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Tuesday, November 15, 2011

Euro, Neuro, Guilder or... Dukaat? The Big Dutch Currency Debate

It's been a busy time in Dutch politics recently, with the Netherlands' 'big currency debate' springing into life.

On Friday, Geert Wilders announced that his PVV party, known for its strongly anti-EU views, has commissioned an investigation into what it would cost to re-introduce the guilder and get rid of the euro, which Wilders described as a "failed project". Wilders has tasked British research institute Lombard Street Research with conducting a cost-benefit analysis of such a scenario, and depending on the outcome of the research, could propose holding a referendum on whether the Netherlands should stay in the eurozone or leave.

A poll conducted over the weekend showed that one in three Dutch citizens support Wilders' plan to go back to the guilder, and in addition, 43% were reported to believe that holding a referendum on Dutch membership of the eurozone would be "a good idea". However, politicans from both governing parties and the opposition were unsurprisingly less enthusiastic.

An overview of the responses so far:

Dutch PM Mark Rutte, from liberal party VVD, was quick in making it clear he believes that the investigation would be "a recipe for disaster in every way", adding that:
"Anyway, they [the PVV] can do it and I think I can already predict the outcome. Hopefully it will help in getting broader support for our [cabinet's] policy".
Finance Minister Jan Kees de Jager from the coalition Christian democratic party (CDA) was reported to find it inconvenient that the PVV was causing so much turmoil at this point in the eurozone crisis. He stated bluntly that:
"We shouldn't go back to the guilder. That's not an option".
Ronald Plasterk from the social democratic opposition party (PVDA) said:
"Let them research whatever they want. We don't see anything in the plan, as giving up the euro is going to cost a lot of money".
Liberal opposition party D66's Alexander Pechtold sarcastically wondered why Wilders hadn't taken the opportunity of also commissioning research on the possibility of reintroducing the 'dukaat', Holland's national currency around 1600.

Meanwhile, unrest in Rutte's VVD has emerged due to recent remarks made by Patrick van Schie, the relatively unknown head of the VVD's think tank Teldersstichting, who said in an interview on Saturday that politicians should start seriously thinking about introducing a new euro (neuro) exclusively for Northern European countries. Van Schie's 'neuro' would not only exclude EU Member States such as Greece and Italy, but also France. According to Van Schie, "the neuro would not become stronger with the French" as they would want political influence over the ECB. Van Schie also said that he was done with the "propagandist talk" concerning the positive influence joining the euro has had on Dutch welfare, arguing that: "this has never been demonstrated and is impossible to prove".

The timing of van Schie's interview seems somewhat random, as the VVD has never openly said anything about being in favour of breaking up the eurozone into a smaller zone. Prominent VVD politicians therefore lined up for interviews over the last few days to make clear that they did not support the concept of introducing a Northern euro.

MEP Hans van Baalen said in a tv-interview on Sunday that:
"throwing away the euro would be the stupidest thing we could do. That's not what I think, that's what I know."
European Commissioner Neelie Kroes described such speculation as "dangerous", adding that it was not legally possible to kick weaker Southern European states out of the eurozone anyway.

Former VVD spokesman for Foreign and European Affairs Frans Weisglas said the 'neuro' was a bad idea that "would lead to unrest and would have a destabilising effect".

The suggestion therefore is that van Schie's 'neuro' plan was just a unilateral initiative, and that no one was aware of it within the VVD headquarters. However, for the head of a party's research institute, that does sound slightly strange.

In the meantime, poll results show that 47% of the Dutch are positively inclined towards introducing a 'neuro', an increase of 9% compared with only six months ago. Significantly, Wilders announced yesterday that Lombard Street Research would also take into account this scenario as part of its investigation.

The research is scheduled to be finalised by the end of January or beginning of February next year. Watch this space...


Sheona said...

The comment that reintroducing the guilder would be "a recipe for disaster in every way" makes me think that this Dutch politician is not au fait with current events. Italian bonds hit 7% today and the eurocrats seem incapable of doing anything. At least one politician has recognised that the euro has been the original recipe for disaster for many countries.

Anonymous said...

Europe would have functioned quite well without the Euro.

Rollo said...

It is extraordinary how politicians throughout the continent continue to support the EU, against the wishes of the people, and force us all into the poor man's club of the EU.
When the invevitable happens, and the weaker countries, PIGIS, France, Belgium, Cyprus either exit the Euro or collapse out of it, the Dutch will have to live with the Reichsmark, which will be a lot stronger, to their detriment.

Anonymous said...

How is it that "the man in the street" seems no longer to have a voice in the government of their country? Faceless unelected men are put in positions of power and appointed from within the European commission. Will people put up with this for long?