The Netherlands is one of the eurozone countries that profit most from the European common market and common currency. In addition to being one of Europe's highest value-added economies, it is a main transit country for goods moving to and from the European inland. This makes the country richer per capita and more dependent on trade than even Germany. The Netherlands thus has a strong interest in the stability of the eurozone and its members to ensure stable trade flows.
Having experienced German power during World War II, the Netherlands also has a strong interest in restraining German influence. Thus far, EU bureaucracy and equal voting rights among countries tends to restrain Germany. Even so, the Netherlands maintains tight relations with Germany given the importance of goods entering into and leaving Germany through the Netherlands. The Netherlands and Germany are two of the four remaining AAA countries in the eurozone and have been the most vocal in pushing peripheral countries to implement austerity measures. The Netherlands also is interested in a peaceful relationship between France and Germany such that neither, alone or in alliance, can dominate the Netherlands or the rest of Europe.
Political Dimensions
A two-party minority coalition composed of the Liberal Party (VVD) and Christian Democratic Party (CDA) currently governs the Netherlands. The coalition has a support agreement with the third-largest party, the Freedom Party (PVV), which has aroused ire beyond Dutch borders for its anti-immigration and anti-Islam rhetoric. PVV leader Geert Wilders has called for a referendum on whether the Netherlands should remain in the eurozone.
Through its alliance with the PVV, the government had 76 seats in the 150-seat Dutch parliament. The PVV has just lost a member to an internal struggle, depriving the government of its majority and thus putting in question whether the government can push austerity measures through parliament. The government depended upon the PVV to win approval for aid packages for Greece (in exchange for proposing controversial laws, such as the veil ban that could be passed soon).
In addition to domestic austerity measures, the Dutch government is supposed to ratify the fiscal compact the Netherlands signed March 2 with 24 other EU nations. The left-wing opposition has said it will not support the measure because it views its deficit rules too strict.
Because the Netherlands has a low threshold for entering into parliament, its governments all will tend to be multiparty coalitions. Currently the constant need to accede to the wishes of parties outside the government coalition is proving unsustainable for the Dutch governing coalition over the long run.
If the Dutch government were to collapse in the coming weeks — for example, because no agreement can be found on austerity measures — it is uncertain which parties would profit most from new elections. A left-wing coalition would reach around 70 seats, while the present VVD and CDA government with support from the PVV would still reach 75 seats, according to polls. Agreeing to a coalition, however, often takes months — meaning, should the government collapse, a core EU country would be adrift without a foreign policy during the economic crisis.
The European Commission already has reminded the Dutch government that it must respect the 3 percent deficit rule by 2013. The Dutch government is supposed to show how it intends to reach this target when the eurozone finance ministers meet March 30. Negotiations among the coalition parties regarding how that level should be reached are ongoing. The aim is to implement austerity measures worth 9 billion euros ($12 billion), though the opposition Labor Party believes the government would have to make cuts close to 16 billion euros to reach Brussels' target.
The political dispute and economic troubles within the Netherlands will have effects beyond the country. After being one of the most vocal countries in terms of pushing for more austerity and compliance with the deficit rules, the Dutch government now must show the rest of Europe that it can lead by example. Peripheral countries will point out that the push for austerity by the northern eurozone countries lacks credibility because even the latter are struggling to comply. It will also appear unfair if EU institutions do not push the Dutch government to implement austerity measures the way they did other peripheral countries, which is likely.
