Tusk’s gamble

 

While pundits continue, Cyprus bailout notwithstanding, to predict the imminent demise of the euro, a vote of confidence from Warsaw should lift spirits in Frankfurt. Prime minister Donald Tusk, a long-time advocate of Poland’s membership, has gambled on a course that could see the country begin its accession process to the euro by 2015.

Having recently reinitiated a public debate on membership, Mr Tusk has now announced his willingness to hold a referendum on joining, in a deal with the Eurosceptic Law and Justice opposition. That will see the latter, as a quid pro quo for the referendum, line up the necessary two-thirds Sejm majority for requisite constitutional changes.

Mr Tusk has until now opposed a referendum, and polls show that two-thirds of the public would vote No. But Polish accession to the EU in 2004, which included eventual euro membership as a precondition, was ratified by a 78 per cent vote and Mr Tusk is confident a strong campaign can swing a Yes. Sympathetic Irish politicians, wary, from bitter experience, of EU referendums, are likely see Mr Tusk’s move as courageous and perhaps foolhardy.

He admits that, at the moment, “the climate for the euro is not good in Poland”, but the economy is one of the EU’s best performing – some say because the zloty has been allowed to float, making Polish products cheaper abroad and shielding it from the euro zone’s downturn.

Aligning its budget deficit, interest rates and inflation to the requirements for euro membership should, however, be possible by 2015 when Mr Tusk intends to fight parliamentary elections on the issue of membership. A successful referendum then, followed by the required two years in the exchange rate mechanism, should allow Poland to join the euro by 2017. Among Poland’s ex-communist peers, Slovakia, Slovenia, and Estonia have already joined the euro. Latvia has asked Brussels to start the process, and Lithuania’s central bank has said it could join as early as 2015. The Czech Republic has no intention of doing so.