NETHERLANDS/FRANCE: Dutch government collapse over budget talks, but the EU is confident the Netherlands will implement budget austerity even as new elections loom

Record ID: 216341

  • Title: NETHERLANDS/FRANCE: Dutch government collapse over budget talks, but the EU is confident the Netherlands will implement budget austerity even as new elections loom
  • Date: 24th April 2012
  • Summary: NETHERLANDS (APRIL 23, 2012) (REUTERS) ROYAL PALACE HUIS TEN BOSCH SEEN THROUGH GATE DUTCH PM MARK RUTTE ENTERING PALACE, FOLLOWED BY CONCIERGE WHO CLOSES DOORS SECURITY OUTSIDE PALACE AS TALKS TAKE PLACE SECURITY OFFICIALS OUTSIDE THE PALACE JOURNALISTS WAITING OUTSIDE GOVERNMENT BUILDING DUTCH MINISTER OF FINANCE JAN KEES DE JAGER WALKING TOWARDS JOURNALISTS (SO
  • Embargoed: 9th May 2012 13:00
  • Keywords:
  • Location: Belgium, Netherlands
  • City:
  • Country: Netherlands
  • Topics: International Relations,Economic News,Politics
  • Reuters ID: LVADNGTV54LAZEO8TIKQ62MARJ1
  • Story Text: Dutch Prime Minister Mark Rutte on Monday (April 23) went to see Queen Beatrix to report on the country's political crisis after talks over budget cuts collapsed on Saturday. Dutch broadcasters said Rutte is meeting the Queen to hand in the resignation of his cabinet. The imminent resignation opens the way for almost inevitable new elections.
    The crisis spells the end of a coalition which has strongly backed a European Union fiscal treaty and lectured Greece on getting its finances in order and marks an embarrassing setback for Dutch Finance Minister Jan Kees de Jager, who has taken a tough line with euro zone "budget sinners" such as Greece, saying it should be denied international aid unless it gets its fiscal house in order.
    But De Jager promised to keep fighting to cut the deficit and dismissed comparisons with the region's sickest economies.
    "It is clear there are worries about sorting out our public finances, this cabinet, each cabinet, also in the past, the Netherlands has shown to have a strong name when we talk about budgetary discipline and I am convinced that the Netherlands, because it is in the best interest of everyone, also the elderly, that with various majorities we can find the support to adopt the measures needed to have solid public finances," De Jager said after a minister meeting on Monday morning.
    Political turmoil in what is traditionally one of the eurozone's most stable and prosperous members jolted financial markets, already worried that the Socialist frontrunner in French elections has promised to renegotiate the agreement to ensure fiscal stability if he wins the presidency next month.
    The Dutch row erupted at the weekend when the anti-EU Freedom Party (Partij Voor de Vrijheid-PVV) of Geert Wilders refused to agree with Rutte's centre-right coalition on how to cut 14 to 16 billion euros from the budget and get the Dutch deficit down to the EU target next year. The PVV is outside the coalition but had promised to support the minority coalition on major issues.
    Elections cannot be held until July at the earliest and are unlikely until after the summer holidays - long after an April 30 deadline when the Netherlands and most other EU countries, must tell Brussels how they will cut their budget deficits.
    The EU expressed optimism that the Netherlands will remain focused on cutting its budget deficit despite the crisis, and suggested that fiscal goals were not set in stone.
    "The European Commission trusts that the Dutch government will continue to seek budgetary solutions that are important for the country and for the welfare, first and foremost, the welfare of Dutch citizens. All member states, as you know, are required to present during this month both their updated stability or convergence programme and their national reform programmes. We understand that the Dutch government continues to deploy all the efforts in order to adopt measures that can help the country to meet its commitments at a European level," Commission spokesman Amadeu Altafaj told a regular briefing in Brussels.
    Asked if the Commission could be more lenient with the Netherlands on its budget targets, Altafaj said all EU budget issues could be considered by EU finance ministers.
    "There is room for discussion, for explanation, for correction. But once again, the aim is to have a system that works with anticipation, that enables the institutions to exert this peer pressure to prevent, rather than correct. So it's not a blind system as Mr. Rehn likes to say. The Stability and Growth Pact is not stupid."
    The failure of Rutte, whose coalition has been in power since October 2010, to win agreement on cutting the deficit next year to the EU's ceiling of three percent of GDP drew withering comment in Brussels.
    The Netherlands has been close to Germany in calling for austerity across the euro zone, and in supporting the EU fiscal pact which must win ratification by the end of the year in the 25 EU countries whose governments signed up to the treaty.
    With elections unlikely before September or October, Rutte may try to cobble together an agreement with opposition parties as a caretaker prime minister to meet the deadline at the end of this month.
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