Dutch government on brink of collapse

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Geert Wilders has withdrawn his party’s support for the Dutch coalition government and has called for new elections. Prime Minister Mark Rutte says new elections are now very likely.

The break occurred suddenly on Saturday afternoon when Mr Wilders left the negotiations at the prime minister’s official residence, the Catshuis. The three parties involved in this coalition have been negotiating drastic new austerity measures since 5 March.

Minority coalition

The current government owes its existence to an unusual construction. The two coaliton parties, VVD and CDA, control a minority of seats in parliament. They therefore signed an agreement with Geert Wilders' Freedom Party, which pledged its support in parliament in return for government backing for some of its core policies, particularly on the issue of immigration. As a result, although the Freedom Party is not in government, the coalition depends on it to stay in power.

Geert Wilders withdrawing his support does not necessarily signal the immediate collapse of the government: it could in theory continue by calling on support from other parties. That is not likely to happen. Mr Wilders says he wants elections, and Mr Rutte says elections are the most obvious solution. 

Mr Rutte and Deputy Prime Minister Maxime Verhagen reacted bitterly to Mr Wilders’ move. The prime minister says the parties had agreed to a package of new austerity measures on Friday evening. Today’s negotiating session should have been a formality.

Mr Verhagen says Mr Wilders is "turning his back on the 16 million residents of the Netherlands and has driven any hope for a strong country into the ground."

Mr Wilders argues that the total package on the table at the Catshuis would have caused his supporters too much pain, particularly those living on retirement benefits. "We don’t want our pensioners to bleed just to meet the dictates coming from Brussels. Today, I can look my electorate directly in the eye and say we didn’t cave in to the bureaucrats in Brussels."

Need for more cuts
The latest crisis began in February when new figures showed the Dutch economy would continue to perform poorly in 2013 and 2014, and the Netherlands' annual budget would therefore exceed the European deficit limit of 3% of GDP. Unless cuts were made, the deficit for 2013 would be around 4.5 percent.

The coalition parties felt obliged to come up with around 14 billion euros of new spending cuts, in order to bring the balance in order. This followed an earlier round of cuts totalling 18 billion euros. The three party leaders, along with one assistant each, started a difficult and sensitive negotiating process at the Catshuis. They agreed on a complete media blackout and included neither parliament nor cabinet ministers in their negotiations.

7 weeks of silence
For seven weeks, the country has waited patiently while the negotiations continued. There were two tense moments – firstly, on 20 March when MP Hero Brinkman left the Freedom Party but kept his seat in parliament. That damaged Geert Wilders and took away the one-seat majority that the coalition-plus-Wilders construction had in parliament.

A few days later, the negotiators admitted they had entered a ‘difficult phase’. Geert Wilders threatened to walk out but, after a night to consider things, he returned to the table.

Of the three parties involved, it was Mr Wilders who found coming up with new austerity measures the most difficult. His populist Freedom Party wants to keep the social safety net in place, while the pro-market VVD and the Christian Democrats aim to cut social programmes further.

In the end, proposed cuts in healthcare and pensions were too much for Mr Wilders. He said he could not in good faith sign off on those cuts.

Brussels looming
A 30 April deadline from Brussels, when the Netherlands has to submit its austerity plan, is coming up fast. Mr Rutte’s government has been an outspoken proponent of drastic cuts by countries in the south of Europe and is now facing a credibility crisis as it struggles to practice what it preaches. The Hague will not find much sympathy in the rest of Europe for its current position.

In addition, the credit ratings agencies are beginning to reconsider whether the Netherlands still deserves is AAA status. If the Netherlands gets marked down, it will make it even harder to balance the books.

Next step
Mr Rutte says the cabinet will meet on Monday to discuss the situation. It is likely he will go to see Queen Beatrix and ask her to call for new elections, which could be held in September at the earliest.

In the meantime, he will attempt to find rolling majorities for his proposals in parliament in an attempt to bring the government finances in order in 2013. As he has said many times, a country going through an economic and financial crisis cannot afford to stand still while waiting for elections.