When the leaders of the 27 nations gathered in Brussels last weekend for what would be a marathon summit on the current and future financing of the European Union, the absence of the UK delegation was hardly noticed.
No, it’s not because the Brits weren’t there, it’s because the Dutch delegation were. Prime Minister Mark Rutte was more than willing to be obstinate, obdurate and obstructive — obnoxious too some officials from southern Europe might add too for his stubborn refusal to give ground on his opposition to financial grants to the hardest-hit nations by the coronavirus pandemic.
For many long term EU observers, Rutte’s deep-rooted intransigence was a reminder that while the Brits are gone, Euroscepticism is alive to thwart any move towards greater EU integration anytime soon.
For observers of Dutch politics, Rutte’s obdurate performance was more an attempt to maintain the unity of his fragile domestic minority centre-right coalition than it was as a statement of principled leadership of the so-called “frugal four” states of the Netherlands, Denmark, Austria and Sweden. Principled Calvinist frugality will only carry so far, after all.
While a two-thirds majority of Dutch still want to be and believe in the EU, there is a rump “Nexit” sentiment in the Netherlands.
Holland, a small state geographically and with 17 million people, has always hit above its weight at the European level. It was an original member of the six founding states of the Common Market back in 1957 — West Germany, Italy, France, Belgium and Luxembourg were the others — and has traditionally aligned itself closely to Bonn then and now Berlin as the bloc grew to embrace some 500 million Europeans and collectively become the third-largest global economy. But as a result of last week’s summit performance, Rutte is plainly out of step now with German Chancellor Angela Merkel and French President Emmanuel Macron who both stickhandled the €1.8 trillion (Dh7.66 trillion) financial package through some testy and testing talks.
In essence, the EU27 agreed on two separate packages. The first element is a €1.074 trillion budget for the running of the EU itself to cover off the period between 2021 and 2027. Formally called the Multiannual Financial Framework (MFF) — yep, with such eurocratic terms and convoluted language, it’s easy to see why so many express frustration with the mechanisms of bringing together 27 separate nations with 24 official languages and nine currencies. Not to denigrate those sceptics however, in reality French, German and English are the working languages and the MFF itself, once agreed by the EU27 and approved by the European Parliament, is administered by the European Commission, the cabinet-like structure that oversees the day-to-day running of the bloc.
At the best of times, setting the MFF is a Herculean task that requires many hours of complex negotiations. But these are not the best of times and the European Central Bank — responsible for administering the euro, the common currency used by 19 EU member states — has set aside €1.35 trillion to ease the effects of the pandemic on Eurozone nations. At its June meeting, the ECB predicted a contraction of 8.7 per cent in the Eurozone from coronavirus. The recovery, however, will take time, and the ECB predicted growth of 5.2 per cent in 2021 and 3.3 per cent. Those predictions, of course, could change if there’s a sustained second wave in the coming weeks and months.
The ironic thing is that for Rutte’s obduracy on the politics of parsimony a golden opportunity was missed by the EU leaders to force both Hungary and Poland into line.
But the Brussels summit last week spent many long hours and all-night sessions hammering out the details — and trying to convince Rutte more so that the Austrian, Danish and Swedish leaders — to agree to a separate €750 billion coronavirus recovery fund.
Rutte’s opposition was based on the definition of the recovery fund and its differentiation between grants — which are essentially handouts and don’t have to be paid back — and loans. Italy and Spain, both hardest hit by the coronavirus, wanted as much money as possible to come as grants.
Acrimony and tension at Brussels
When the original €750 billion plan was proposed by Urusla von der Leyen, the chair of the European Commission, it was envisaged that €500 would be in grants, €250 in loans. That quickly was shot down by Rutte and company, leaving Charles Michel, the chair of the EU Council, proposing €450 billion. That was rejected by Rutte — who also snubbed €400 billion. By that stage, both Italian and Spanish officials had taken to calling the Dutch PM “Mr. No”.
The tensions during the five-day summit were acrimonious at times, with Rutte offending for his comments that Italy should stand on their own two feet when the next crisis comes along.
Most of the coronavirus recovery fund — €312.5 billion in grants and €360 billion in loans — will be spent through a new Recovery and Resilience Facility (RRF) to help countries get their hibernating economies back up and running.
Rightwing moves in Budapest and Warsaw
The grant portion is linked to national recovery plans tied to economic reforms linked to complex and specific fiscal targets.
Countries will get payouts based on their progress toward certain targets. Under pressure to save euros, leaders discarded the idea of a separate €26 billion “solvency instrument” that was intended to prop up companies in danger of failing due to the crisis.
The ironic thing is that for Rutte’s obduracy on the politics of parsimony — the Dutch have always abided by the rule of law principles that are the cornerstone of the EU — a golden opportunity was missed by the EU leaders to force both Hungary and Poland into line. Right-wing leadership in Budapest and Warsaw have played fast and loose with the EU rule of law provisions, undermining personal freedoms and the independence of their judicial systems.
After five days of prolonged talks there was little stomach to protract matters even longer by tackling Budapest and Warsaw. That will come, and certainly under the current six-month term that sees Chancellor Merkel chair the EU Council, but Rutte’s obduracy meant an opportunity missed.
