Double Dutch: how the Rutte government nearly lost the europlot
From the start of the current economic crisis the Dutch government has insisted on strict budgetary discipline in troubled eurozone countries – in particular for Greece. That shouldn’t come as a surprise. After all, the Netherlands is one of the biggest net contributors to the various eurozone rescue packages.
This week the fiscally responsible Dutch were in the spotlight themselves. On Thursday morning the government’s official forecasting body said the Netherlands would fail to meet its 2013, 2014 and 2015 budget deficit targets, predicting a deficit of 4.5% in 2013.
One of the first to respond to the gloomy figures was Stef Blok, parliamentary leader of Prime Minister Mark Rutte’s Liberal party, the VVD. He said the 3% target was “not sacrosanct”. (Within hours he began to backpedal. Later that morning Blok issued a second statement, saying his earlier comments should not be interpreted as calling for a breach of the 3% rule.)
Sybren van Haersma Buma, parliamentary leader of the Christian Democrats, the junior coalition partner, followed suit, saying the 3% target only provided “guidance” and adding that the key thing was to get the economy going again.
Meanwhile Geert Wilders, leader of the anti-European Freedom Party which props up the minority government, was busy giving media interviews in which he cautioned against “numbers fetishism”.
Then finance minister Jan-Kees de Jager weighed in. He also detected some wiggle room, arguing that the European rules did not require a deficit of less than 3% in 2013. “Only the media talk about 3% in 2013″, Het Financieele Dagblad quoted him as saying. “We’ve always said, with the support of parliament, that we don’t want to scrap the clause for exceptional circumstances. It’s true that the European pact offers some room for manoeuvre.” On his twitter account he wrote in a reply: “The rules are more complex and smarter than 3% in 2013!”
With most opposition parties in the Hague also calling for the budget rules to be relaxed, a large parliamentary majority, plus the finance minister, appeared ready to pick a fight with Brussels, just as the Belgians had tried to do six weeks earlier (they lost).
But budgetary discipline Commissioner Olli Rehn, who just a few weeks earlier had reminded the Netherlands of its deficit reduction obligations, was quick to nip the Dutch rebellion in the bud. He let it be known the same day that he fully expected the Dutch to meet the 3% target.
“We think that the Netherlands is one country that has been very vocal when supporting the reinforcement of our fiscal surveillance rules. So it’s absolutely normal to believe that the Netherlands will apply this same approach to its own fiscal policies,” Rehn’s spokesman Amadeu Altafaj told a news conference within hours of the apparent Dutch policy shift.
The next day, just hours after Prime Minister Rutte added his signature to the new fiscal compact, European Council President Herman van Rompuy and German Chancellor Merkel also made clear in no uncertain terms that the Netherlands should not expect favourable treatment.
By Friday afternoon the Dutch government had changed its tune. “In the end it’s up to the European Commission to decide if there’s room for manoeuvre”, De Jager, a Christian Democrat, said, adding that the Netherlands had always argued for strict rules: “I will not go begging for clemency in Brussels.”
The Dutch government will start talks on Monday 5 March about how to tackle the excessive deficit. With both coalition parties having renewed their commitment to the 3% target, the scene is set for a clash with the Freedom party, who want to reintroduce the guilder and oppose further big cuts. This time the opposition won’t be there to bail the government out.
