The same four parties. The same premier. Probably mostly the same ministers. Yet the fourth ruling coalition led by liberal Mark Rutte has struck a decidedly different tone when it comes to the Netherlands’ place in the EU. The new coalition agreement suggests The Hague will no longer act as a brake on the EU but as a locomotive. Rutte, who often relished his casting as Europe’s Mr No, now intends to be in the vanguard of European integration.
The Hague’s newly hatched enthusiasm for Europe bears the imprint of D66, the left-liberal pro-European party that was the big winner in the election. The big losers were the more Eurosceptic Christian Democrats. Rutte’s authority was weakened by the benefits scandal that brought down his third government and, chameleon-like, has an opportunity to reinvent himself.
But the new Dutch position is also a reflection of how geopolitical uncertainty, the pandemic and Britain’s Brexit mess have “reinforced the need for solidarity and collective action” within the EU, says Catherine de Vries, professor at Bocconi University.
The parsimonious Dutch who like to lecture other EU governments about fiscal discipline are turning on the spending taps. The incoming government will boost expenditure on housing, education, childcare and defence. It is creating a fund to finance decarbonisation worth a cumulative 4.3 per cent of gross domestic product and another one for rural diversification (including closing down polluting intensive farms) worth 3.1 per cent. Extra borrowing will push Dutch debt just above the 60 per cent EU limit. It is hardly the same category as Italy (155 per cent) or Greece (206 per cent), but the limit no longer seems sacrosanct. The agreement amounts to a “farewell to frugality”, according to Marcel Klok, senior economist at ING.
The four coalition parties now say they are open to the “modernisation” of the EU’s fiscal rules as long as its promotes fiscal sustainability and economic convergence. It is vague, but in line with the slightly more flexible approach promised by the new German coalition government.
After Britain’s departure from the EU, The Hague acted as ringleader of the so-called frugal states opposed to big EU spending, greater risk-sharing or any watering down of the bloc’s fiscal rules.
Rutte’s fourth administration also wants to become an advocate of deeper integration, such as ending national vetoes in foreign policy, strengthening the role of the European parliament and creating EU-wide carbon and digital taxes. Where a sub-set of EU capitals wants to pursue an initiative, the Dutch want to be in the vanguard.
The new Dutch stance is its second readjustment to post-Brexit Europe. The first was its leadership of an informal group of free-trading, economically liberal, fiscal hawkish governments, dubbed the New Hanseatic League, who needed to team up to defend their interests in place of their powerful British ally. The group shrunk to a hard core of frugals to try to block the EU dishing out recovery fund grants financed by common debt.
The New Hanseatic League made sure small countries were listened to in the EU, says de Vries. But the Dutch started to ask “could you gain more by being constructive and not being some naysayer”. However, she cautions that the strong strain of Euroscepticism in Dutch politics has not disappeared.
Pepijn Bergsen of Chatham House doubts there will be a fundamental Dutch shift on EU fiscal policy, but says the new coalition deal reflects a “slowly shifting consensus” on other areas of EU policy.
The coalition agreement is peppered with references to EU “strategic autonomy” and how it should use its economic power strategically through investment screening, level-playing field instruments and smart industrial policy.
“The Netherlands used to be this last stalwart of neoliberal, free trade, light-touch government thinking,” says Rem Korteweg of Clingendael, the Netherlands Institute for International Relations. “Even the Dutch are moving to a more confrontational, even protectionist-light approach to international economic affairs.” The Dutch are sounding a little less Dutch and a little more French.
Source: Economy - ft.com
