The Netherlands has been drawn into the debt crisis in Europe as the government failed to agree on budget cuts, thus casting doubt on its support for the Euro zone.
Reuters reports that over the weekend, the government in the Netherlands failed to gain coalition support for its austerity plans. Elections are now planned for September and analysists have said that one of the EU's strongest economies might just bring about the demise of the Euro.
The Netherlands Prime Minister, Mark Rutte strongly advocates the Euro. He has been attempting to get the Dutch Parliament to adopt 14-16 billion Euros worth of austerity cuts in the country. This attempt is aimed at getting the Dutch budget deficit under the 3% of deficit to GDP limit which was established by the new EU fiscal agreement.
Rutte is the leader of the center-right People’s Party for Freedom and Democracy
However, Rutte was unable to gain the support of the far-right Freedom Party. Leader Geert Welders said that his country should not have to fund the new European Stability Mechanism while being expected to implement Brussels' deficit caps.
Welders stated: “We don't want to cut spending by 14 billion euros and at the same time transfer billions of euros to Brussels for the horrible ESM emergency fund and the weak Greeks.”
On Sunday he tweeted: "The Freedom Party benches are unanimously against Brussels diktats and the attack on our elderly."
The Dutch government's austerity measures also came under criticism from the leftist opposition Labor Party. Leader Diederik Samsom, while admitting that the 3% deficit limit exists, has stressed that the Netherlands does not have to comply “if there are exceptional circumstances in the economy.”
After he failed to obtain the necessary support from coalition parnters, Rutte tendered his resignation and said that new elections will likely be held in September.
The now acting premier still hopes to obtain the support of minor opposition parties to pass the legisation.
The Wall Street Journal reported that Charles Grant, director of the Center of European Reform in London had said: "The euro zone is a sick patient on a bed, and the doctors gathered round can't agree on the diagnosis, so it's hard to heal the malaise."
In an interview with RT, journalist Neil Clark says that he believes the Dutch are mainly angered with the fact that the EU fiscal pact imposes deficit limits on its signatories.
“The people have had enough of austerity,” Clark told RT “Holland’s GDP growth in the ten years since it’s had the Euro has just been 1.5 per cent. And they’re now being told that because of this absolutely insane fiscal pact that was agreed upon last year. It will destroy the good life that the Dutch people have been used to over the years. And unsurprisingly the Dutch are saying, it’s enough.”
Clark also stated that leaving the Euro zone was now a strong possibility:
“I think if Holland were to leave the Euro, and that’s not such a far-fetched idea now, as it might have appeared a few years ago, then it really is game over. Because Holland has been a strong ally of Germany in the drive towards the Euro and I think it would be an enormous blow.”
Several Eurozone members have adopted severe austerity measures to reduce their massive budget deficits and debts. Such measures were not met with popular support, especially in the badly crisis-hit countries such as Greece, Italy and Spain.
Currently the economy in the Netherlands is in much better shape and Moody's still maintains an AAA rating for the country's economy.