International

A very happy 2014 to all readers of this weeklog. Friday evening we got the year off to a rapid start with what the Netherlands’ Radio 1 billed as ‘the first debate between the candidates topping each party’s list for the European elections of 2014’. I was participating as the incumbent MEP and the nominee for the number one position for the SP, though this remains to be confirmed by the party’s highest decision-making body, the National Congress, at its pre-election meeting in February. At the end things became rather heated, with the Labour Party (PvdA), Christian Democrats (CDA) and Green Left (GL) at last wanting to know for once what the SP thinks about the euro. Apparently this isn’t clear, so I’ll use this weeklog to make it so with this declaration: we don’t want any more sacrifices made for the euro, but nor are we seeking the currency’s rapid downfall. We do want to see measures taken which will prevent its unravelling, whether that should come sooner or later, from causing more damage than necessary.

I have yet to meet anyone in the SP who is jubilant about the euro. The SP never wanted this common currency and in the 1990s demonstrated against the monetary union. The most important reason for our protests was and remains the fact that the countries involved are so varied and you can only go so far in putting them all into one pile, a process which has led and is leading to tensions and which is setting people against each other, an example of which is all that has been written and said about the Greeks. The fact is that cultural differences exist: in southern Europe there is a large informal economy within which no taxes are paid and a great deal of dodgy activity takes place. These kinds of differences have major economic consequences, which matter little if countries can manage their own currencies. Prior to the introduction of the euro, the lira and the drachma regularly plunged in value. This would improve the export position of Italy and Greece and strengthen their tourism, simply because relative to other countries’ products and services those from these two countries would become cheaper. That possibility no longer exists, and there’s the rub.

European Council president Herman van Rompuy stated in an interview this weekend that he was delighted that we have now left the crisis behind us and that the Eurozone had not fallen apart. To maintain this fine development, all that’s necessary is that we give the Eurocrats in Brussels more power in the areas of economic and financial policy.

Apart from the fact that most Dutch people have had a belly full of a European Commission which is becoming ever more powerful , I also ask myself what ‘Super-commissioner’ Olli Rehn is likely to do with this power. In September the Dutch television programme Tegenlicht invited the powerful investor George Soros on to discuss the euro. In his view there are two possibilities: either we continually transfer money to southern Europe, or the wages in the weaker Eurozone countries must be so far reduced and labour productivity raised to the extent that these countries can compete internationally. Neither of these scenarios is all that realistic. It would mean either such constant sacrifices that people in the northern member states would rebel, or alternatively that those in the south would do so. This Soros acknowledges. And he doesn’t rule out a German withdrawal from the euro.

Last year SP leader Emile Roemer together with our finance spokesman Arnold Merkies brought together a group of economists to advise the party on our standpoint on the euro.The economists have met on a number of occasions and their analysis is similar to that of Soros: the Eurozone is leading to increasing tension, because the differences among its members are too great. If the budget deficits in the weaker countries are falling, their structural position remains shaky. Moreover, the social problems are unpredictable. In Portugal and Greece the entire middle class is being wiped out, there’s hardly any work for young people, and poverty is acquiring terrifying proportions. This is an exceptionally dangerous mix and at any moment a spark could ignite a conflagration.

Van Rompuy might be content, but people in Europe are anything but. The SP can therefore scarcely be happy about the euro. That is, however, not to argue that the Netherlands, for example, should withdraw from it. The same economists are also in agreement that any collapse of the Eurozone could cause widespread economic and social misery. Damage would be greatest were this to occur in an uncontrolled fashion. For years we have urged the development of a ‘Plan B’: stop repeating the mantra that the Eurozone cannot be allowed to disintegrate, and work with a scenario in which its unravelling is virtually inevitable. Prepare for it, develop all necessary emergency measures, such as limiting capital movements and maintaining sufficient liquidity in circulation so that everyday life can as far as possible continue. If things go so far that one or more member states were to leave the Eurozone, then at least we wouldn’t descend into total chaos.

To put it another way, the SP has never believed in the euro and we don’t believe in it now, despite all of Van Rompuy’s fine words. We must therefore stop offering up ever more sacrifices in order to maintain it, whether financial or in the form of the transfer of still more powers to Brussels. Instead, we would be better working on measures to minimise the economic and social damage which would accompany the process of unravelling. And that is what the SP wants to do about the Euro in 2014.