Nearly a quarter of a century has passed since twelve European Union countries officially adopted the euro as their currency, with the aim of ending exchange rate volatility. Nowadays, there is some unrest around this cause, including in politics.
In contrast to the elections two years ago, the Socialist Party included in its election manifesto the intention to take major steps towards the “orderly dismantling” of the euro. According to the party, the currency will not be sustainable in the long term, because the differences within the economies of the euro countries are not decreasing.
National debt rises
Former Finance Minister Hans Hoogervorst largely agrees with the euro’s unsustainability. “This may happen because government debt, especially in southern Europe, is very high.”
He expects that the current situation in Italy and France, among other countries, may make the euro unsustainable.
From the euro, from the European Union
But can you, as an EU member state, distance yourself from the euro? According to Wim Boonstra, senior lecturer at Vrije Universiteit Amsterdam and former chief economist at Rabobank, this may be legally possible. There is only one important comment to make.
“The only way to do that is that you also have to leave the EU. Then we will have border controls between Germany and Belgium. Which is also what happened in the UK during Brexit.”
Important for the European Union
Hoogervorst completely disagrees with Boonstra and believes there is room for improvement.
“This decision cannot be taken lightly, but the Netherlands is very important for the European Union, and in practice European law is very flexible.”
Since many countries use the same currency, it is easier for the Netherlands to trade, according to Boonstra. “You have to realize that the Netherlands depends much more on international trade than other countries,” he says.
“If we leave the European Union, it will be a strong blow to the Dutch economy.” The senior lecturer believes that this blow will be stronger than Brexit.
According to Boonstra, the Netherlands has benefited greatly from European exports. We have a cumulative current account surplus since the introduction of the euro of about 900 billion euros.”
“This represents almost 100% of the GDP we have recorded in trade surplus with the rest of the world – and most of it – with the rest of Europe over more than twenty years.”
The Socialist Party wants to negotiate a new European treaty with EU member states, where citizens have a greater say and member states have more powers of their own.
They then want to present that treaty to the Dutch population in a referendum.
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