Tuesday

16th Oct 2018

Netherlands: Indebted states must be made ‘wards’ of the commission or leave euro

  • Mark Rutte has radical ideas for the eurozone (Photo: NewsPhoto!)

The Dutch government has proposed that highly indebted states be put into “guardianship”, with spending decisions seized from the elected government and placed under the direct control of a European commissioner.

If a state is unwilling to surrender its sovereignty in this way, then it would be forced to exit the euro.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

“"Member states not willing to make themselves a ward, may choose to make use of the option to leave the eurozone,” Dutch Prime Minister Mark Rutte said in a letter to the national parliament co-signed by the finance, economy and foreign ministers.

“To continue to be part of the monetary union, states should fully respect agreements."

Under the proposals, seen by EUobserver, a special European commissioner would be appointed to oversee the budgets of euro-area countries.

If a country repeatedly overspends in breach of EU stability pact rules, this commission overseer would be able to intervene directly in the running of the country, in a similar way to how a court intervenes in the running of a bankrupt firm put into receivership, according to officials familiar with the intention of the Dutch government.

"We propose to take a great new step forward by forging effective rules to be strictly enforced by an especially appointed commissioner. This is how we must safeguard the heath and viability of the eurozone and all its members for now and in the future," Rutte later said of the proposals.

The commissioner would be given a “ladder of intervention” under which the level of control of the state would be steadily ratcheted up and applied this “ward” of the EU executive.

The first rung of the ladder would involve an outside auditor making adjustments to spending to bring down the level of the deficit.

If this level of intervention is insufficient, binding measures would be imposed, or the commissioner could order a country to cut spending or raise taxes.

The last rung of the ladder would see a country placed under “guardianship”. The auditor would then draft the budget of a country before sending it to the national parliament for approval.

Such states, described in the paper as “notorious sinners”, would also lose their voting rights in the EU and the delivery of European structural funds would be dependent on compliance with the orders of the commissioner.

The guardianship would be accompanied by intensive monitoring and verification of progress at a more detailed level under “prior review” by the commissioner.

The Hague recogises the extreme nature of the proposals, but argues that such measures are necessary if the eurozone is to survive.

“For the eurozone and the internal market in their present form to have a future as a stable currency union that underpins our prosperity, there needs to be a radical break with the persistent habit of soft touch approach to agreements.”

One Dutch official said of the paper: “It is not like it would be a takeover of sovereignty, but things do need to get much tougher for countries.”

Asked whether voters would still consider themselves in a democracy under such extreme conditions, the official said: “In that case, they need to take their own responsibility. If you want to be in the club, you have to play by the rules.”

The paper adds that for the proposal to be implemented, agreement with “especially but not exclusively” eurozone countries.

Merkel and Sarkozy plan 'true economic government'

Under pressure to restore confidence in the eurozone, the leaders of France and Germany on Tuesday outlined plans for what they said was true economic governance but shied away from financial measures seen by markets as necessary to stem the euro debt crisis.

Commission to unveil bank bail-out plan

European Commission President Jose Manuel Barroso has said that the EU executive will put forward plans for a fresh round of bank bail-outs across Europe on Wednesday.

Dutch PM clashes with parliament over EU summit

Dutch Prime Minister Mark Rutte clashed with parliament in the Hague on Saturday, over his refusal to elaborate on the government’s position at Sunday's eurozone summit for fear of giving away its negotiation strategy.

Rehn to get increased economic powers

EU monetary affairs commissioner Olli Rehn is to be given extra powers to supervise national fiscal policies, as the commission moves quickly to centralise economic governance powers in Brussels.

EU needs fewer presidents and a new budget 'tsar', say Finns

The EU needs fewer president and a new budget 'tsar' if it is to emerge from its current economic and political crisis, Finnish Europe minister Alexander Stubb has said. He also explains how Finns were shocked by Greek behaviour.

Spanish commissioner lashes out at core eurozone states

Spain’s European commissioner has lashed out at core eurozone states in the wake of suggestions from the Netherlands and Germany that heavily indebted members of the single currency could be booted out of the club.

News in Brief

  1. Le Pen warms towards cooperation with Bannon
  2. Bettel set to stay in power in Luxembourg after election
  3. EU-UK Brexit deal talks paused
  4. Macedonian parliament to vote on name change Monday
  5. Swedish opposition leader gives up on forming government
  6. Commission confirms: no record of Juncker speech seminar
  7. Ukraine splits from Russian orthodox church
  8. Polish doctor wins landmark pro-life case in Norway

Airbnb agrees to clarify pricing for EU

The justice commissioner says the accommodation-rental website will better inform users about prices, and about the legal status of their 'hosts'. Facebook, however, could face sanctions if it doesn't comply with EU rules.

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  4. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  6. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Latest News

  1. Daily reality in Western Sahara - and how EU can protect it
  2. Bavarian election puts Merkel on defensive
  3. It's time for the EU to stand up to transnational corporations
  4. Tug of war between 'top-down' and 'bottom-up' cohesion money
  5. 'Macron vs Orban' is no quick fix for EU democracy
  6. Brexit and sanctions at EU summit This WEEK
  7. EU looks at Morocco and Tunisia to offload migrants
  8. EU urged to seize assets of foreign hackers

Join EUobserver

Support quality EU news

Join us