On Friday 24th of June a debate on the euro and the Netherlands took place in the recently reopened “House of Europe” in the Hague. The debate was organized by the Jean Monnet Centre of Excellence. Among the participants were MEPs Dennis de Jong (SP) and Gerben Jan Gerbrandy (D’66), former MEP Jan Marinus Wiersma (PvdA), Alfred Kleinknecht (Professor Economics, TU Delft), Amy Verdun (Prof. Political Science & Jean Monnet Ad Personnam Chair University of Victoria) and Bernard Steunenberg (Professor Public Administration & Jean Monnet Ad Presonnam Chair Leiden University). The politicians and experts discussed aspects of the current Eurocrisis. The discussion was expertly moderated by Roel Janssen (former Political Editor of the NRC Handelsblad).

The participants argued that instead of debating whether the Netherlands should leave the Euro, the real question was whether Greece should do so. Dennis de Jong kicked off by stating that the current Greek situation was very dramatic. “So the people that claim that all loans will be repaid are simply fooling us”. De Jong saw the Greek reform measures as another expression of the European Union’s neoliberal slant. He feared that the crisis would be grist to the mill of the economic right and would also serve as justification for all the current cutbacks in the Netherlands, utilized under the guise of “never waste a good crisis”. For these reasons De Jong was in favour of restructuring Greece’s debt. Further support for debt payments would only be, according to him, funding European banks and not really supporting the Greeks

Gerben Jan Gerbrandy (from the European liberals) clearly had a different opinion, namely that the design of the euro system was to blame for the crisis. “We made a critical design error in the beginning by only employing a joint monetary policy, without looking at a joint economic policy”. ”We also made the mistake to provide the Greeks with the opportunity to enjoy the benefits of low interest loans for too long”.

Furthermore, the Stability and Growth Pact had failed, especially when Germany and France breached the rules and went unpunished. Metaphorically, he said “the EU is like a patient with a gaping wound that is being patched time and time again with small plasters, this will continue until we run out of plaster, or the patient dies”. According to Gerbrandy we should have applied a firm bandage much earlier, that is, by instituting a much bigger emergency fund in order to lessen the risks.

Jan Marinus Wiersma also found the crisis was a perfect excuse for austerity measures, but he saw the failure of Europe and its politicians in failing to regulate the banks after the 2008 crisis. Therefore, now, he said, politicians “watch their language”, because every remark or statement could potentially have far-reaching consequences for the financial markets. Furthermore, there is a possibility that the crisis would not be limited to Greece, but other weak Euro countries could be contaminated as well. Wiersma stated that “90% of the people he spoke to about this crisis ensured that Greece could never repay its debts”. He argued that “we should look beyond these debts and at the perspective for future growth and the Eurozone situation in general”. Wiersma pleaded for a more “just or fair” way of European integration. Politicians should involve citizens in an open and fair way when taking further steps of integration.

Alfred Kleinknecht argued that the real problem has received very little attention in the media, namely that the big export surpluses of the Netherlands and Germany have been made possible by Greek and other South European consumption and by cheap credit made possible by the euro. “You don’t need to be an economist to see this will cause problems in the long run”. “The Netherlands and Germany have pursued too aggressive export policies and have enjoyed a competitive position due to the favourable economic climate in the eurozone,. Furthermore, he suggested Greece was an exception in that it owed its debt to public spending and the size of its public sector. By contrast, in other Eurozone member states which are currently in trouble, like Ireland and Spain, the high debt level has been caused by bank bailouts for the private sector. Therefore, Kleinknecht suggested this was evidence for the arguments of those who had long argued the euro was doomed from the start and suggested that there should be a revision of economic policies for the whole Eurozone.

“Are we still willing to put in effort for Europe?” is what Amy Verdun was wondering. According to her, the current crisis has been made worse by the fact that politicians have not defended the Union more robustly and that they have given the impression not to be committed to the European project.. Politicians have not shown that they reflect on the future shape of the EU despite fact that they might be forced to do so in “big fat crises” when heads of government “have to reopen negotiations” in order to attune financial and economic policies. She suggested that perhaps it would have been good to compare the Union to other (federal) models like Canada or the US in order learn how to address issues of multi level governance. What is clear, however, is that “they need to signal how they see the future, for the short as well as the long term”.

In the eyes of Bernard Steunenberg, Gerbrandy’s “Band-Aid theory” could potentially lead to a bloodbath because the administrative arrangement of the monetary union is unsound. The problem is not single flaw but a structural defect in the administrative arrangement. According to him, the problem is that the survival of the Euro is dependent on agreements made in national parliaments, these agreements could all potentially put a veto on the continuation of the Euro. National votes on the Greek austerity measures in Greece or any other national parliament could play this role. “It is like asking all passengers after boarding an airplane independently of each other, where they would like to go”, Steunenberg suggested. He saw only two paths towards solving this problem: (1) a further increase of the transfer of sovereignty to the EU (joint financial-economic policy under democratic control of the European Parliament together with European bonds and taxes) or (2) full withdrawal from the joint currency. If the European option is chosen, the problem remains that politicians are not able to sell at home that the solution to the crisis is ultimately more Europe.

After a lively exchange of ideas and questions and comments from the audience, Sjerp van der Vaart (Director of the Netherlands Bureau of the European Parliament), offered an instructive anecdote from the early years of the Economic and Monetary Union when he was a financial correspondent in Brussels. He was given to understand that politicians who participated in the creation of monetary Union  were well aware that the economic project would only survive if further arrangements were made to institutionalize political Union as well. However, they did not find it appropriate to tell their electorates at the time and they clearly did not expect the crisis to force their hand. This proves that the science of ‘muddling through’ doesn’t always seem to be the best modus operandi.

See photos for this event.