The Netherlands has been one of the staunchest proponents of forced austerity on Greece. However, now that Brussels has demanded the Netherlands hit its fiscal targets, Dutch politicians can’t get the task done and the government is poised to collapse. New elections are coming up.
The Washington Post reports Dutch prime minister says government austerity talks collapse
The ruling Dutch minority government was on the brink of collapse Saturday after anti-EU lawmaker Geert Wilders torpedoed seven weeks of austerity talks, saying he would not cave in to budget demands from “dictators in Brussels.”
New national elections that will be a referendum on the Netherlands’ relationship with Europe and its ailing single currency are now all-but-certain.
But before Prime Minister can tender his resignation — possibly as early as Monday — he must consult with allies and opposition parties on how to run a caretaker government that will have to make important economic decisions in the coming weeks and months.
Austerity talks began in early March after the Dutch economy sank into recession and forecasts showed the 2012 budget deficit will reach 4.6 percent — well above the 3 percent limit mandated by European rules. Dutch politicians have strongly demanded that Greece and other countries meet that target.
Rutte leads the free-market Liberal Party in a minority coalition with the center-right Christian Democrats with outside support from Wilders’ Freedom Party. The outspoken Wilders is widely known for his anti-Islam and anti-EU opinions, including calls for Greece to return to the drachma and the Netherlands to leave the euro.
Christian Democrat leader Maxime Verhagen accused Wilders of “political cowardice” for refusing to sign off on the cuts — details of which have not yet been released.
Wilders was happy to take the blame, saying he “would not accept that the elderly in the Netherlands have to pay for nonsensical demands from Brussels.” He underlined that an accord would have been possible had the coalition been less concerned with following European rules to the letter.
“We don’t want to bow to Brussels,” he said. “We don’t want our pensioners to suffer for the sake of the dictators in Brussels.”
Wilders has long been a staunch critic of the European Union, opposing an EU constitution and last month suggesting the Netherlands should return to its pre-euro currency, the guilder. Most mainstream Dutch parties are generally pro-EU.
The Netherlands is one of only four nations using the euro that has the top rating, though it already is under review by rating agencies. Central Bank President Klaas Knot said last week borrowing rates would rise by 1 percent if the Netherlands’ ratings are cut.
Once considered one of Europe’s strongest economies, the Netherlands is suffering from high levels of personal debt, mostly mortgage related.
Kiss Netherlands’ AAA Rating Goodbye
The Netherlands can kiss its AAA rating goodbye within a week or so. More importantly, this vote coupled with demands for border controls and protectionist legislation in France shows just how tenuous the Merkozy accord is.
The Merkozy agreement held together with rubber-bands, paper clips, and broken promises is about to splinter to smithereens. Pencil in May 6 for the date. That’s when Greece holds new elections and also when French president Nicolas Sarkozy is ousted in the second round of French elections.
The ouster of Sarkozy will end any chance that France signs off on the agreement “as is”. Since the Netherlands won’t abide by the agreement either, just how much of an agreement is there?
Mike “Mish” Shedlock
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