President Klaus in Germany

The intrepid translators at Prague Daily Monitor relay the news that President Klaus sees the EU as completing a political union by controlling the budgets of its more, well, profligate member states. He rightly views national budgets as a key aspect of national sovereignty, and thus any bailout is bound to lead to greater political control by whoever provides the money.

Klaus' most interesting comment concerns the idea about "economic spaces," explaining that, "Someone may now be surprised, but I can say that the Czech Republic is part of something I would call German economic space. It breathes in a similar way as the other countries in this German economic space. And I believe it could be good for the Czech Republic to create a common currency with this space."

The most interesting aspect of this quote is Klaus' use of the word "could." Klaus leaves open the possibility of Czechs adopting the Euro, (as they are obliged by treaty to do) but certainly has maintained his skepticism about a Europe-wide currency. The balance between sovereignty and the opportunity for national wealth accumulation is noted, yet Klaus is also clever enough to rhetorically ask if "Portugal, for example," belongs in the same "German economic space."

In any case, the trials of the euro and the Czech Republic's relationship to the currency regime will continue to keep policymakers and academics burning the midnight oil. Should be interesting.