By endorsing the Nice Treaty on the weekend, Irish voters have paved the way for EU enlargement by up to 10 mostly central and east European countries. While Czech equities are less sensitive to EU-related news, the domestic bond market, and especially the currency market, stand to rise.
On Friday, the Netherlands blocked the closure of the “competition chapter” between the EU and the Czech Republic in EU-enlargement negotiations. According to Czech ambassador P. Telicka, while the Dutch government has no concrete objections, its negative stand at present is rather a reflection of their current domestic political situation, which is increasingly critical of EU enlargement. The Czech government and the European Commission will strive to overcome the issue in the coming days.
Rather than negative attitude towards EU enlargement itself, the Dutch may be signaling their displeasure with the way the EU functions at present (e.g., position of the small EU countries). Nevertheless, a delay of the EU-enlargement process would probably cast a negative sentiment over domestic capital markets.
Jiri Soustruznik