Doubts Arise in Euro's Birthplace

欧元诞生地出现质疑欧元的声浪

For the 20th anniversary of the treaty that led to the euro, Dutch officials have quashed a proposal to invite the graying architects of the currency back for a commemoration.

Until a local university suggested an academic conference this coming February, there was nothing at all planned here for the historic event.

Contrast that with five years ago, when the city marked the anniversary with a yearlong series of events called 'Maastricht celebrates Europe.' This time, 'we had our doubts whether a celebration would be justified,' says Jean Bruijnzeels, a city accounts manager.

The debt crisis convulsing the 17-nation currency zone has sown doubts even in a place regarded as the cradle of the euro.

The Netherlands' open and trade-based economy has long made it one of the strongest supporters of a more integrated European market. About twice the size of New Jersey, the country ranks as the world's 16th-largest economy, with global competitors like Philips Electronics NV and chemical giant Akzo Nobel NV. Fiscally healthier than even Germany, it has been a key proponent of budgetary rectitude among euro members, and supplied the European Central Bank with its first president.

Now, as financial anguish in the euro zone reveals flaws in the monetary union, the crisis is exposing deep divisions not only among Europe's national leaders but even within the consensus-minded and long-supportive Netherlands. A unified pro-euro position projected for years by the Dutch political and economic establishment has begun to crack.

'We could look at the euro as a failed project,' said Hans Hoogervorst, a former Dutch finance minister and current chairman of the International Accounting Standards Board, on Dutch television last week. The Netherlands' current finance minister said much the same a few days earlier. The Central Planning Bureau, the Dutch equivalent of the U.S. Congressional Budget Office, last month said the creation of a monetary union had been about politics, and its economic gains have been 'minimal.'

This splintering of establishment views, until recently seen as inconceivable here, is reflected in weakening public support for monetary union.

Some polls now show a majority of Dutch people favor dropping the currency. As recently as 2009, Dutch public support for using the euro remained as high as 80% in a European Union survey.

The Dutch have rejected a move toward greater European unification before, in 2005, when the country said no in a referendum on creating a European constitution. But that vote had to do with political symbolism, rather than with the mechanics of currency union.

The questioning now has fueled support for the country's rightist Freedom Party, which has switched its focus from driving foreigners out of the Netherlands to driving out the euro. The party, which the center-right ruling coalition relies on for its parliamentary majority, has surged in polls and in the Dutch parliament.

In an effort to shore up support for monetary union, as well as for greater European political integration to support it, chief executives of the Netherlands' five largest industrial companies earlier this month issued an unusual joint statement. 'Withdrawing behind our dikes is not an option,' they said.

'What is striking is that the question of staying with the euro was really something for nut cases; now it is openly discussed,' says Johan Van Overtveldt, author of a book on the crisis called 'The End of the Euro.'

The concern, he says, is that divisions over the common currency in traditionally pro-euro countries like the Netherlands make additional big and painful solutions to the crisis harder to achieve, and an eventual unraveling of the common currency more likely.

The shift in attitudes has also vindicated a few Dutch economists who warned of problems with a common currency 20 years ago but were ignored or derided, like Arjo Klamer.

'I predicted the euro would fall by 2010,' says Mr. Klamer, 58 years old, who teaches at Erasmus University in Rotterdam. 'So I lost that bet. But no one wants to make another one.'

The euro was meant to overcome, not foment, such division.

Two world wars fought in Europe, plus a Depression caused partly by protectionist trade policies, made a compelling case to break down the political and economic borders of post-World War II Europe. The U.S. encouraged closer economic ties to accelerate European reconstruction in the face of spreading Soviet communism.

Economic integration proceeded in uneven, stop-and-go steps. Concerns about a lack of fiscal union to support it were swept aside at Maastricht by the feeling that the euro was making history. It would guarantee European peace as well as restore European geopolitical power, with a currency on a par with the U.S. dollar.

'The treaty within a few years will lead to the creation of what the founding fathers of modern Europe dreamed of after the war, the United States of Europe,' then-Chancellor Helmut Kohl of Germany declared.

A number of American economists, such as Barry Eichengreen of the University of California, Berkeley, and Martin Feldstein of Harvard, weren't convinced. They argued that Europe lacked the U.S.'s labor mobility, wage flexibility and common federal budget, which they considered necessary for coping with regional shocks and the functioning of a common-currency zone.

Critics also said a one-size-fits-all monetary policy─geared to the characteristically low inflation of the largest member, Germany─could lead to an interest rate that was too low for smaller, higher-inflation countries like Greece, leading to yawning trade deficits enabled by easy credit.

That's what happened.

Most European economists at the time of Maastricht argued that monetary union would usher in the political union needed to supervise fiscal policy. Besides, countries still had time before the 1999 launch of the euro to get their houses in order.

Mr. Klamer, the economics professor, was among the few in the Netherlands speaking out persistently against the project. 'A monetary union without a political union is impossible to maintain,' he wrote in a newspaper article in 1991. Some other Dutch economists voiced similar concerns but fell largely in line as monetary union became inevitable.

Mr. Klamer recalls that many regarded him as 'a doomsayer or an idiot.' He says Frans Timmermans, a senior member of the Dutch parliament, once told him that he 'had no understanding of the importance of the euro project, and that my position was destructive.' Mr. Timmermans says he recalls such a conversation with Mr. Klamer in 2005 during the debate over creating a European constitution.

Peter-Wim Zuidhof, a former doctoral student of Mr. Klamer, says that in 2006 a job interviewer, seeing the Klamer name on his resume, asked if he was a euro-skeptic. 'I had to explain myself,' says Mr. Zuidhof, now a lecturer at the University of Amsterdam. 'There was a hegemonic consensus where everything was pro-Europe─and Arjo went against that.'

As the monetary union was being formed, Germany's Mr. Kohl insisted that Italy, as the fourth-largest European economy, be a founding member even though it didn't meet the budget criteria, says Frits Bolkestein, who was the EU's commissioner for the internal market and led the party that now heads the Dutch government.

Once debt-ridden Italy was included, there was no argument for excluding high-spending Greece, he adds, and Athens adopted the euro two years after the 11 founding members.

'The euro was a victory of political romanticism over economic thinking and reality,' Mr. Bolkestein says.

CHRISTOPHER RHOADS

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