Why the euro is on a slide
by
Marcel Van Silfhout |
Political and monetary union a must for currency’s success
If there is one country known as the perfect spot for a nice holiday, it’s Greece. But, at the same time, if there is one country known for its utterly unreliable and bad economical politics, it’s Greece too. Today we’re all witness to the big monetary European collision that was predicted by some monetary specialists in 1997. After all those years, their criticism on introducing the euro at last sounds loud and clear: One unified European currency can only exist when there is a solid political union as a base under the monetary union.’ Fact was and is: there still is no political union and the euro is, indeed, on its crumbling way down.
Ironically, recent news of the threatening bankruptcy of Greece came together with the booking of my family’s summer holiday on the splendid green and sunny island Corfu. The last time I visited Corfu was in 1997, when I used the Greek island to embark myself on a journey to the then dangerous Albania. In that year I reported as newspaper journalist on the Albanian crisis with its apocalyptical riots that ravaged the country after the collapse of huge pyramid-funds.
In that same year I missed the critical assessments on the euro that were made by 70 economists in The Netherlands. My understanding of the weakness of the unified European currency came together with the documentary ‘Eurobedrog’ (‘euro-deceit’) that I and a colleague made in 2005. We revealed how the Dutch guilder wrongfully wasn’t revaluated. In the late 90s the Dutch economy was on top in Europe and the Dutch guilder – already one of the most solid currencies ever since it was minted in the 17th century – was even stronger then the German mark. Nevertheless, the value of the Dutch guilder to its successor the euro wasn’t defended well by the Dutch politicians in those years. Therefore the Dutch people had to face a loss of about 5 to 12 per cent on its value when the guilder was merged much too cheap into the euro.
Although the Dutch public felt this loss daily due to the far more expensive shopping, the ‘neglected revaluation-story’ was denied with force by the ruling politicians and the Dutch Central Bank (DNB). Even stranger, we interviewed the former banker and pensioned director of the DNB André Szász, who subscribed to the fact that the guilder was merged into the euro on a devastatingly wrong value. Szász actually confirmed the revaluation-story in our television programme. ‘When living becomes more expensive people feel it, right.’ But my colleagues in the Dutch Press never dared to go on with this story of ‘euro-deceit’ and the DNB officially went on strongly denying the immense Dutch loss.
Our investigative reporting on the euro-deceit, was broadcast on the 26th of May - just a few days from the Dutch referendum on the European Constitution - might have had some influence on the public. The Netherlands –one of the first founding fathers of the European Union – replied with a stunning 62 per cent saying ‘no’ to the European constitution. France did the same a few days earlier with about 70 per cent of the people voting ‘non.’ This European crisis is actually still going on. There is a monetary union, but it still lacks a political union. There isn’t a strong European government, there aren’t many European taxes and there isn’t a European financial watchdog that can overrule the still sovereign but financially failing European nations like Greece. To say it straight and simply: there still is not enough trust in Europe.
If there are two countries in Europe who don’t want to help bankrupt Greece it’s Holland and Germany. The northern European countries are still known for their solid and sober financial policies, even in the midst of the most severe crisis after the Great Depression. Today we find words like ‘the Garlic-belt’ and ‘Club-Med’ in order to describe the huge difference in economical culture between the sober and hard working north of Europe and the more relaxing and wealthy way of life in the sunny Mediterranean. These countries might be the perfect holiday-spots, that doesn’t mean that the hard working northern-European people should pay for failing countries like Greece. But this still isn’t the whole story. When the euro tumbles down, when it loses its trust and solidity, then the value of the massive savings and pensions in the Northern European countries will also be at stake.
In our TV report in 2005 we had interviewed Szász and other monetary specialists and professors of economics. The real euro-deceit, they had forecast, is still to come. At last these critics are now being heard. Professor Alfred Kleinknecht from the University of Delft (TU-Delft) suggests splitting the euro zone in a Nordic or northern currency, and a southern one, a sort of Medic or Mediterranean currency. His colleague Arjo Klamer is even more radical. His plea is for the return of the good-old currencies such as the Dutch guilder and the Greek drachma.
Szász, widely seen as one of the biggest monetary experts in Europe in the last decades, is less radical and pessimistic about the euro-future. “The euro will only disappear when Germany decides to step out,” he said. But he doesn’t see that happening.
(Marcel van Silfhout is an investigative reporter working for public Dutch Television)
Oman Tribune |
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