Greece better off leaving euro: Czech president

(CHICAGO) - Greece would be better off economically if it exited the eurozone, Czech President Vaclav Klaus said Tuesday, warning there is no "imminent" solution to the European debt crisis.

"There is no imminent solution to the eurozone sovereign debt trap," Klaus said in a public address following the NATO summit in Chicago.

"The long-lasting problems in Europe have been irresponsibly, widely underestimated... This debt crisis is only the tip of a much bigger, much deeper and much wider iceberg."

Speaking a day before European leaders gather to discuss the crisis, Klaus decried the "European experiments both with the continental wide, artificial, non-genuine unification and with the continual undermining of the market economy."

He said Greece was being punished for being the "victim" of an economically imbalanced arrangement.

"It would be much better for Greece to leave the eurozone, which is almost not allowed, impossible and so on," Klaus told the Chicago Council on Global Affairs.

Klaus acknowledged that a Greek exit would have significant consequences, but said it's an issue of deciding which would be a "bigger mess."

He insisted that only deep structural change could save the European Union and dismissed fellow European leaders who say that economic growth is the solution.

The sovereign debt crisis was "an inevitable consequence of one currency, one exchange rate and one interest rate for countries with very dynamic parameters," Klaus said.

Establishing a monetary union was a political decision taken without any attention being paid to economic fundamentals, he said, adding that there was insufficient solidarity among the members for the arrangement to hold in the long term.

"The European politicians and their economists should have known that wrongly-constructed monetary unions are costly and do not last long," Klaus said.

He expressed little hope that Europe would deal with the "straight jacket" of institutional uniformity, bureaucratic centralization and "unnecessary standardization."

Any long-term solution must also address deeply-rooted political and cultural problems, such as a preference for "social policy based on income redistribution to productive activity" and "leisure, holidays and free time to hard work."

"It can't be abandoned easily, it can't be corrected by painless or cosmetic measures," he warned.

"To make Europe functional and productive again requires deep structural change, something similar to the tasks we had to accomplish more than two decades ago in the Czech Republic when we tried to get rid of communism and its legacy."

This transformation will not come from small or medium European countries and instead requires a "radical political change in one of the big countries in Europe.

"I'm afraid Europe will continue muddling through, not making any decisive decision, continuing to pay the price for a non-optimum economic institution arrangement," Klaus added.