Academic journal article The Polish Quarterly of International Affairs

Poland's Winding Road to the Eurozone: From a Cost-Benefit Stance to Risk Aversion

Academic journal article The Polish Quarterly of International Affairs

Poland's Winding Road to the Eurozone: From a Cost-Benefit Stance to Risk Aversion

Article excerpt

Introduction

Fifteen years after the free elections of 4 June 1989, Poland joined the European Union in May 2004. Poland's prospective participation in the third stage of the Economic and Monetary Union (EMU) had been firmly inscribed in the Accession Treaty1 it signed in 2003. In line with the provisions of that treaty, and as a result of Poland fulfilling acquis membership criterion defined in Copenhagen back in 1993, Poland belongs to the group of EU Member States that, unlike Denmark and the United Kingdom (UK), cannot opt out of participation in the third stage of the EMU. This means that Poland is legally bound to join the euro area as soon as it fulfils the nominal and legal convergence criteria.

Clearly, the prospect of joining the EU, and later on of adopting the euro, has defined Poland's foreign and European policies since 1990. EU membership was seen as a "return" to Europe, a means of overcoming the historically-determined geopolitical challenge of being locked in between Russia and Germany, and a means of securing Poland's place in the EU decision-making process. Indeed, in the early 2000s the prospect of joining the EU and of adopting the euro was enthusiastically embraced by Polish society and the political elite. As a result, the debate on EU accession and on eurozone entry2 ran in parallel, with the question of euro area membership eventually being included in the EU accession referendum held in Poland in June 2003. At that time 77.45% of voters expressed their support for the conditions of EU accession, which included prospective participation in the currency union.3 The consensus regarding Poland's eurozone entry was reinforced right after Poland acquired EU membership, with several publications and reports of that time providing arguments that accession to the third stage of the EMU would be beneficial to the Polish economy.4 Not surprisingly, in 2007, the newly established coalition government was in favour of adopting the euro quickly, and a roadmap for doing so was approved in October 2008.5

Given the positive growth rates, increasing absorption of cohesion and structural funds, and undiminishing popular enthusiasm for European integration, Poland's eurozone membership was considered mainly as a matter of a legal obligation deriving from the provisions of the Accession Treaty and convergence criteria as enshrined in the Maastricht Treaty and related documents. Indeed, perceived as the "poster child" highlighting the success of the Union's enlargement policy, Poland was expected to fulfil the Maastricht convergence criteria relatively quickly and thus join the eurozone soon after EU accession. These expectations notwithstanding, today the prospect of Poland adopting the euro is no nearer than it was in the early 2000s. In fact, the eurozone crisis and its corollaries have had a catalytic impact on Poland, turning it from an enthusiast of euro adoption to merely an assertive endorser thereof. Three correlated factors have contributed to this. First, the indeterminate nature of the Maastricht convergence criteria opened up "temporal room for manoeuvre"6 for Poland and other Member States remaining outside the euro area, allowing them to delay the introduction of the euro. Second, the eurozone crisis affected the cost-benefit analysis regarding participation in the third stage of the EMU. Also, it created additional incentives to exploit the Maastricht-induced room for manoeuvre as a means of shielding the Polish economy from external shocks. Third, EU economic governance reform led to the emergence of new euro area membership criteria and new modes of decision-making in the eurozone were consolidated; both factors added to the already affected cost-benefit calculations of the euro-aspiring countries. As a result, the prospect of Poland's eurozone entry turned into a political issue, whereby the attainment of nominal and legal convergence has become a function of a broader domestic and European political strategy of successive Polish governments. …

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