Brussels, 23/04/2012 (Agence Europe) - On Monday 23 April, the European Commission said that European economic governance needs to be strengthened by cleaning up public finances and pursuing structural reforms, as the minority Dutch government is pulling out the stops to make an additional €16bn in savings to reduce its public deficit to 3% of GDP in 2013. A spokesperson for Euro Commissioner Olli Rehn said that the Stability Pact was not stupid, referring to a controversial statement by the former president of the European Commission, Romano Prodi. In response to accusations by leading Dutch politicians of concerns expressed by “insane European officials”, Rehn's spokesperson said that the updating of the Stability and Grown Pact had been agreed to by all 27 EU member states and a majority of the democratically elected European Parliament: “The Stability and Growth Pact is not stupid. Decisions were taken by all 27 member states. All 27 governments and the majority of the European Parliament” agreed on the revision of the Stability and Growth Pact. “The Netherlands is a strong advocate of reinforcing EU economic government, with a strong role of the European Commission as a fair institution to administer decisions.” The spokesperson quoted Olli Rehn: “The Netherlands has benefitted for decades from such a culture of stability that we are enhancing in the EU” in terms of “international reputation” and “market confidence”.
At the weekend, Liberal Dutch Prime Minister Mark Rutte lost his ally Geert Wilders, head of the far right PVV, because of disagreement over the austerity measures to be introduced, and the prime minister therefore handed over his resignation to Queen Beatrix on Monday. Dutch Finance Minister Jan Kees de Jager, however, seemed confident that the government would be able to unveil its Stability and Growth Programme and structural reform plans by the end of the month. De Jager said that he was working on the assumption that the government would find a majority to vote through the measures and would therefore be able to submit them to Brussels at the end of April. He said that the important thing for the Netherlands is the fact that it had always shown that it had robust policies, even in difficult circumstances.
Rehn's spokesperson said that the Commission was confident that the Dutch government would be able to find budget solutions that were important for the economy, but also, more importantly, for the welfare of ordinary people, and the decisions were not to keep Brussels happy, but for the welfare of people living in the Netherlands. Figures published on Monday by the EU's statistical office, Eurostat, show that the Dutch deficit grew to 4.7% of GDP in 2011. Further savings of €16 billion will be required if the government is to meet its pledge to reduce the deficit to below 3% in 2013. Some commentators wonder how the resignation of the government will affect the country's credit rating. It is one of the few eurozone nations to retain its top-notch AAA rating.
Can the deficit reduction target be renegotiated? The updating of the Stability and Growth Pact tightened up the excess debt rules and introduced surveillance of macroeconomic imbalances. The Commission now has the power to take action much earlier and there is peer pressure in Brussels to prevent rather than cure, explained Rehn's spokesperson. He said that dialogue between the Dutch government and Brussels was always possible and it might be possible to make some changes if there is a change of government, which wants to change the earlier government's policies.
In a press release, MEP Guy Verhofstadt of Belgium, the head of the Liberal group at the European Parliament, of which Rutte is also a member, criticises Wilders' rejection of austerity: “It is not because of the European rules that the Netherlands should put in place austerity measures. The severe economic decline we are witnessing in Spain, Greece and Portugal shows what happens if countries decide not to live up to the rules of the Stability and Growth Pact.” He also criticised the hypocrisy of the PVV head for refusing to apply austerity measures in the Netherlands, while calling Greeks lazy. (MB/transl.fl)