Dutch in last-ditch effort to agree austerity deal

Wed, Apr 25, 2012, 01:00

THE DUTCH caretaker government agreed last night to provide MPs with the full details of the multi-billion euro austerity programme which led to the collapse of the country’s minority coalition government – in a last-ditch bid to reach a compromise deal by the EU deadline of next Monday.

The decision came at the end of a day of bitter recrimination in parliament, during which beleaguered prime minister Mark Rutte pointed at Freedom Party (PVV) leader, Geert Wilders, accusing him of walking away from a package of cuts he said was crucial to the future of the country – the euro zone’s fifth-largest economy.

“We had an agreement. The texts were finalised. We were simply waiting for the input of the central planning bureau. Then Wilders called it off,” declared a normally mild-mannered Mr Rutte – while Mr Wilders sat impassively opposite him, legs crossed, jotting on a notepad.

Earlier the PVV leader had defended his decision to pull out of the budget talks and end his 18 months of support for the Liberal-Christian Democrat minority coalition, saying it had taken “courage” to reject the austerity plan, which would have harmed the Netherlands’ most vulnerable citizens.

“It is the government, not the average citizen, not Henk and Ingrid, who spent too much. Either we choose to act in the interests of Henk and Ingrid or we act in the interests of Brussels. We cannot do both,” said Mr Wilders, who often refers to the “typical” Dutch couple as “Henk and Ingrid”.

Although Mr Rutte called on the parties to “act responsibly” and said he still believed agreement could be reached on a package of budget cuts, there was little mood for this among MPs – who disagreed first over whether or not it was necessary to achieve the EU’s budget deficit target of 3 per cent of GDP, and later over a date for a general election.

Despite a warning that the Netherlands could face a penalty from Brussels of €1.2 billion if it failed to meet next Monday’s deadline, Alexander Pechtold, leader of the centre-left D66 party, said he believed that “exceptional circumstances” could be invoked to allow a country to break the euro zone deficit rule.

Labour Party leader Diederik Samsom agreed – but said that if it came to a full-blown discussion of the detail of the cuts, his party favoured tax increases for high earners rather than a rise in VAT.

Regarding the election date, there had been suggestions that June 27th, could be chosen to prevent a lengthy period of economic uncertainty. However, Dutch electoral law stipulates 40 days to allow new candidates to come forward, followed by a 43-day campaign.

Parties who fared badly in weekend polling, such as the Christian Democrats, said they would be insisting on that time frame – which means an election before September 5th now seems unlikely. Mr Rutte himself mentioned September 12th.

The only positive news yesterday came when the Netherlands easily raised €2 billion at an early-morning bond auction of sovereign debt – indicating that market sentiment remains broadly positive.