green legislation
get rid of centralization, standardization, & regulation
victims should return to their own monetary system
forget a fiscal union
keep democracy @ the level of the nation state
Q&A
War is still unimaginable, even if some victims leave the market economy
the Czechs & Slovaks are experts @ dissolving a monetary union
Not all who lived under communism understood it like Klaus & Angela Merkel
regulation was unified by pan-Europeans, without any real representation of the people. Politics should return to the nation-state level.
Klaus does not suggest Greece leave the Euro, but it may be to their detriment to stay in the Euro.

The Chicago Blackhawks ice hockey team presented Pres. Klaus with gift, a Black Hawks jersey with the name “Pres. Klaus” embroidered on it.

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