Finland, Netherlands Block Bailout Fund Expansion

Finland and the Netherlands, the eurozone’s two most hardline creditor states, said on Monday that they would block expansion of the permanent European Stability Mechanism’s ability to buy sovereign bonds.

A European Council last week agreed that the ESM, which is set to replace the temporary European Financial Stability Facility next week, could be used in a “flexible and efficient manner” to lower the borrowing costs for eurozone governments. Highly indebted Italy and Spain had insisted that other European nations help them reduce interest rates on their debts to avert a deepening of Europe’s financial crisis.

Although the council statement gave no specifics, it was assumed that the bailouts fund would be empowered to buy government bonds which could reduce the interest rates that Italy and Spain pay on their loans. Read more “Finland, Netherlands Block Bailout Fund Expansion”

Dutch: We Can Live Without Greece in Eurozone

The Dutch prime minister Mark Rutte and European Commissioner Neelie Kroes both said on Tuesday that the single currency area would survive a Greek exit.

Rutte said in a radio interview that the eurozone could “handle” a country leaving the union because the risk of contagion has now been sufficiently reduced.

His words echoed those of Kroes’ who told the Dutch newspaper de Volkskrant that “it is just not true” that the euro would collapse if Greece were to give up the currency. Kroes is a member of the Netherlands’ ruling liberal party which Rutte heads. Read more “Dutch: We Can Live Without Greece in Eurozone”

Dutch Threaten Eurozone Exit for Profligate Nations

Eurozone nations that aren’t willing to submit to a stricter enforcement of fiscal rules should leave the single currency area, the Dutch prime minister declared on Wednesday.

In a written statement to lawmakers, Mark Rutte suggested that countries that won’t commit to “strengthening budgetary discipline and the stringent enforcement of rules under independent supervision” should be forced out of the monetary union.

The Dutch leader envisioned the appointment of a “eurocommissioner” who would be empowered to subject countries to austerity measures if they violated the fiscal agreements of the Stability and Growth Pact repeatedly. This treaty, which was adopted by the seventeen members of the eurozone in 1997, maximizes deficit and debt ratios at 3 and 60 percent of gross domestic product respectively.

“Member states that aren’t prepared to put themselves in receivership can choose to leave the eurozone,” according to Rutte. Read more “Dutch Threaten Eurozone Exit for Profligate Nations”

Dutch Liberal Party Leading in Polls

With less than two weeks to go before Dutch voters head for the polls, and half of the electorate still describing itself as undecided, all political parties in the Netherlands are ramping up their campaigns with a vigor quite unprecedented in Dutch politics.

Where polling figures in the wake of local elections in March revealed political uncertainty before anything else and no three party majority seemed possible at the time, the situation today is slightly less complicated as for the first time in their postwar history, the liberals will likely claim victory and possibly deliver the prime minister.

Incumbent Prime Minister Jan Peter Balkenende hasn’t done well in the polls nor in the three televised debates that have taken place so far. His party of Christian conservatives currenty holds 41 seats in parliament; the polls give them somewhere between 21 and 26 instead.

Labor, which pulled out of its coalition with the Christian Democrats last February because it refused to prolong the Netherlands’ participation in ISAF, nominated former Amsterdam major Job Cohen to lead the party into the election. He managed to more than double the socialists’ popularity in the polls but has performed poorly in the debates since and is steadily losing support.

According to all the polls, the liberal party, led by 43 year-old Mark Rutte, wins the most seats, from 22 in parliament today to somewhere between 33 and 37 depending on the polling bureau.

Rutte was written off as a lightweight when he took over the party leadership in 2006 but has built credibility in recent months by promising to cut government spending and lower taxes once in power. The liberals are traditionally regarded as the party best equipped to balance the budget and have repeatedly delivered the country’s finance minister in the past. With deep spending cuts ahead, the party favors small government, individual responsibility and economic modernization. If they maintain their current support, the liberals may well turn out to deliver the prime minister for the first time in almost a hundred years after June 9.

The liberal party also campaigns on law and order issues and a promise to curb non-Western immigration. It has to compete with the more radical faction of Geert Wilders on this front who is renowned for his strong positions on reducing the supposedly growing cultural influence of Islam. His Freedom Party enjoyed a spike in popularity around the time of local elections in March but didn’t manage to maintain its support when economic issues came to dominate the agenda. People don’t seem to care so much about what Wilders describes as the “Islamization” of Dutch society anymore. They care more about jobs and being able to afford their mortgage.

The liberals’ pledge not to allow any change in home mortgage interest deduction is something many homeowners like to hear while unemployment hovers near 6 percent.

A center-right coalition of liberals and Christian Democrats appears most likely at this stage. Rutte has more or less rejected the possibility of coming to a government with Labor while the parties on the left do not hold a majority on their own. A government on the right does need support from the center however unless it wants to subject itself to the whims of Geert Wilders.