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Syp Wynia (Atlantic Sentinel) | The Netherlands deserves to leave the euro, argues Lex Hoogduin, the country’s former central bank chief.
Hoogduin, now a professor of money markets at the University of Groningen, claims in an interview with Wynia’s Week that the nineteen countries sharing the euro have damaged almost every regulation they agreed to in the 1990s, when the currency was introduced. High inflation and low interest rates, to help France and Italy pay off their debts, threaten Dutch industry and 1. 4 trillion euros in Dutch pension assets. The Italian euro
Hoogduin, advisor to Wim Duisenberg, the first president of the European Central Bank (ECB); the chief economist of Robeco, the investment fund; and member of the Board of Directors of the Dutch Central Bank.
The eurozone reminds it of Italy in the 1990s: a country with peak inflation, maximum debt, and repeated currency devaluations. Italy’s loan prices were high and would remain high had it not been for the ECB’s purchases of Italian bonds.
The Italian economy has not grown for twenty years. Unproductive industries are kept afloat with government support. Young Italians are looking for job opportunities elsewhere in the EU. An Italian-style euro would weaken the currency at the expense of more competitive and trade-dependent nations like the Dutch. The Dutch and Germans miscalculated
Germany and the Netherlands think they can design the euro into the German mark and guilder with strict debt and deficit regulations. These regulations, the Stability and Growth Pact, “have never been respected,” according to Hoogduin.
When the euro was introduced, Hoogduin assumed that countries would comply with the treaty and that the ECB, like the central banks of the Netherlands and Germany, would prioritize stability of value over fair loans:
No country has ever been fined for borrowing more than the legal pact, which, in the case of Greece and Portugal, has led to debt crises and European bailouts. Italy has not fulfilled its commitment to pay off its debt.
Hoogduin accuses the French:
Since Duisenberg’s retirement in 2003, all ECB presidents have been Italian or French. Why not Kaag Germany?
The current Dutch government, a coalition of liberal parties and Christian Democrats, has for the first time opened the door to extending the debt and deficit limits of the Stability and Growth Pact to 60% and 3% of GDP, respectively.
“I don’t see what we’ll gain from this,” Hoogduin said.
Dutch Finance Minister Sigrid Kaag, a former UN diplomat, co-authored a reform proposal with her Spanish counterpart, Socialist Minister Nadia Calviño.
German Finance Minister Christian Lindner belongs to the same political circle of relatives as Kaag, but is skeptical about reform. Isn’t it worth it anymore?
Weaker tax regulations would be a third attack on Dutch interests.
When Germany renounced its opposition to the pooling of European debts, in order to finance the recovery from COVID-19, the Netherlands practically isolated itself.
Germany is also in favor of French plans for a “Europe First” trade policy that could hurt exporters.
Hoogduin calls for an assessment of the Netherlands’ accession to the euro: do the benefits outweigh the costs?Otherwise, an exit from the single currency, not the European Union, would possibly be worthwhile.
Holland would sign up for Denmark and Sweden. Both retain their own coins. Denmark even has a permanent opt-out from the euro.
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