How is it possible that one of the few member states of the Eurozone with a triple A rating is now handing in an application to joining the PIIGS countries?

For 1,5 years the Netherlands has been experiencing a rather unusual governance structure. The Liberals and the Christian Democrats formed a minority government and were supported by the anti-Islam movement of Geert Wilders. The support, however, was a limited one. Wilders signed for austerity measures and in return asked for a stronger stance on immigration, the introduction of animal cops, the reintroduction of smoking in small bars and other issues that make a certain group of citizens happy.

All dossiers dealing with the EU could not count on the support of Wilders, since Wilders does not support the EU. The minority government needed the support of the opposition to remain a player in the European debate. The Labour party joined the minority government in their demand for stronger budgetary rules for member states in the Eurozone. The idea was that EU economic governance could only be credible if the European Commission would have a stronger role in controlling the budgetary policy of Member States. It was the Greek crisis that scared the Dutchies, since this country's dealing with its budget fundamentally ran counter to the Dutch budgetary tradition. Statistics and rules are there to be respected, not disrespected.

The Dutch were thus at the forefront of tougher European rules over member States budgets and were cheerful when the European Commission in the beginning of this year stood firm against countries like Hungary and Belgium. Said countries handed in budgets that surpassed the iron rule of 3% deficit and were sent back to the budget table. The Commission's new powers were used directly and with rigour. After the Commission's reprimand, Belgium minister Paul Magnette told a newspaper "Who is this Olli Rehn? Nobody knows him, yet he makes decisions over out budget". The Belgians went back to the table and introduced a sound budget proposal.

The Dutch were happy with these new powers of the Commission; never again would we have to face monetary cooperation without member states respecting basic budget rules. Never again would we have to impotently accept violations of the 3% norm by big member states. From now on the European Commission would treat all countries the same, politics would have little to do with it.

The Dutch were very tough on other countries, the more because they claim having a tradition of sound budget policies. The right-wing minority government started their term immediately after the crisis and were faced with a growing budget deficit and state debt. Prime Minister Rutte communicated the need to reduce the deficit and announced a package of budget cuts, worth 18 bn Euros. The measures were painful and reduced the purchasing power of middle and lower income households, among whom a lot of Wilders voters.

When the State Planning Bureau predicted a deficit of 4,6% for the year 2013, new austerity measures had to be agreed upon in order to stay under the target of 3% and avoid conflict with the European Commission. New measures meant that on top of the 18 bn Euros already agreed with Geert Wilders, another 16 bn Euros had to be found. New negotiations started and, as we know now, ended into failure. New elections are scheduled for September. Wilders claims he could not accept the "3% dictate from Brussels", thereby transforming his populist movement from anti-Muslim to anti- EU. Times are tough, even for extreme right populists. 

With the irresponsible behaviour of the government coalition, the Netherlands is losing its credibility very fast. If the Dutch fail to stay under the 3% budget deficit, all their preaching about the PIIGS countries and their lack of working ethos will come back as a boomerang. If they manage to stay under the 3%, the economy is going to fall deeper into a recession. A catch 22 is born...

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