Klaas Knot, president of De Nederlandsche Bank (DNB), has once again emphasized the potential benefits of eurobonds for financing joint European defense efforts. Speaking on Sunday during the television program WNL Op Zondag, Knot highlighted the broader strategic interests at stake for the Netherlands beyond merely the difference in interest rates between Dutch government bonds and collectively financed bonds.
“The Dutch interests at this moment, I think, extend beyond just the interest rate differential between Dutch bonds and jointly financed bonds,” Knot said. He stressed that defense is a public good, meaning all European nations benefit from investments made by others. “We are talking about defense. It is a public good. That means that other countries benefit from what we do, just as we benefit from what other countries do. So, this must be done together,” he stated.
Knot’s remarks come after he previously criticized what he described as “hyperventilation” in Dutch politics over the potential issuance of eurobonds. He argued that any decision regarding such financial instruments should be made rationally. “The choice for these types of financing instruments is up to politicians. I do not wish to interfere in that. However, I do believe that the decision should be based on a rational assessment,” Knot said.
European leaders have yet to reach a conclusion on how to finance their defense plans. The European Commission has proposed providing loans to member states to facilitate the purchase or production of defense equipment, with a total funding proposal of 150 billion euros. However, common debt issuance remains a contentious issue within Dutch politics due to concerns about higher interest costs for the Netherlands.
According to Knot, issuing 150 billion euros in joint loans would result in the Netherlands paying several tens of millions of euros more in interest costs. “That is money that could be allocated elsewhere in the budget. But I would ask the Tweede Kamer, which problem would you rather have on your plate? A budgetary issue amounting to a few tens of millions? Or the problem of insufficient deterrence in our defense strategy? And what if Mr. Putin makes a serious move toward the Baltic states?” Knot questioned.
