The Hague debates as economy flounders
Politicians in The Hague were at odds yesterday on how to combat the worst economic downturn since 1930.
THE HAGUE—The Netherlands is facing its most severe recession since the 1930s. “We’ve got to work together,” Prime Minister Jan Peter Balkenende implored in a House of Representatives debate yesterday. Nearly all of the political parties agree: The Dutch economy cannot withstand any steep budget cuts. All that is, except the VVD (The People's Party for Freedom and Democracy), which is calling for austerity out of concern for a growing national debt.
Finance Minister Wouter Bos (PvDA, ie, Labour Party) said that the VVD plan would inflict a lot of damage to the economy. CDA (Christian Democratic Apeal) fraction leader Pieter van Geel accused VVD party leader Mark Rutte of being seriously misguided.
The House of Representative debate followed a day after the Central Planning Bureay (CPB) predicted a period of severe malaise for the Dutch economy.
At the beginning of the crisis around September-October of last year, the Balkenende cabinet met with broad support for its plans to rescue ABN Amro, and received billions of euros for ING and other financial institutions. Yet, now that the crisis is really starting to hit the economy, there’s much less consensus. Politicians need to strike the right balance between keeping the economy flowing (investment), fiscal restraint (budget cuts), and keeping the economy healthy over the long haul (reforms), which translates into conflict between parties.
The coalition parties CDA, PvDA, Christan Union and the cabinet plan to work behind closed doors in the coming weeks to negotiate a plan of attack. CDA party member Van Geel promised that a recent bout of wrangling between parties would be temporarily put to rest.
The VVD, PVV and the SP (Socialist Party) were critical of the time it's taken for the cabinet to act. PVV (Party for Freedom) member Geert Wilders had some biting criticism to offer: “Bos and Balkende can roll over once again, and Rouvet, whose sleeping next to them in the bassinette, lets them sleep.”
Not all political opponents called for a hard line. GroenLinks (GreenLeft) leader Femke Halsema made a pledge to think constructively on an accord. D66 (Democrats 66) leader Alexander Pechtold called on the cabinet to “work with society on a new accord. D66 expresses its opposition in conjunction with the cabinet; not at odds with it.”
The Plan Bureau calculated that the cabinet faces a budget shortfall of 3 percent of gross domestic product that will increase to 5.5 percent in 2010. Unemployment will rise to 700,000 by next year. In a regime accord it was agreed that the shortfall wouldn’t go above 2 percent. Yet in order to reach the goal of 2 percent, a savings of 40 billion euros would have to be made. Pieter van Geel: “We have to be realistic. That’s unattainable. We’d destroy the economy with such a decision.”
Yet the VVD continues to clamp onto the idea of strict budget cuts. Van Geel asked Rutte where he was going to get 40 billion. Rutte attempted to deflect the blame onto CDA. Citing the consequences for future generations of failing to make cuts, Rutte retorted, “I’m not going to pass on the bill to our children.” In the end the VVD listed a series of cuts, including raising the retirement age, reducing unemployment benefits, putting an end to the kilometer tax, and giving out less money on stimulus measures.
This list would mean a savings of 7 billion. “You’re placing yourself outside of the social and political reality,” concluded Van Geel. Arie Slob (Christian Union), stated, “I’m having difficulty taking you seriously.”
Bos and Balkenende didn’t give much insight into their own ideas on the matter, which will come later. The coalition was in implicit agreement: this isn’t the time for political debate, or for stride between Balkenede and Bos. If that proves to be the case, it will be a time of unprecedented self-control in The Hague in the coming three weeks.
NRC Handelsblad/Lila Lundquist/Expatica