The dark side of the euro

15 February 2010

The dark side of the euro

Things certainly aren’t going smoothly with the euro. The problems are piling up. Differences between the participating countries are simply too great. A single European monetary policy isn’t enough, it seems. The example of Greece, taken to the cleaners by this business, proves that. The problems did not begin yesterday. On the contrary. Things were actually going wrong as soon as the euro was introduced. In the Maastricht Treaty, which established the rules for the euro’s introduction, could be found a number of agreements, dealing, for example, with budget deficits and state debt. Already numerous countries have gone against these agreements, including France and Germany. Because no real penalties were established, each country can go its own way.

by Jan Marijnissen

Jan MarijnissenThe whole euro project, the EMU and the Stability Pact, has proved to be of no help in combating the crisis. Where states in the past could respond to differences between their economies which were too wide by doing something with their exchange rates, this course is now closed. The result is that countries such as Greece, Portugal, Spain and Italy are getting ever further out of step with the rest of the eurozone. Fortunately, there is a fixed rule within the eurozone that countries are not expected to cough up to pay each others’ national debts. Whenever, moreover, this rule is breached (for example, in order to preserve the euro’s credibility), you can say goodbye to any discipline. Nobody, either in our country or any other, is prepared to shell out for problems which the southern countries have brought upon themselves, euro or no euro.

Now from various sides come calls for political union. What’s meant by this is a federal Europe in which each member state would become a kind of province. Europe could then, in addition to monetary policy, also take control of budgetary policy, social security, the public sector and numerous other matters. But that is, of course, precisely what the French, Irish and Dutch peoples voted in referenda on the European Constitution to reject.

The scenario that is now unfolding before us, was predicted a decade ago. A common currency should be the culmination of a long-lasting, solid and far-reaching process of integration. Well of course, there has been no sign, or very little, of any such thing. In order to meet the wishes of the multinationals, united in the European Round Table, the business was forced through. Europe’s citizens are paying the price.

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