[D66] Netherlands government falls over austerity budget

[Antid Oto]

Netherlands government falls over austerity budget
By Chris Marsden
24 April 2012

With the resignation of Dutch Prime Minister Mark Rutte, the Netherlands joins a
growing list of countries whose governments have fallen from power as a result
of the sovereign debt crisis and the demands of the International Monetary Fund
(IMF) and European Union (EU) for ever more savage austerity measures.

In Portugal and Spain, rightist parties benefited from the political
difficulties faced by social democratic parties in ramming through cuts
amounting to billions of euros. Greece saw the formation of an unelected
coalition of the formerly governing social democratic PASOK, the Conservative
New Democracy and the neo-fascist LAOS. In Italy, a government of “technocrats”
was imposed, directly, as with Greece, at the behest of the EU, the IMF and
European Central Bank (ECB).

Governments have also fallen in Slovakia and Slovenia. To this list can be added
Ireland, where disaffection with Fianna Fail resulted in the election of a Fine
Gael-Labour Party coalition.

Rutte heads the free market liberal People’s Party for Freedom and Democracy
(VVD) and led a minority government that included the Christian Democrats (CDA).
It was able to rule only with the support of the far-right Freedom Party of
Geert Wilders.

The VVD and CDA came to power in 2010 due to disaffection with the fractious
coalition headed by the CDA after the Labour Party (PVDA) decamped, citing the
decision to extend Dutch military participation in Afghanistan.

The VVD-led government collapsed after just 558 days when Wilders pulled out of
talks aimed at cutting the annual budget by €16 billion. Wilders feared that his
party was hemorrhaging support due to its association with the austerity measures.

In a country of about 16 million people, the €6 billion in social spending
already slated to be cut is equivalent to over €100 billion in Germany and $570
billion in the United States. The additional cuts being sought are staggering in
their social implications.

The crisis in the Netherlands has major ramifications. Its economy is considered
one of the strongest in Europe and Dutch sovereign debt has a AAA credit rating.
The fall of the government of a core member of the euro zone bodes ill for the
very survival of the single currency.

That Netherlands’ protracted and deepening political instability is a
manifestation of the explosive social tensions being generated by the relentless
demands for cuts by the financial markets and the so-called “troika” (the IMF,
EU and ECB).

The Netherlands had been instructed to submit its budget plan to the European
Commission by April 30, under conditions where its 2013 budget deficit is
expected to hit 4.7 percent of gross domestic product (GDP), compared with the
EU target of 3 percent. But both Wilders and Socialist Party leader Emile Roemer
refused to back the measures proposed by the VVD.

Whatever the posturing of the opposition, Europe’s ruling elite will only step
up their demands for austerity. Massive pressure is already being placed on the
Netherlands to toe the line, with stock markets and the euro falling in the face
of the Dutch crisis as well as Nicolas Sarkozy’s poor performance in the first
round of the French presidential election and dismal economic data.

Manufacturing output in Germany has also fallen to a three-year low. With
figures for France and the wider euro zone showing a contraction, Europe is
already in a double-dip recession.

On Monday, German shares fell 3.4 percent, French stocks dropped 2.8 percent,
and British shares fell 1.9 percent. Shares also fell broadly on Wall Street.

The crisis is by no means confined to the Netherlands. Overall deficits across
the EU have continued to grow, despite the austerity measures. There is
widespread speculation that both Spain and Italy will be forced to seek a
bailout that would exhaust Europe’s stability fund and plunge the continent into
a recession of unprecedented depth and duration.

The political establishment in the Netherlands will do all in its power to
oblige the demands of the global financial elite. Finance Minister Jan Kees de
Jager of the CDA returned from talks in Washington stating that the government
would remain in power for five months and suggesting that it might still be
possible to reach an agreement with other political parties to impose the
austerity measures.

“For me it is important, as a message to financial markets, that no matter the
circumstances, the Netherlands will continue to strive for budgetary
discipline,” he said.

A parliamentary debate is to take place today to consider whether to hold a
general election before or after the scheduled summer recess. A delay would be
considered preferable for some within Europe’s ruling circles, despite the
instability this implies, given that an election is likely to result in yet
another unstable regime.

Opinion polls suggest that 11 parties would win seats in a general election,
leaving no party with an overall majority. Indicating the growing sentiment
against the austerity measures demanded by the EU are predictions that the
euro-sceptic Socialist Party (SP), which began life as a Maoist formation, will
double its parliamentary representation from 15 to 30. This compares with
predicted losses for the most right-wing parties—the CDA and, at least for now,
Wilders' Freedom Party.

A meeting of parliamentary leaders yesterday reportedly showed a slim majority
in favour of elections on June 27. Early elections were supported by Wilders,
Labour Party leader Diederik Samsom, and Socialist Party leader Emile Roemer.

In the meantime, there will be desperate efforts to cobble together an interim
agreement providing sufficient parliamentary votes to push through the cuts.
This would require the support of Rutte’s liberals, the Christian Democrats and
others—with Labour, the Christian Union and the D66 party likely to be courted.
The latter three parties support the cuts, but are asking for them to be
staggered over a longer time period.

Samsom has said Labour will work with the liberals, but he wants to secure some
minor compromise to cover his flank in the run-up to the general election.
Everyone fears being punished at the polls if they are seen to be instrumental
in getting the budget cuts through.

http://wsws.org/articles/2012/apr2012/neth-a24.shtml