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Slovakia, Poland: (Mis)Understanding the Euro Experience

According to a recent poll [pl] published in Gazeta Wyborcza, the majority of Poles are against joining the Eurozone.

One of the reasons may be their (mis)understanding of the Slovak experience.

Jakub Loginow, a Pole living in the Slovak capital of Bratislava, described [sk] for the Slovak readers of his blog how his fellow citizens saw the Slovak economic situation after Slovakia had entered the Eurozone as the second country of the former Eastern Bloc.

Euro bank notes. Image by Flickr user aranjuez1404 (CC BY-NC-ND 2.0).

Euro bank notes. Image by Flickr user aranjuez1404 (CC BY-NC-ND 2.0).

According to the author, they mostly see it as a clear failure, which is quite different from the Slovak perspective: in an autumn 2010 poll [sk], 89 percent of the Slovaks were in favor of the only currency for the whole European Union; and according to a February 2011 poll [sk], 63 percent of the Slovaks viewed entering the Eurozone positively.

Loginow wrote:

In 2007, the Polish politicians were thinking whether it would be better to enter the Eurozone in 2011 or in 2013. Today, no one speaks about accepting the Euro anymore and typical estimations are 2018-2022. It is interesting that a big part of this skepticism was caused by Slovakia. Despite the reality, most Poles think that Slovakia's adoption of the Euro ended in a very bad way.

“Prices grew because of the Euro”

Many Poles remember the value of the Slovak Koruna (Crown) from many years ago. But “during 2004-2008 the Slovak Koruna was growing compared to the Euro and also to the Zloty” – and the Polish Zloty was falling. “In 2007, 1 Euro was 2.90 PLN, and in April 2009, 4.5 PLN (later stabilized at about 4 PLN).”

So, compared to a decade ago, Slovakia is much more expensive for the Poles, and they see it as the “doubling of the Slovak prices.” Because of it, Slovakia lost “thousands of Polish tourists.” In the Polish view, the “Slovak economy is based mainly on tourism” (and the economy of mountainous regions near the Polish border is of this kind indeed) – even though “in fact, tourism creates just about 5 percent of the country's GDP,” while “many Poles think it would be about 40 percent.”

Loginow mentions “no price growth” in the period when Slovakia entered the Eurozone. This happened due to several factors. In addition to the world financial crisis, there was also a governmental program “We're changing the currency, not the price.”

For many months before and after the switch to the Euro, there were mandatory ‘double’ prices in Koruna and in Euro in the Slovak stores. There was a legal possibility to challenge the unjustified price growth. Many Slovaks, however, are ready to believe that the growth did happen between the announcement of the new law and the date it became valid.

Because of the temporary fall of the Polish as well as of the Hungarian and the Czech currencies in early 2009, and the already easily comparable prices between Austrian and Slovak shops, that period was the golden era of the Slovak shopping abroad. This also helped to keep Slovak prices lower, though it did not help the local economy.

Propaganda against the Euro

Greek problems and the example of Slovakia's costliness are widely used at the Polish scene. Eurosceptics and politicians who have “failed to fulfill the promise of a fast entrance into the Eurozone” and “postponed the necessary reforms, which led to a huge deficit growth,” are glad they have a reason “to show that we do not want the Euro for now.”

According to Loginow, at the end of 2009 and the beginning of 2010, articles appeared in Polish newspapers that claimed that the Slovak economy was about to collapse in the absence of Polish tourists – “and many Polish citizens started to believe in it.”

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