The European Council on Foreign Relations

The Dutch in a twist

Date: 25th April 2012  |  Author: Dick Oosting,

Categories: Euro Crisis, Reinventing Europe,
Tags: austerity, debt , debt, holland, netherlands, wilders

The precarious coalition that Dutch prime minister Mark Rutte (VVD, conservative/liberal) had cobbled together 18 months ago (with the Christian Democrats (CDA) and with the support of Geert Wilders’ Freedom Party (PVV)) collapsed on Saturday. The makeshift construction by which the PVV did not participate in government but ‘condoned’ it had been hanging by a thread already because they recently lost their minimal formal majority after the defection of one of Wilders’ lieutenants.

The bust-up came over cuts required to meet the 3% limit for the 2013 budget. With the deficit running at 4.8% some €14b had to be found, and the three party leaders had been negotiating for seven weeks in secret. Just as Rutte thought they were there – having found over €14b in all manner of measures to which Wilders had agreed individually – Wilders pulled the plug on the package, saying that he would not let Dutch pensioners pay for “insane demands from Brussels”. Having stood shoulder to shoulder last year with Germany on the 3% discipline and on empowering Olli Rehn to enforce it (all supported by Wilders), the Dutch to their embarrassment are now widely seen as trying to wriggle out of it.

Elections are to be called after the summer. Rutte’s now caretaker government will have to present a 2013 budget proposal to the Commission by 30 April on how to meet the 3%. This they are expected to do, but without being able to count on parliamentary agreement since the opposition social democrats (PvdA) a few months ago changed leadership and ended their support over Europe.

What this means is unclear. The opposition is pushing for structural reforms (labour market, pensions, housing market, healthcare sector) and argues that these should create very significant savings in the longer term, and so not only keep the markets happy but also be cause for short-term clemency from the Commission. Which of course won’t happen. In fact the package that had been put together included a modest start in some areas but nothing on labour market and not enough on the rest, according to the opposition.

There is a tendency elsewhere in Europe to see the growing Dutch unease with the strict budget discipline as a new chink in the armour of Germany’s austerity drive. It would be a mistake to expect the Dutch to join any revolution: aside the firm fiscal attitude in principle, responsible forces will be loath to become Europe’s laughing stock. However it will be interesting to see if and how there may be a constructive impulse coming out of the current mess towards a more mature debate on how to encourage growth in Europe.

How things will play out electorally in the Netherlands is anyone’s guess. Polls show that the Christian democrats, for decades the largest party with at times 50+ seats (out of 150) and holding the balance of power in varying centre-right and centre-left coalitions, keep sliding down, almost to 10 seats. Rutte is holding on to his VVD’s 30+ level, having that enviable teflon quality (so far). The PvdA is showing signs of recovery. And Wilders: having soared to 24 seats on his anti-Islam and anti-immigration platform he is now exposed as an unreliable partner when it comes to taking governmental responsibility – and with a party structure so dependent on him that it is hardly sustainable he should pay a heavy price for this. However, it would be a mistake to count on the master manipulator’s early demise.

In short, uncertainty and anxiety are deepening behind the dykes.