25th Oct 2016

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

“"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.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

Stakeholders' Highlights

  1. EFADraft Bill for a 2nd Scottish Independence Referendum
  2. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  3. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  4. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  5. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  6. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  7. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  8. Dialogue PlatformIs Jihadism Blind Spot of Western Intellectuals ? Wednesday 26 October
  9. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  10. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16
  11. EJCEU Parliament's Roadmap for Relations with Iran a Massive Missed Opportunity
  12. Nordic Council of MinistersFish Skin on Bare Skin: Turning Fish Waste into Sustainable Fashion