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Does the Corona crisis heralds the collapse of the euro?
Translated from Dutch. View the original post
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At the moment, the leaders of the European countries are discussing how to cope with the Corona crisis. As so often, the northern and southern countries are opposed to each other. The great differences in culture and mentality are once again revealed. Klamer speaks about the #muntunie of the euro as a forced marriage, which is now under tremendous pressure.
Professor of financial geography Ewald Engelen and Arjo Klamer, professor of economics of art and culture, in conversation with Ad Verbrugge about the corona crisis and the euro. Does Corona hurt the euro?
Soon, there must be a plan to help the most distressed countries such as Italy and Spain. According to Engelen, there is a great danger that a transfer union will be created without democratic control. Whether the North supports the South with the so-called Corona Fund, for example, without the taxpayers in the Netherlands or Germany having taken part in the decision. Or the southern countries take out a loan on strict terms, but that means that Italy or Spain is giving up its own sovereignty. “On both sides, you ultimately have to deal with the elimination of democracy. That seems undesirable to me.”
Initially, the idea was to create a European political union together with the euro. That has not happened so far. Klamer: “The Eurocrats seize this opportunity to do what was always intended, they will develop the euro structure further”. More confidence and solidarity are needed to keep the currency alive. The problem, according to Klamer, is that this will not work. “Europe is not a democracy, there is no 'demos'. We do not feel that kinship.” Solidarity at the European level is incomparable to that at the local level.
Angels nuances the image of Italy as a spilless country. Ever since the creation of the euro, he says, they have been under the monetary yoke of monetary union. Italy did not have the institutional infrastructure, such as the Netherlands and Germany, to use wage moderation to strengthen competitiveness. The only means they had to do this was devaluation of the currency. This has become impossible since the euro, which has led to a huge increase in Italian public debt despite the cuts and burdens. Angels: “longer-term solidarity is to see how we get rid of the fuckin' euro.”
The question is what lessons do we draw from the corona crisis? In the short term, something of a solution will have to be found for the southern Member States. But in the longer term, Klamer and Engelen argue, we need to think more fundamentally about our financial system. The economy needs to be organised locally, the landscape needs to be more diverse, and institutions need to be more socially involved. Klamer calls for multiple currencies, so that financial traffic can be properly regulated on a smaller scale. In this way, the current problem also points to a philosophical question. Klamer: the question is how we want to shape the good society. It is only through proper organisation of the community that security and solidarity can be achieved.
Initially, the idea was to create a European political union together with the euro. That has not happened so far. Klamer: “The Eurocrats seize this opportunity to do what was always intended, they will develop the euro structure further”. More confidence and solidarity are needed to keep the currency alive. The problem, according to Klamer, is that this will not work. “Europe is not a democracy, there is no 'demos'. We do not feel that kinship.” Solidarity at the European level is incomparable to that at the local level.
Angels nuances the image of Italy as a spilless country. Ever since the creation of the euro, he says, they have been under the monetary yoke of monetary union. Italy did not have the institutional infrastructure, such as the Netherlands and Germany, to use wage moderation to strengthen competitiveness. The only means they had to do this was devaluation of the currency. This has become impossible since the euro, which has led to a huge increase in Italian public debt despite the cuts and burdens. Angels: “longer-term solidarity is to see how we get rid of the fuckin' euro.”
The question is what lessons do we draw from the corona crisis? In the short term, something of a solution will have to be found for the southern Member States. But in the longer term, Klamer and Engelen argue, we need to think more fundamentally about our financial system. The economy needs to be organised locally, the landscape needs to be more diverse, and institutions need to be more socially involved. Klamer calls for multiple currencies, so that financial traffic can be properly regulated on a smaller scale. In this way, the current problem also points to a philosophical question. Klamer: the question is how we want to shape the good society. It is only through proper organisation of the community that security and solidarity can be achieved.
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