Monday

23rd Sep 2019

Dutch had euro-exit plan at height of crisis

Details have emerged indicating that both the Dutch and German governments were preparing emergency plans for a return to their national currencies at the height of the euro crisis.

In early 2012, a few months after the then Greek prime minister Georgios Papandreou and his Italian counterpart Silvio Berlusconi had resigned, the Dutch finance ministry prepared for a scenario in which the Netherlands could return to its former currency.

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Dutch TV documentary programme Argos Medialogica reported on Tuesday (18 November), based on anonymous sources, that the ministry had an emergency plan called Florijn, a reference the original name of the guilder, the Netherlands' pre-euro coin.

Current finance minister Jeroen Dijsselbloem also confirmed the existence of the plan on Tuesday in his weekly interview with RTLZ.

“It is true that [the ministry of] finance and the then government had also prepared themselves for the worst scenario”, said Dijsselbloem.

“Government leaders, including the Dutch government, have always said: we want to keep that eurozone together. But [the Dutch government] also looked at: what if that fails. And it prepared for that.”

That preparation included “practical aspects”, but the government did not print new national currency banknotes.

The plans occurred around the time when politicians openly referred to the possibility of a Greek exit from the euro.

Germany's finance minister Wolfgang Schauble said that the eurozone could survive without Greece.

But in truth no one knew what this would mean in reality. Many predicted that such a move could lead to a social chaos in Greece and would spur markets to see what country would next be forced out of the single currency.

While Dijsselbloem said there was no need to be “secretive” about the plans now, such discussions were shrouded in secrecy at the time to avoid spreading panic on the financial markets.

Jan Kees de Jager, finance minister from February 2010 to November 2012, did not directly speak about the Florijn project, but acknowledged that a team of legal experts, economists and foreign affairs specialists often met at his ministry on Fridays to discuss possible scenarios.

“The fact that in Europe multiple scenarios were discussed was something some countries found rather scary. They did not do that at all, strikingly enough”, said De Jager in the TV documentary.

“We were one of the few countries, together with Germany. We even had a team together that discussed scenarios, Germany-Netherlands.”

The German ministry of finance did not outright deny that it made similar plans when contacted on Thursday by EUobserver.

“We and our partners in the euro zone, including the Netherlands, were and still are determined to do everything possible to prevent a breakup of the eurozone,” it said in an emailed statement.

Meanwhile new details continue to emerge about the ad hoc nature of the eurozone response to the crisis.

The ECB - policy on the hoof

According to many analysts, the future of the eurozone was secured after a now famous speech by ECB chief Mario Draghi, in July 2012, in which he promised to do “whatever it takes” to save the euro.

But according to leaked transcripts - obtained by the FT - of interviews for a book by former US treasury secretary Timothy Geithner, the ECB chief’s comments were anything but planned.

According to Geithner, the remarks were “off-the-cuff” and “totally impromptu”.

“I went to see Draghi and (...) at that point, he had no plan. He had made this sort of naked statement of this stuff. But they stumbled into it”, a leaked transcript of the interview says.

Improvisation as the origin to one of the most important comments on the eurozone fits with other descriptions of the ECB president.

Simeon Djankov, Bulgarian finance minister from 2009 to 2013, describes the different personalities of Draghi and his predecessor, Jean-Claude Trichet.

In his book “Inside the Euro Crisis”, he writes about the different personalities of successive ECB presidents Jean-Claude Trichet and Draghi.

During meetings with the EU finance ministers, Trichet “would read prepared statements, and after that he would fade into the role of passive observer,” Djankov wrote in his book “Inside the euro crisis”.

Draghi, on the other hand, had a “more instinctive approach” and “scribbled his talking points on bits of paper a few minutes before the meeting began, tossed out comments throughout the discussions, and stayed until the end”.

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