Dutch Cabinet Submits Resignation To The Queen

The Dutch government was close to collapse on Monday, with the prime minister widely expected to resign after top-level talks on an austerity package failed. Photo: Getty Images

Wall Street Journal | April 23, 2012

AMSTERDAM (Dow Jones)–Dutch Prime Minister Mark Rutte and his cabinet Monday tendered their resignation to Queen Beatrix of the Netherlands, after his ruling coalition lost support of a populist party due to disagreements over austerity budget measures.

The Queen will take the resignation into consideration and has asked the cabinet to continue to work “in the interest of the Kingdom,” the government said in a statement.

Rutte is due to address the Dutch parliament at 1200 GMT Tuesday.

The widely expected step, which marks an end to Rutte’s center-right minority government after just one and a half years, comes after weeks-long talks over measures to slash the Dutch government’s budget deficit collapsed over the weekend, raising questions about the future commitment of one of the euro zone’s foremost proponents of fiscal stringency to a German-led austerity agenda.

The Netherlands has been a key ally of Germany and one of the most vociferous supporters of austerity since Greece’s debt problems initiated the euro zone’s debt crisis more than two years ago. But its economy is performing poorly and is expected to shrink this year, widening its budget deficit and making it one of the worst-performing in the euro zone.

The talks collapsed after the right-wing Freedom Party pulled out of talks with Rutte’s center-right liberal party. The negotiations had been aimed at cutting the budget deficit to 3% of gross domestic product next year, in line with European Union rules, from a forecast 4.6%.

Geert Wilders, the head of the anti-euro Freedom Party, called for elections “as soon as possible.” He said agreeing to the budget cuts would have hampered economic growth and triggered unemployment.

The Dutch news adds to a growing catalog of governments facing internal rifts and public protest rising from the growing strain that fiscal consolidation has been having on euro-zone economies. The euro-zone has set deficit reduction as a top policy priority to defuse the region’s sovereign debt crisis, but the cost in lost demand and jobs is sorely testing political consensus.

This leaves Germany’s Chancellor Angela Merkel facing an increasingly lonely battle of keeping austerity plans on course, even among what had been some of the euro-zone’s strongest supporters the German doctrine of fiscal probity.

Francois Hollande, the French socialist who just edged out President Nicolas Sarkozy in the first leg of the French presidential elections, has built support as an anti-austerity candidate. The Spanish government, only in government since December, is facing increased popular opposition to redoubled cutbacks as unemployment keeps rising. As Greece braces for new elections, set for May 6, the country’s splintered political landscape has become increasingly radical after two years of harsh reforms.

Europe’s financial markets showed the strain Monday after the Netherlands became the latest country in the euro zone to be thrown in political turmoil.

The euro fell to the day’s lows against most other major currencies following the Dutch government’s resignation. The euro shed almost 1.4% against the yen today and 0.3% against both the dollar and the pound. The euro’s now just off its lows, but only just.

Government bonds from the euro area also came under early pressure, but later recovered somewhat. The Netherlands suffered more clearly, with 10-year yields rising by five basis points to 2.38%. The extra yield demanded by investors to hold 10-year Dutch bonds instead of haven German Bunds widened to 80 basis points, the highest in three years.

Meanwhile, the cost of Dutch five-year credit default swaps, used by investors as a way to insure against non-payment on a government bond, jumped towards a record high. The rate moved 13 basis points wider to 132 basis points, according to data provider Markit. That means it now costs $132,000 a year to insure a notional $10 million in Dutch five-year bonds against default. The record level, struck last November, was $136,000.

The spreading of market tensions to even higher rated euro-zone economies marks another chapter in the debt crisis and reflects the waning capacity of countries in the common currency region to weather additional austerity measures. Political leaders in Greece, Italy, and Spain have already been ousted but discontent is now rumbling even in some of the countries that prescribed the austerity medicine.

Attention will now turn on the timing of new elections in the Netherlands and the country’s ability to push through with the budget reforms while it’s faced with a political vacuum that could last several months.

If the Queen accepts the current cabinet’s resignation, it generally takes about three months before elections are held, although in theory elections could be held late June, according to a Dutch organization that advises the Government on elections. It said early September appeared to be the most likely date.

But several opposition parties have called for elections as soon as possible.

“The longer we wait, the longer the uncertainty continues,” Diederik Samson, leader of Dutch labour party, or PVDA, said in a TV interview.

Finance Minister Jan Kees de Jager indicated the government will try to push through with its planned budget cuts soon, even without parliamentary majority. Euro-zone countries have until April 30 to submit to the EU commission any additional budget reforms.

“The Netherlands will be up to its responsibilities, even in this difficult political situation,” De Jager said at the sidelines of the International Monetary Fund meetings in Washington over the weekend.

Opposition parties, which are also calling for early elections, haven’t indicated so far if they would support the government’s austerity package.

European Commission economics chief Olli Rehn on Sunday said he expected the government would continue to seek an appropriate solution to its budget problems.

“We trust that the Dutch government will continue to seek budgetary solutions that are important for the financial stability of the country and for the welfare of Dutch citizens,” he said.

A public-opinion poll conducted by polling institute Maurice de Hond among 4,500 people after the center-right minority government lost the Freedom Party’s support shows Rutte’s liberal party would emerge slightly stronger if elections were to be held now. But he would still need support from at least three other parties to form a majority government, in which analysts say left-wing parties could play an important role.

Without extra measures, the Netherlands will breach the budget rules it has been fiercely advocating as one of the euro’s founding nations. This has fueled a debate on whether the country still belongs to the group of “core” euro-zone states with solid public finances.

Last week, Fitch Ratings threatened to strip the Netherlands of its cherished triple-A credit rating if it failed to take action to cut its budget deficit and stop its debt from rising.

The ratings firm will consider its rating of the Netherlands in June, and placing it on negative outlook is a possible first step toward a downgrade, it said.

The Netherlands is one of the four remaining triple-A-rated countries in the euro zone, along with Germany, Finland and Luxembourg.

Klaas Knot, Dutch central bank chief and ECB governing council member, has said the government’s borrowing costs could rise significantly if it were to lose its top rating.

-By Archibald Preuschat, Dow Jones Newswires; +31 20 5715 218; archibald.preuschat@dowjones.com

(Robin Van Daalen in Amsterday and Geoffrey T. Smith, Jessica Mead, Katie Martin and Neelabh Chaturvedi in London contributed to this article.)

Source:

http://online.wsj.com/article/BT-CO-20120423-713183.html

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About Pat Donworth

I express myself as teacher, writer, and consciousness explorer. These driving interests have manifested in my work/service as a university and hospital chaplain; a book and magazine writer/editor, and teacher and workshop leader. I designed this blog to be a portal that points to and assists awakening souls to implement, and make practical, the changes that will usher in a new world based on unity, compassion, and collaboration.
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One Response to Dutch Cabinet Submits Resignation To The Queen

  1. Almaz Mequanint says:

    IN THE EYES OF Dutch ‘NRC INTERNATIONAL Handelsblad’ NEWSPAPER

    In June 23, 2012 I attended the talk show conducted by Mr. Kibret Mekonnen/ Colour Multimedia production owner & AIMIRO Media. The talk show was held at Taken at Dudok Den Haag (PRODEMOS) in The Hague, The Netherlands.
    Mr. Tefera Addisu and I addressed the audience about the issue of Ethiopian victims of fluoride and Asbestos of Wonji, Wonji/Showa and Metehara employees who were working for Dutch run company HVA International who was running three sugar factories in 1954, 1960 & 1968 until 1974.
    HVA International didn’t respect and violated our economic, social and cultural rights by withholding information from its employees the existence of excess fluoride in the drinking water but informing/protecting the Dutch employees only. Also by building the roofs of the employees’ houses from asbestos. Even though the UN reported the case in 2004, HVA International denies its wrongdoing and The Netherlands government should be held accountable to compensate Wonji, Wonji/Showa & Metehara fluoride/Asbestos victims. Ethiopian employees/families including my family & I had been discriminated/segregated in facilities, residential areas & medical treatments. Even though apartheid based on race is outlawed at the time, but corporation like HVA had their own system that goes far deeper than that in disguise. HVA International’s cruelty and injustice exercised its system of an economic apartheid on its Ethiopian employees regarding them as no more than cheap expendable laborers.
    From those who were invited only Ethiopians attended the talk show. There was a great expectation of Dutch Media and Dutch citizens who were working to HVA in Ethiopia to come and hear the sad story of these mistreated Ethiopian laborers. Unfortunately, no Dutch citizens or the invited Dutch media NRC Handelsbad showed up.
    Very sadly, while thousands Wonji victims are still suffering and dying some Western medias /editors reject to raise the issue and make report on it. To mention one of them is NRC Handelsblad who made a poor and senseless decision not to report on it by stating “Too far away and too long ago.” Oh really, too far and too long ago!
    NRC Handelsblad showed the lack of concern for countless number of Wonji,Wonji/Showa & Metehara fluoride/asbestos victims suffering, deformed births, tainted teeth suffering from mesothelioma, dental & skeletal fluorosis and most of them dying from it.
    There is a profound disconnect between this senseless and inhumane action of NRC Handelsblad and its mission statement “NRC Handelsblad is recognized for its authoritative reporting of national politics, foreign affairs, financial news and coverage of arts and culture. It has a liberal profile and is targeted at an affluent and well-educated readership.” http://vorige.nrc.nl/article1876754.ece
    NRC Handelsblad also brags about its provision of readership with quality journalism based on its mission. By refusing to report on Wonji victims and HVA issues it clearly reflects it’s irresponsible, unfair and unethical manipulated journalism/news coverage. Or may be the victimization by the Dutch corporation…a nationalistic behavior played role on this matter. Any ways, NRC Handelsbald failed to reflect the diversity of the Dutch & international public they serve by holding some group to one standard while using a different double standard for other groups.
    If NRC Handelsblad claims itself a liberal newspaper would not be just common sense and ethical to advocate for the poor and voiceless like Wonji victims? What does the ignorance, negativity and defensiveness help for liberal newspaper like NRC Handelsbald when reporting and reflecting over the mistakes done on Wonji victims could inspire, motivate and change our attitude towards finding justice?

    Maybe ignorant/curious eyes will be opened on what is really going on in Wonji, Wonji/Showa & Metehara. Again I repeat the statement by NRC Handelsblad “Too far away and too long ago.” It was not too far when HVA International decided to come in Ethiopia to establish three sugar factories and exploiting us, exposing us to fluoride & asbestos, treating us like slaves with many restrictions from using residential segregation, facilities, school, hospital treatments and physical/mental abuses. This is very bizarre to say the least! My conclusion, shame on NRC Handelsblad!

    Sincerely,

    Almaz Mequanint

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