Back to Europe

25-02-2004

After a ten-year pre-accession period, the Czech Republic is becoming an EU member on May 1, 2004. Countdown to Europe is our new series on various aspects of Czech membership of the European Union. We will be finding out how life is going to change for ordinary Czechs - students, entrepreneurs, farmers, pensioners, members of minorities - as well as what it will mean for foreigners who visit the Czech Republic or want to work and live here.

In 65 days, the Czech Republic will become a member of the European Union, a milestone in the history of this central European nation. The Czechs have been closely linked with the EU for several years. We have adopted EU standards, an absolute majority of Czech exports go to the Union, we receive financial support from EU funds... In those respects, little is going to change and we could carry on that way for years. Yet the move is seen as historic for its irreversibility.

We should note that way back in the 15th century, the Czech king George of Podebrady made a proposal to establish a union of states - the Congregation of Concordance -open to all the European Christian states, which would then form a common governing body where the countries could be represented in conformity with their size and which would offer collective defence. It was planned to have a united army and a common budget for the Congregation. Four centuries later, the Czech-born nobleman, Count Richard Coudenhove-Kalergi, one of the most vocal advocates of European unification after World War I, wrote a book entitled "Paneurope", a fundamental text of the European integration movement.

After a ten-year pre-accession period, the Czechs voted for membership of the EU last year in a referendum, after a massive government campaign highlighting the benefits of accession. Yet opinion polls show that Czechs are afraid of EU entry, especially of socio-economic aspects, such as unemployment growth, prices hikes, and a decline in living standards. And indeed, almost 30 percent of small and medium-sized enterprises said they would have to make redundancies when they are faced with the full impact of the single market. I asked economic analyst Vladimir Pikora of the Prague branch of Volksbank whether those fears of changes related to the EU entry were substantiated.

"We expect that the EU enlargement will mainly mean that borders will be no limits for our exports and we will be able to export goods with short durability, such as yoghurts and bread. On the other hand, we will also have better opportunities to export not only to the current EU members but also to countries like Poland and Hungary, where we faced some difficulties in export due to duties and regulations.

"We also expect that some foreign companies could invest in smaller firms and this should slightly help the Czech economy but we do not expect anything really significant. The GDP should accelerate only very slightly. The labour market will remain almost unchanged. The most important countries around us will be closed to our workers, so we do not expect anything significant at the moment of EU expansion. A significant change will come when we adopt the euro. This will be an important moment when something could change."

What about the price level?

"After the EU enlargement, we do not expect any changes of prices, any significant changes. Of course, there will be some changes due to changes of duties in trade with third parties. Some goods from China and Southern America could be more expensive. However, this is not so much important for the Czech economy. The prices should increase and should change significantly after the euro adoption or shortly before, which could come in 2008 or 2010, so it is not a question of today."

25-02-2004