THE leader of the Czech Republic, which holds the rotating European Union presidency, has warned that a “Europe of states” is in danger of turning into a “state of Europe”, legislating on almost every aspect of people’s lives but lacking in democracy and transparency.

In an interview with The Sunday Times, President Vaclav Klaus drew parallels between Brussels and the failed communist dictatorships of eastern Europe.

“My criticism is based on the sensitivity towards attempts to restrain freedom and democracy, and it does relate to the fact that for most of my life I lived in a political, social and economic system which was not free and was not democratic,” he said.

Klaus also predicted that Gordon Brown’s attempts to produce a European solution to the global economic crisis in time for next month’s G20 summit in London could make the problems worse.

Klaus, 67, an economist by training and a successful finance minister after the fall of communism, said he believed Brown’s plans for more regulatory supervision of the financial system would resolve nothing. Instead, Europe should let business and markets go free.

“The crisis cannot be solved by restraining human initiative and putting further burdens on businesses,” he said. “I propose the exact opposite: deregulation, liberalisation, removing barriers and unnecessary obstructive legislation at the European level.”

A longstanding Eurosceptic and admirer of Margaret Thatcher, Klaus remains scornful of attempts to impose the Lisbon treaty on an unwilling electorate. He said the treaty contained measures to give unelected officials in Brussels “even more power”.

Irish voters who threw out the treaty in a referendum last year “knew what they were doing”, Klaus added, and he was not certain that the second vote which has been called will have a different outcome: “But the pressure will be enormous and not very democratic.”

He talked of a “democratic deficit” in the EU when he addressed the European parliament last month. In his interview, conducted by e-mail, he explained: “I see the democratic deficit in a growing distance between the citizens of the EU member states and the EU political elite, as well as in the shift of decision making from the member states’ capitals to Brussels.”

About 75% of legislation was made in the EU by unelected officials, he said. The Lisbon treaty would give the EU its own legal personality and would abolish important rights of veto: “This certainly is not a solution to the democratic deficit. It makes the democratic deficit even greater.”

Klaus refused to say whether he would agree to sign the treaty, which has yet to be passed by the Czech Senate, if and when it arrives on his desk.

“I don’t wish to foresee . . . what happens after that; let’s wait for the Senate’s decision,” he said. The Czech government’s presidency has smashed any hopes of a cosy EU consensus. Klaus was booed by many MEPs after his speech and a humorous sculpture installed in Brussels portrayed Bulgaria as a lavatory, Romania as a Dracula theme park and France as a country permanently on strike. They were not amused.

Klaus, who helped to lead his country from communism to freedom, warned that the new constitution would stifle debate and democracy. “Not so long ago, in our part of Europe we lived in a political system that permitted no alternatives and therefore also no parliamentary opposition,” he said.

“It was through this experience that we learnt the bitter lesson that with no opposition and tolerance to differing points of view, there is no freedom.”

Klaus revels in speaking his mind on controversial subjects, always prepared to confront politically correct orthodoxies. He is a leading critic of the green movement and also of measures to fight global warming. Freedom and prosperity, he said, were much more endangered than the climate.

He firmly refuses to fly the blue and gold European flag over his official residence in Prague, pointing out that “the European Union is not a state and legally it does not have a flag”.

In a pointed reference to his country’s Soviet-dominated past, he said: “We have lived through the times when it was compulsory on some days to fly another state flag next to ours. I am very glad that these times are over.”

Tight grip

The Lisbon treaty:

- Creates EU president post with 30-month term

- Allows new “foreign minister” to take charge of common EU foreign policy

- Increases power of European Court of Justice

- Gives more authority to unelected Brussels bureaucrats

- Limits veto powers of member states

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