Sanctions only way to ensure euro's success: Dutch PM

16th August 2011, Comments 0 comments

Sanctions against countries which do not respect eurozone rules on their public finances are the only solution to ensure the euro's success, Dutch Prime Minister Mark Rutte said Tuesday.

"We are in complete agreement in the Dutch cabinet that imposing automatic sanctions as much as possible against countries who do not stick to the rules is the only way to ensure the euro's long-term success," Rutte told a parliamentary finance committee.

"You have to impose penalties but they must be objective," he said, adding that the form of any sanctions still needed "to be discussed."

Rutte said he believed rules concerning eurozone budgets should be stricter than that proposed by the euro's founding stability pact.

The eurozone debt crisis which has snared Greece, Ireland and Portugal, and which now threatens Italy and Spain is largely driven by fears that eurozone governments cannot control their debt and budget deficits after years of breaching EU limits on both.

Asked about possible expulsion from the eurozone to penalise countries which do not respect the rules, the Liberal Conservative Rutte, who heads a coalition government, said: "I do not want to speculate about the expulsion of any country from the eurozone."

He added that any speculation about the enlargement of the European Financial Stability Facility (EFS), the temporary EU rescue fund established last year, or the possible creation of eurobonds to share the debt risk would be "extremely unwise."

Dutch Finance Minister Jan Kees de Jager said even if eurobonds could present a long-term solution, they were not a response to the current debt crisis.

De Jager backed Rutte, saying an enlargement of the EFSF was "ill-timed" and called on countries such as Spain and Italy to restore order to their finances and reduce debt.

© 2011 AFP

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