Czech president sees 'lost decade' for Europe

(PRAGUE) - Europe is facing a lost decade similar to that experienced by Japan in the 1990s, Czech President Vaclav Klaus, an avowed euro-sceptic and former economic forecaster warned on Monday.

"I'm afraid Europe... is facing a 'lost decade' similar to the one in Japan in the 1990s. A decade without economic growth, a decade of permanent cuts and austerity packages, a decade of social unrest," Klaus wrote in the Tyden (Week) weekly on Monday.

The liberal economist known for ardent euro-scepticism slammed disproportionate growth in public spending, the careless provision of bank loans and widespread failure to keep balanced government budgets as being the root causes behind the eurozone debt crisis.

He also remarked Europe's crisis was more than a matter of financial, monetary or economic issues.

"It is a crisis of European society as such, of its behaviour, its way of thinking," wrote the 70-year-old head of the country that joined the EU in 2004, but has not yet entered the eurozone.

Klaus also highlighted Europe's "democratic deficit" or, in his words, "an absence of democracy or possibly a post-democracy."

Recalling his country's experience with communist rule, he said that while Europe did not have gulags, it was suffering from the dictate of politics over the economy.

"The degree of regulation, control, management, organising economic life from above and the degree of suppressing the market are way beyond the border of any rational economic setting," he said.

"The degree of government intervention in the economy in today's EU is absolutely different from the early aggressive communism, but it is not so different from its final, markedly "softer" phases," Klaus added.

As a solution, Klaus proposes a deep transformation similar to that undergone by former Soviet-bloc countries ahead of their entry into the EU.

"Either Europe will undergo this transformation as soon as possible, or it will find itself on the margin of a dynamically developing rest of the world," he said.