“spare a moment to think that this whole situation may well never have arisen if euro membership hadn’t been insisted on by the EU as a membership condition for these countries”

I completely agree. In fact I wrote this in the post:

“We might also spare a moment to think that this whole situation may well never have arisen if euro membership hadn’t been insisted on by the EU as a membership condition for these countries,”

The problem is that this condition was imposed and we now have a very complex situation to face up to.

“Its good to have membership as it is very useful for us.”

Unfortunately this is not as clear as it seems. You need to look very carefully at what has happened to Spain in the years since euro membership. Following the implosion of its construction boom Spain may now be facing a “lost decade” and a very hard adjustment process. I wouldn’t wish this on anyone.If this were to happen in Slovakia it would be a tragedy.

Basically the difficulty comes when you lose control of your own monetary policy, and inflation rises above the ECB rate and stays there for a longish time (lets say years rather than months). Remember the eurozone itself is now slowing (lead down by Spain and Italy) and the probability is that interest rates will come down at the ECB later this year, just when Slovakia’s inflation might be accelerating.

Of course, not joining but maintaining a peg with the euro - as they have done in Bulgaria and the baltics - doesn’t work much better, and especially if citizens borrow money in euro denominated loans. The thing is there is a massive centrigugal effect at work, but as I say, in whose interest is it to have the kind of boom-bust cycle we are seeing in these countries?

No easy answers here, but I think in the short term Slovakia would be better - following Poland and the Czech Republic - to maintain an independent monetary policy, and to try and use a FISCAL SURPLUS (as recommended by the Commission and the IMF) to cool the domestic overheating.

The debate is now hotting up (I will be putting a small update post up on this later) with the IMF having just done some research on the pass-through rate which your government are interpreting (erroneously IMHO) as confirming their - and not the EU commissions - view, while your Prime Minister Robert Fico was out defending his corner in a press conference yesterday, insinuating that the only possible grounds for rejecting the application were political ones. This has all the hallmarks of being a very close race indeed.