Mark Rutte's VVD now advocates the cutting of the nation's development aid budget by two-thirds (Geert Wilders wanted all of it to go). Is this the price of putting stability before intolerance?
Brussels breathed an audible sigh of relief at the result of the elections in the Netherlands. In these turbulent times, everyone sees what they want to, and what they wanted to see was the comeback of the pro-European centre, who would manage, modulate and internalise the current plan – growth through austerity. If the economics of this are terrible (the postwar economic boom may never return, and why should we assume banks will re-emerge as the economic engine they once were?), the European politics of it are even worse.
The current German consensus that sees partial surrender of debtor sovereignty as the quid pro quo of debt mutualisation is a real vote-loser everywhere else – in France, Spain, Italy, Portugal, never mind Greece. And besides, the Germans say they have written enough cheques in the aftermath of re-unification, so their share of mutualisation will always be limited.
The closer you look, the more cracks there are in the theory that, with these policies, the pro-Europe political centre will hold the ring on the rescue of the euro. Much solace was to be had in Brussels from the fact the Dutch electorate, traditionally seen as the trend-setting Californians of Europe, rejected the extremes. They gave the far-right populist Geert Wilders a kicking, and froze the vote of the Socialist party, which voted against the eurozone rescue package.
This is fool's gold. Never mind the volatility of these votes, with large percentages undecided right up until the last minute. Think instead about the policy trade-offs that Mark Rutte and Diederik Samsom made to achieve this result. Thanks to the absorption of part of Wilders' vote, Rutte's VVD now advocates the cutting of the nation's development aid budget by two-thirds (Wilders wanted all of it to go). Is this the price of putting stability before intolerance? On Greece, Rutte says no third rescue package and no extension to the second. Put Samsom's Labour budget through the mill of the central planning bureau, the monopoly macroeconomic adviser, and in the first two years you would get a budget deficit of 3.7%, busting the European target, and in the second two years you get full-blown austerity.
Negotiations over the formation of the next government are going to be interesting. It will do nothing to prevent the wrecking of the economy of the European periphery to stave off the evil day when the banks write down their bad assets. This is not how deeper European integration will be forged. The Netherlands is both pro-European and pro-euro. The issue is the management of the euro storm, from which the Netherlands, a rich nation with low unemployment, will find scant shelter.
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