Netherlands Government Latest Victim of European Debt Crisis

April 24, 2012 Updated: October 1, 2015
Dutch Prime Minister Mark Rutte
Dutch Prime Minister Mark Rutte leaves after submitting his government's resignation to Queen Beatrix at the royal palace, in the Hague, on April 23. (AFP/Getty Images)

AMSTERDAM—In Greece there is little to laugh about these days, but the fall of the Dutch government over budget cut talks has likely left many Greeks with a snicker.

After all, over the past months, Amsterdam, alongside Berlin, has been one of the biggest proponents of requiring European nations to cut billions in spending to meet tough deficit targets.

But now, the Netherlands, which has one of Europe’s strongest economies, has itself failed to reach an agreement on how to nip and tuck its budget deficit down from 4.5 percent of GDP to the allowed maximum of 3 percent.

“I confess that I enjoyed the fall of the Dutch government and the dissolution of Merkel [and] her partners that took part in this dreadful economic policy that has led to a stagnation of the European economy and rise in unemployment,” wrote Greek journalist Paul Stragas on April 18.

After seven weeks of closed-door talks, the Netherlands’s political leaders were unable to come to an agreement on the budget, resulting in the collapse of the minority coalition on April 21.

This moment came when Geert Wilders, leader of the far-right Freedom Party, walked out of talks with Prime Minister Mark Rutte of the People’s Party for Freedom and Democracy and coalition partner of the Christian Democratic Appeal Party.

Wilders, whose main platform revolves around anti-immigration and Islmaphobia, rose quickly on the Dutch political stage. Founded in 2006, his Freedom Party became the third largest after the 2010 elections.

During April 24’s debate in Parliament on the fall of the government, Wilders was widely criticized by both his former coalition partners as well as the political opposition for walking out on the budget talks and plunging the country into a political crisis.

Wilders says he simply could not agree with the proposed budget cuts because they would hurt the common man and woman, whom he refers to as “Henk and Ingrid.” He blames the budget woes on the high cost of the European Union, arguing that it is unfair that the country needs to cut billions of euros domestically, while billions go to Brussels.

“Either we chose Henk and Ingrid, or we chose Brussels and the mega budget cuts, and wreck the economy,” Wilders said in Parliament on April 24.

Despite the political crisis, the Netherlands, with one of the world’s top 20 economies, will still need to come up with a budget plan for 2013 by April 30 that meets European targets.

The challenge for Prime Minister Rutte, now officially a caretaker prime minister, is how to find enough support from the opposition to pass his proposed budget, containing roughly 14 billion euros (US$18.5 billion) worth of cuts.

Given that the right-wing coalition fell apart over the issue, reigning in the left-wing opposition parties is expected to be even tougher. They have already indicated they can’t agree with many of the proposed cuts, and some opposition members are suggesting that it would be fine for the Netherlands not to meet Europe’s deficit targets. This view is rejected by most economists who point out that the country could face hefty fines from Brussels if the targets are not met.

The fall of the Rutte government is the latest in a series of European leaders to be defeated by the debt crisis. In Greece, former Prime Minister George Papandreou resigned under pressure from Europe after daring to call for a national referendum over mandatory budget cuts; former Italian PM Silvio Berlusconi also resigned under European pressure. In Slovakia, the government fell over the issue, and in Ireland, Spain, and Portugal leaders were not re-elected.

Analysts believe that if French socialist presidential candidate Francois Hollande wins France’s presidential run-off vote on May 6, Europe could see big shifts in how it handles the crisis. Until now, leaders of Europe’s two largest economies, Germany and France, have been the ones setting forward the main strategy of a balanced budget. Hollande has pledged if he wins, he will reverse Europe’s austerity drive, which could prove very popular with the growing number of thrift-weary nations.

With reporting by Neli Magdalini Sfigopoulou in Athens.