This is
Europe
The
Dutch-led opposition to a ‘coronabond’ to raise funds for nations hardest-hit
by the pandemic is self-defeating
David Adler
and Jerome Roos
Tue 31 Mar
2020 09.47 BSTLast modified on Tue 31 Mar 2020 12.33 BST
Dutch
PM Mark Rutte.
‘Rutte declared that he could not foresee any
circumstances in which the Netherlands will accept eurobonds.’
Last
Thursday, the leaders of the European Union convened a video conference to
deliberate the escalating Covid-19 crisis. On the agenda was a simple proposal
co-signed by nine different eurozone governments: the “coronabond”, a new type
of public debt instrument backed by all the members of the currency union as
they come together to combat the virus.
After a
long decade of crisis fighting in the eurozone – pitting north against south,
creditor against borrower – the proposal marked a rare display of unity, and
the meeting was a perfect opportunity to ratify it. Issued collectively, the
“coronabond” would drive down the borrowing costs of some of Europe’s most
heavily affected countries, staving off another sovereign debt crisis and
freeing up much-needed resources to invest in public health and economic
recovery. “We are all facing a symmetric external shock,” the proposal read,
“and we are collectively accountable for an effective and united European
response.”
As long as the pandemic rages in Europe, even
the supposedly frugal burghers of Amsterdam will suffer the consequences
Alas, the
request for solidarity was swiftly rejected. At the video conference, the
eurobond motion came up against the eurozone’s “frugal four” – Germany, the
Netherlands, Austria and Finland – who argued that the issuance of a common
debt instrument would punish the countries that had saved for such a rainy day,
and encourage further fiscal mismanagement by those who did not. Solidarity,
they claimed, just created moral hazard.
In the
course of this standoff, it was the Netherlands that positioned itself as the
stony face of the frugal four. For a small and trade-dependent country that has
long portrayed itself as Europe’s liberal beacon – open, progressive and
internationally oriented – it was a remarkably short-sighted position to take.
Without a collective mobilisation of fiscal resources, countries such as Italy
and Spain will be powerless to prevent further contagion, of both the medical
and economic kind. And as long as the pandemic continues to rage elsewhere in
Europe, even the supposedly frugal burghers of Amsterdam will suffer the
consequences.
Yet the
Dutch government has held firm. Speaking after the meeting, the prime minister,
Mark Rutte, declared that he could not foresee “any circumstances in which the
Netherlands will accept eurobonds”. Adding insult to injury, the finance
minister, Wopke Hoekstra, called on Brussels to investigate why some eurozone
member states had failed to get their houses in order ahead of the pandemic –
comments that the Portuguese prime minister, António Costa, later described as
“repugnant” and “senseless”.
The spat
has reopened painful old wounds. In the early stages of the eurozone crisis,
the Dutch were among the most vocal opponents of the initial Greek “bailout”,
and demanded draconian austerity measures in return for the emergency loans.
The former Dutch finance minister Jeroen Dijsselbloem gained widespread
notoriety for his penny-pinching in the Greek debt negotiations, at one point
appearing to suggest that his southern European neighbours had wasted their
money on “booze and women”.
But
Europe’s governments have run out of patience with such fiscal moralism. Over
the weekend, reports suggested that Latvia, Lithuania, Estonia, Cyprus and
Slovakia may add their names to the original eurobond proposal. Among these 14
governments, there is broad agreement that this is not the time for petty
lectures on fiscal book-keeping, it is a time to think big and confront the
continent’s greatest collective challenge since the second world war as a
united front. As Costa drily observed: “No one has any more time to hear Dutch
finance ministers as we heard in 2008, 2009, 2010 and so forth.”
Beside its
untimely nature, the Dutch government’s position is also exceedingly
hypocritical. The Netherlands has long been known as one of the world’s most
infamous tax havens, siphoning off hundreds of billions of euros in corporate
profits and international financial flows and keeping other governments from
taxing them properly. To depict the Netherlands as a pillar of fiscal rectitude
is to deny the myriad ways in which the very architecture of the Dutch tax
system actively serves to undermine the fiscal capacity of its European and
international partners.
Ultimately,
however, the best argument against the Dutch position is that it is
self-defeating. By rejecting the call for “coronabonds”, the Netherlands and
its partners in the frugal four have undermined the ability of the wider
eurozone to fight the pandemic as a whole – threatening the health and
wellbeing of each of its members in turn.
Solidarity
is not charity. It is the recognition that the struggle of one is the struggle
of all. In a pandemic like Covid-19, that logic is global. But it becomes all
the more urgent in the context of a currency union as thoroughly integrated as
the eurozone. If the frugal four continue to obstruct a common fiscal response
to this crisis, the remaining eurozone countries will be right to ask if they
are not better off going their own way.
As Spain’s
foreign minister, Arancha González, kindly reminded Hoekstra following his
much-maligned intervention last week: “We are in this EU boat together. We hit
an unexpected iceberg. We all share the same risk. No time for discussions
about first- and second-class tickets … History will hold us responsible for
what we do now.”
• David
Adler is a policy leader fellow at the School of Transnational Governance (EUI)
and the policy coordinator of the Democracy in Europe Movement (DiEM25). Jerome
Roos is a fellow in international political economy at the London School of
Economics, and author of Why Not Default? The Political Economy of
Sovereign Debt
Sem comentários:
Enviar um comentário