Is There Any Reason for the Czech Republic to Celebrate the First Ten Years in the EU?

The below speech was delivered by Václav Klaus, to Le Cercle Meeting, London, June 20, 2014.

Many thanks for the invitation. I am really glad to be here again and to meet many old friends. The twelve months between last June and this one supplied us with many significant events. Some of them were unexpected but some of them were known in advance. We – in the Czech Republic and other Central and East European countries – did expect the coming of the 10th anniversary of our EU membership. This moment gave us an opportunity to analyse and discuss this experience.

Countries in our part of the world are similar as regards their communist past, but they differ in many respects – in size, GDP per capita level, share of trade with the rest of the EU, historical traditions, geographical vicinity to Russia, national mentality, maturity, political structure, ruling political ideology, etc. The impact of their EU membership was correspondingly different. I don’t know exactly how all the countries in the region celebrated this anniversary, but in the Czech Republic there were no celebrations. With the exception of several unconvincing statements made by the representatives of the new political elite brought to the fore by last year´s political changes, who vehemently try to differentiate themselves from the previous political leadership, from the former president and the former right-of-centre government, the support of the EU is at the lowest level ever.

The people didn’t find a reason for any kind of celebrations. Serious analysis of the impact of EU membership is not available and propagandistic statements were rightfully considered meaningless. The problem is that

a serious, unbiased, politically neutral cost-benefit analysis of the EU membership is difficult to make. It would be technically and methodologically complicated because of its multidimensional character. The EU membership was not a controlled experiment. We didn’t live in a vacuum, all other things were not kept equal, the “ceteris paribus” condition was not fulfilled.

In spite of that, it is quite evident that we have entered neither a healthy, prosperous, fast growing economic zone, nor a truly democratic entity. Both these defects have been considerably magnified in the last years but we – at least some of us – were aware of them long before the outbreak of the crisis which came at the end of the last decade.

In addition to our expectations, we have been getting new and new proofs of the loss of our sovereignty, of the irrationality of being governed from a distant alien city and of the inefficiency of EU centralism and dirigisme. In the first 10 years of our EU membership, we had to swallow 3600 European directives and were forced to pass almost 500 new pieces of EU legislation. With growing despair, we have been witnessing the gradual reversal of our liberal reforms (introduced at the beginning of the 1990s) into a new form of very intrusive government interventionism. In spite of our resolute rejection of all versions of “third ways” twenty years ago – because we wanted to follow the first way, capitalism – we feel now that the EU membership brings us back from capitalism to a new variant of European socialism, to a new version of administratively organized and controlled society. The fact that the recent European elections didn´t explicitly raise this very fundamental issue is frustrating.

People like me have been always afraid of all kinds of slippery roads which lead to socialism. The current European one, masterminded from Brussels or in the name of Brussels, is one of the most successful, one of the most innocently and friendly looking, one of the most “business as usual” variants. Common people underestimate it. Public intellectuals mostly support it.

Our sufficiently long experience with communism sharpened our eyes which helps us when observing and judging today’s EU. I am afraid we continue marching in the same blind alley as before

- regardless the deteriorating economic data,

- regardless the waning respect and position of Europe in the rest of the world, 

- regardless the deepening of the democratic deficit we are confronted with,

- and regardless the undeniable increase of frustration of people who live in Europe and are passive objects of the immodest progressivist and constructivist EU experiment.

After four decades of communism when we were not free and sovereign, we wanted to be a normal European country in a normal continent of free, sovereign and naturally friendly countries. We live in a nominally free country now but we feel we are losing our sovereignty and our freedom again – this time to Brussels. In addition to it, the dictate of political correctness and the powerful role played by new modern isms, such as multiculturalism, transnationalism, human-rightism, environmentalism, homo-sexualism, aggressive feminism and genderism, all of them based on old, perhaps differently packed collectivist and freedom suppressing ideas, have been undermining and negatively affecting our current feelings.

It has its important economic aspect. More than 80% of our exports goes to the EU which is by no means a flourishing economic area. This is a region which undergoesan already rather long economic stagnation and an unending sovereign debt crisis. Even by keeping the Czech crown, we were not able to disconnect ourselves from the developments in the rest of Europe.

The economic stagnation in Europe is not a historic inevitability. It is a man-made problem. It is an outcome of a deliberately chosen and for years and decades gradually strengthened European economic and social system on the one hand and of the more and more centralistic and undemocratic European Union political institutional arrangements on the other. They both and especially they together form an unsurmountable obstacle to any further positive development. What we go through is not an accident or a misfortune. It is a self-inflicted injury. If Europe wants to start growing again, it has to undertake a far-reaching transformation of its economic and social system. This is my proposal No. 1.

Not less important is the fact that the excessive and unnatural centralization, bureaucratization, harmonization, standardization and unification of the European continent has brought about a deep democratic defect, not just a democratic deficit as it is euphemistically called. Europe already entered a post-democratic era which was always a dream of socialists of all colours. This may become in the long-run an even bigger problem than the current economic stagnation. Changing it – which meanschanging the concept of the European integration, getting rid of its post-Maastricht development – is the task No. 2.

Six months ago, on January 1, 2014, the EU architects and exponents planned to celebrate the first 15 years of the common currency, but as far as I know it went almost unnoticed. Euro evidently did not help practically anyone. On the contrary, it created new problems. It weakened the self-discipline of individual countries and produced an exchange rate which is too soft for the countries of the European North and too hard for the European South.

It was expected. It is an elementary textbook knowledge that all historically known fixed exchange rate regimes needed exchange rates realignments sooner or later. Eliminating this powerful – and for centuries functioning – adjustment mechanism was a naive attempt to stop history, something which all the constructivists, central planners, manipulators and dictators always wanted to achieve. Unsuccessfully.

The erroneous belief that the very heterogeneous European economy could be – in a relatively short period of time – made homogenous by means of monetary unification belongs to the category of wishful thinking. Europe can be made – eventually – more homogenous by evolution, not by revolution, not by means of a political project.

I find it wrong to concentrate on the well-known weaknesses of individual EU countries. These countries did not bring about the current problems. These countries are the victims of the system of one currency. The system itself is a problem. These countries were forced to function in a world of – for them – unsuitable and inappropriate economic parameters. It proved to be untenable. Letting such countries leave the Eurozone – in an organized way – would be the beginning of their long journey to a healthy economic future. This is my proposal and our task No. 3.

Some critics, especially the Americans, say that it was a mistake to establish a monetary union whose members enjoy – according to them incorrectly – fiscal sovereignty. They are, therefore, in favour of a genuine, full-fledged fiscal union and don’t want to hear that the people of Europe want to retain their nations as well as the fiscal sovereignty of their nations.

The issue of freedom in Europe gets a new relevance in connection with the recent developments in Ukraine. I am frustrated and angry being confronted with a blunt misinterpretation of events there. All rational people and all true democrats should challenge it. Ukraine has been misused to restart a clash between the West and Russia. This country, with its long existing fragility both in political and economic fields, has been denigrated to the role of an instrument in it.

To force Ukraine into making a decision whether the country belongs to the West or to the East is a certain and guaranteed way how to destroy it. It leads the country into an insolvable conflict that cannot have but a tragic ending. To my great regret this is exactly what we see developing in front of our eyes. The only way to save or – perhaps – finally introduce freedom and democracy there would be to let Ukraine solve its own problems without foreign intervention. Both from the West and from the East.

I expect that someone will remind me of Russian behaviour in Crimea and compare it with Soviet intervention into Czechoslovakia in August 1968. This would not be fair and appropriate. The violent political destabilisation of Ukraine was not a genuine domestic political uprising but an imported revolution. Its organisers had other plans and ambitions than to introduce freedom and democracy there.

The victim of this all is Ukraine and the people who live there. They didn’t need it and they did not deserve it even though the responsibility of Ukrainian politicians for not succeeding in solving the long-lasting Ukrainian problems for more than two decades after the end of communism is enormous (and inexcusable).

Other victims of today’s events are the European democrats. The atmosphere of confrontation, danger and fear will be quickly used to further accelerate the European unification and to create a centralized European superstate where the people will have only a limited right to hold an independent opinion.

If we want to change this, we have to make a fundamental transformation of our thinking and of our behaviour. This must be generated by the people, not by the vested interests of EU politicians and their fellow travellers. The people, successfully blinded by the EU propaganda, don’t know it. They are not prepared for it yet. The feeling of systemic failure is not sufficiently deep and wide-spread among them. It is our task to help them understand it

Václav Klaus  is a Czech economist and politician who served as the second President of the Czech Republic from 2003 to 2013. He also served as the second and last Prime Minister of the Czech Republic, federal subject of the Czech and Slovak Federal Republic, from July 1992 until the dissolution of Czechoslovakia in January 1993, and as the first Prime Minister of an independent Czech Republic from 1993 to 1998.