Farewell to euro?

By Irina Mikkola and Maiju Majamaa

Is leaving euro mere utopia?

Over a third, 35%, of the True Finns party –supporters feel that Finland should leave EU. This is transpired by a survey conducted in the beginning of 2011 by TNS Gallup for Helsingin Sanomat newspaper.

18 per cent of the answerers thought that Finland should stay in the EU, but give up euro as a currency.

All parties don’t feel the same away: only eleven per cent of the Coalition party wants to abandon euro, and among the Green party the percentage is 16.

A finnish social politics professor J.P. Roos told Helsingin Sanomat in April, that in his opinion Finland should leave euro immediately. According to him, euro is weakening Finlands competitiveness and potential in the markets.

However, professor Roos and the supporters of True Finns stand far from the rest of the nation, as a vast majority of all Finns clearly wants Finland to stay in the EU and also preserve euro. 66 per cent of all Finns are pro-EU. Only a little more than a tenth of the country wants to restore the old currency, finnish mark.

It is more common for older people to want to leave euro, as younger generations seem to be much more eager in keeping it, as well as in staying in the EU.

Mari Kiviniemi of the Centre Party, who was also Prime Minister at the time, said after hearing the results of the survey that the idea of Finland leaving euro doesn’t seem likely. She also felt that the consequences of Finland joining euro have been mostly positive.

– It has stabilized our economy, she commented in Helsingin Sanomat.

The survey was done by telephone interviews between 18th of January and 28th of January in 2011.

But what would happen if Finland actually abandoned euro – and is it even possible? Let’s turn back time to the point when euro first came to be.

Ten years of euros
The first stage of euro was born as early as 1979, when the European Currency Unit was founded. The real possibility for a common currency didn’t evolve until the beginning of 1990. That’s when EMU, European Monetary Union first started to form.

In 1992 the basic ground rules of EMU were decided by the signing of the Maastricht treaty. In 1994 the real preparation for the common currency started, and the name euro was given for it.

Euro has a long history.

After many complicated interphases, the euro was finally implemented 1st of January 1999, but only as an account currency. At that time there were eleven countries in it: the Netherlands, Belgium, Spain, Ireland, Italy, Austria, Luxembourg, Portugal, France, Germany and Finland. Greece wasn’t accepted to join the group until 2001.

The euro bills and coins took years of time to manufacture, because they had to replace the massive amount of money in eleven countries. The actual, concrete euro bills and coins didn’t arrive to countries until a year later, 1st of January 2002.

No procedure in place
We asked two Finnish experts if it would be possible for Finland to leave euro and how could it be done.

Paavo Okko, a professor from the University of Turku says that the idea of leaving EU or euro was left open; it did not belong to the basic philosophy of European integration.

“There is no laid down procedure to leave EU or Eurozone, not for Finland or any other country.  If some country however decided to leave Euro, it would have to be handled somehow, but no one is to say how the rest of the EU-countries would then react to that country”, he says.

Simo Pinomaa, an expert from confederation of Finnish industries, agrees with Okko.

“Technically it would need an unanimous decision from all EU-countries and Finland, because euro is an agreement between countries. But Finland is a sovereign country so it can do as it pleases. ”

If Finland left EU, it could lead to other countries leaving it as well. After that Finland might consider establishing a common currency with countries that have similar economies, such as Sweden and Germany.

According to Okko, leaving EU wouldn’t be as easy as it may seem. If Finland did it, we would have to press new bills and figure out, what course would be used to convert euros back to finnish marks, if that was the chosen tactique. One of the most crucial questions would be, in which currency should the leaving country pay its debt.

Euro may not hold forever
Okko doesn’t see any real reason for Finland to leave EU. He also sees little good in the possibility of other countries leaving it.

“I think that when someone leaves it, it will be during a very bad crisis, worse than current one. A country like Finland could possibly leave EU without any impossible problems, but then again, a country like Finland has no reason to do it. Greece, however, has a reason to leave EU, but by doing so it would probably suffer very great damages in the process”, says Okko.

Pinomaa feels the same way, but thinks it is very likely that euro-system will collapse at some point. History has taught, that all money-unions have broken up at some point. It is only a question of time.

“It might be soon or as late as after fifty years. But even then it would be unlikely for Finland to go back to having its own currency. It would more probably establish a new currency with a few countries like itself, and the southern countries that are in trouble now, would have their own.”

The recent election victory of the True Finns had the rest of the Europe worried:

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One Response to “Farewell to euro?”

  1. peterverweij Says:

    Intro of the story unfocused. What exactly is the message out of these numbers? Links in the story are very limited, the video of the BBC is adding some extra. Best of the story are the sources: credible with clear views. Good summarizing history on the intro of the EU

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