THE EXPANSION OF THE EUROZONE MIGHT BE POSTPONED BY EIGHT YEARS

Poland, Hungary and other EU states from Eastern Europe are sceptical about the adoption of the Euro

"The accession of the larger Eastern European countries to the Eurozone might be postponed by a decade," Reuters pointed out in an analysis on Estonia's entry in the single monetary union, which became a fact on January 1, 2011.

The agency quotes economists, according to which the big EU member states from Eastern Europe EU countries will not join the Eurozone before 2019-2020. Poland and Hungary are the most skeptical regarding the adoption of the Euro. "They have promised to join the European Exchange Rate Mechanism (ERM II) but, for the time being, they want to see how the problems with the debts of Ireland, Greece, Spain and Portugal, and even potentially in France and Italy, would be solved," Reuters added. Furthermore, these countries fear that once deprived of their flexible exchange rates, they would become less competitive and it would be more difficult for them to deal with financial crises. The sovereign debt crisis of last year also questioned the idea that membership in the Eurozone guarantees low credit costs.

According to the Polish central bank Governor Marek Belka, his country will adopt the Euro "when order is restored in the Eurozone. Dramatic things are happening in the Eurozone. Why should we hurry to join it," he said for The Super Express newspaper.

The Czechs are also strong opponents of the single European currency. According to Czech PM Petr Necas, the Euro will not become an advantageous currency for the country for a long time to come.

According to the British Centre for Economic and Business Research (CEBR), the chances for the Eurozone to survive in its current shape are 15 or 20%. Spain and Italy, for example, have to refinance bonds worth more than €400 bn ($530 bn) in the spring which could deepen the crisis in the single monetary union. "At that stage, the Euro could collapse, although European politicians usually manage to cope with crises," said CEBR CEO Douglas McWilliams, quoted by Reuters.

The sovereign debt crises in Greece and Ireland shook Eurozone countries this year prompting many analysts to predict that Germany might eventually refuse to help its neighbours who spend more and this could, ultimately, lead to a collapse. According to the expert, the profound imbalance between stronger and weaker member states, which became more apparent after the financial crisis in 2008, would have its impact in the long run. "What will cause the Euro to collapse will be the impossibility for most countries to undertake stringent measures for increasing their competitiveness in the long run. The chance of the Eurozone to survive over the next 10 years is only 1:5," he said. If the Euro does not collapse, CEBR expects it to continue weakening throughout 2011 and even reach parity with the US dollar.

Let us remind our readers that in December 2010 the Swiss bank UBS forecast that after the entry of Estonia in the Eurozone, its expansion would stop for at least four or five years. "Estonia may close behind itself the door of the monetary union to new members," said Reynard Clouseau, Chief Economist at UBS, quoted by Financial Times. According to him, the countries willing to join the Eurozone cannot do it because they do not meet the criteria set for membership, while those which are entitled to enter the monetary union do not want to do so. Clouseau gave as an example Lithuania, Latvia and Romania where the deficit is too big, and Hungary where indebtedness is too high. The economies of these countries have not been able to meet the requirements set by the Maastricht Treaty.

At the same time, the Czech Republic has been pointed out as a country which is closest to the requirements for membership but which is not enthusiastic about adopting the Euro.

Bulgaria's position, however, is just the opposite of that of the Czech Republic. Despite the problems in the Eurozone, our politicians do not mind gaining membership. Recently, Finance Minister Simeon Djankov pointed out that Bulgaria might apply for entry in ERM II (the so-called waiting room to the Eurozone) in October 2011 at the earliest.