Netherlands 'totally' committed to euro zone

Mon, Aug 20, 2012, 01:00

DUTCH FINANCE minister Jan Kees de Jager has said the Netherlands’ caretaker government is committed to keeping the euro zone intact, despite growing Austrian and Finnish demands that weaker states that fail to meet budget targets should be expelled.

Austria and Finland, along with the Netherlands and Germany, have retained their triple-A international credit ratings despite the sovereign debt crisis – and the latest tensions underline a growing divergence between stronger economies and countries that have been or may need to be bailed out.

Senior Austrian and Finnish government ministers tried over the weekend to dampen domestic unrest after colleagues from junior coalition parties called for countries that broke budget promises to be thrown out – and claimed preparations were being made for the demise of the currency.

The squabbling succeeded in undermining a show of support at the end of last week by German chancellor Angela Merkel for ECB president Mario Draghi, saying his commitment to do whatever it took the save the euro was “completely in line” with the robust approach being taken in EU capitals. However, over the weekend Dr Merkel found an unexpected ally in Mr de Jager, who in the past has been among the fiercest critics of countries – particularly Greece – that fail to maintain strict fiscal and budgetary discipline.

He said the focus of the Dutch minority coalition government, which faces a general election on September 12th, remained totally on keeping the euro zone intact – with all its members on board.

“We never speculate about a break-up of the euro currency bloc or about an exit by any particular country – and that remains our position and the way in which we should all proceed”, he told reporters in The Hague.

On the other hand, it was also true, he added, that “in order to remain in the euro zone, individual countries have to establish their entitlement to do so. We must all establish our credit credentials in difficult circumstances.”

However, even in the Netherlands, support for tough budgetary rules imposed by Brussels is no longer a foregone conclusion.

A poll yesterday showed the country is deeply divided over whether or not a new government should cut the country’s budget deficit to three per cent of GDP next year – which can only be done by making hugely unpopular savings totalling €13 billion.

Forty-eight per cent of those polled said the social fabric of the country would be unacceptably and unnecessarily damaged if the cuts went ahead, while 58 per cent disagreed with Socialist leader, Emile Roemer, that the country should refuse to pay a financial penalty if it decided not to meet the target.

The poll continued to show Mr Roemer as potentially the Netherlands’ first Socialist prime minister, giving his party 36 seats in the 150-seat parliament, followed by caretaker prime minister, Mark Rutte’s Liberals on 32 seats.