The euro shelters small economies

I disagree with correspondent Joseph Farrugia's remarks (The Euro Does Not Save Economies, August 5) on Simon Busuttil's contribution of July 29. My reading of Dr Busuttil's piece is different. Dr Busuttil picks his words very carefully and I dare say that Mr Farrugia misunderstood him.

Dr Busutil wrote: "In this recession, the eurozone has emerged as an area of relative (my italic) stability in a turbulent sea. This is not to say that the eurozone economies were untouched by the global recession.

"But the eurozone has shown more resilience and it may therefore help its members recover more quickly. And of course, unlike the Icelandic Kroner, the euro did not become useless paper when the crisis struck."

Nowhere did he claim that the euro saves any economy from all the effects of the recession but that it provides relative stability, a modicum of comfort in an otherwise choppy sea.

In his contribution Mr Farrugia seems to lean in favour of devaluation and laments the fact that the country cannot resort to that tool, which incidentally is not a panacea. Thank goodness for that, may I add.

Dr Busutil's piece seemed to carry one important message. The effect of the current recession could have been harsher, particularly on small economies like ours, had we been out of the euro. He mentions the case of Iceland, which, as a result of the collapse of its financial sector, saw its currency in deep crisis and mistrusted by Icelanders. One could also mention Sterling which experienced a mighty fall against the euro. I am sure the British and Icelanders did not consider this sort of "devaluation" as helpful notwithstanding some minor positive economic spinoffs that might have come out of it.