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Straw Poll: Dutch set to reject EU Constitution, chickens come home to roost
Polls show the Dutch, even more so than the French, are inclined to reject the European Union's proposed constitution, thanks in no small part to reports that they were fleeced out of their fair share of euros when converting to the new currency. The story goes that the guilder, pegged to the German mark, was undervalued by 5% to 10% when the change was made -- and that the government proceeded anyway for political reasons, shrinking savings accounts from Groningen to Zeeland. There are a number of good reasons to reject the constitution, but this isn't one of them. Not that that matters to the constitution opponents who essentially have built a straw man out of a touchy issue and left it for others to knock down. You could also call it demagoguery, and activists on both sides of the constitution question have been trading heavily in that throughout the campaign.

On the guilder issue: As exasperated Finance Minister Gerrit Zalm has tried to explain, the price ratio used in the conversion means that Dutch purchasing power likely held steady even if the guilder was undervalued. No one can say for sure, but it's doubtful whether the guilder would have jumped by 25% against the dollar over the past five years, as the euro has. What's more, the guilder had traded within a narrow band relative to the mark for nearly two decades prior to joining the euro; conversion merely cemented a ratio that had existed almost unchanged for 20 years. And if the guilder really was "undervalued" it would have helped the Netherlands export more goods, as about 60% of Dutch exports go to the euro zone. Anecdotal evidence that the introduction of the euro somehow caused inflation is just that -- anecdotes about individual prices, whereas "inflation" refers to all prices. The official figures tell a different story, with Mr. Zalm reporting last week that prices were up only 1.2% in 2004 after a higher but manageable 2.3% rise in '03.
Posted by: too true 2005-05-23
http://www.rantburg.com/poparticle.php?ID=119834