141 - The Slow Trip to the East: The Domestic Politics of...

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The Slow Trip to the East: The Domestic Politics of Euro Adoption inthe Czech Republic, Hungary and PolandbyAssem Dandashly* and Amy Verdun***PhD Candidate at the University of Victoria ([email protected])**Professor and Jean Monnet Chair Ad Personam ([email protected])Paper prepared for presentation at the Fifth Pan European Conference organized by theECPR Standing Group on European Union Politics, 23-26 June 2010 UniversityFernando Pessoa and Faculty of Economics of Porto University (Porto, Portugal)
2The Slow Trip to the East: The Domestic Politics of Euro Adoption inthe Czech Republic, Hungary and PolandAssem Dandashly and Amy VerdunAbstract:Why have some NMS not been able to join the euro area even if they made seriousattempts at the outset? What are the circumstances and policies in these countries thathave led them not yet to adopt the euro to date? Has it been lack of political will on thepart of the government, a strong voice in the opposition or a euroskeptic president,insufficient administrative capacity, or lack of policy learning? Though there is noconsensus among economists regarding whether adopting the euro in the short run is agood idea or not, however, we believe that an economic cost-benefit analysis wouldsuggest that in the long run euro adoption is positive for NMS. Yet macroeconomicanalyses do not explain the change in government policies that may lead to euroadoption. Constructivist analyses, that focus on collective identity, policy learning, ideasand knowledge transfer among central bankers and other political elites, as well asadjustment to global pressures and Europeanization, are also unable to explain the speedof euro adoption in NMS. This paper adopts a domestic politics approach to analyze theeuro adoption process in the Czech Republic, Hungary and Poland. Based on anexamination of government documents, reports in the media, academic literature andface-to-face interviews we seek to offer new insights into the role of domestic politics inexplaining the process of euro adoption in NMS. Government policies, elections,electoral cycles as well as constitutional rules, turn out to be crucial in explaining thelagging euro adoption process in these countries.
31INTRODUCTIONFollowing their accession to the European Union (EU) on May 1st, 2004, ten NewMember States (NMS), and two more that joined in 2007, are expected to fulfill theMaastricht convergence criteria and enter the last stage of Economic and Monetary Union(EMU) thereby adopting the euro. However, the Treaty on European Union (TEU) doesnot specify a time frame. Slovenia joined the euro area in 2007, Cyprus and Malta in2008, and Slovakia in 2009. Other NMS have not yet adopted the euro. Some have madeserious attempts at being ready to join; others are still far removed. So, why have someNMS not been able to join the euro area even if they made serious attempts at the outset?

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Term
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