February 3rd, 2013 • Only a few weeks after the appointment of Dutch Finance Minister Jeroen Dijsselbloem as Chair of the Eurogroup, my fear that he will find himself in an impossibly conflicted position has already been realised.
He can thank the Germans and their confidence in him for his nomination. That means adopting a hard line stance: a maximum 3% budget deficit and not a cent more. But in the domestic case of SNS Reaal, described by the Financial Times as ‘the fourth-largest systemically important bank in the Netherlands’, he has stepped in to rescue the company, nationalising it at a cost to Dutch taxpayers of €3.7bn, taking the national budget above that same 3% norm. So the rule is ‘hard on others, soft on the Netherlands’. That’s his dilemma, as he doesn’t want the Netherlands at least to destroy his own country through further cuts in spending. My advice to him is – go on the attack! See the SNS catastrophe as the latest example of a stack of evidence that Brussels has not yet managed to tackle irresponsible speculation. Dijsselbloem will gain authority if, on the basis of the Dutch experience with banks such as SNS, he comes forward with an additional package of proposals, with the splitting of bank activities at the head of the list.
The Dutch national daily Trouw this week published my response to an opinion piece by researcher Rob de Wijk. It concerned the question of whether we should be pleased by the choice of Dijsselbloem. I predicted that this would not benefit the Netherlands, as Dijsselbloem would find himself in a difficult position as Chair of the Eurogroup, should it prove necessary to authorise an exception – for his own country - to the 3% norm. The alternative, yet more cuts, would mean the Netherlands sailing into even more troubled waters. That’s why I found the appointment no reason for the country to celebrate. Now, just a few days later, we can see how serious this scenario is. The SNS rescue will drive the national debt up further, and it is now certain that in 2013 we will break the 3% deficit ceiling, unless the government brings in still more ridiculous austerity measures than it is already doing.
We’ve seen on many occasions in Brussels that when Commission or Council Chairs or government leaders find themselves in a tight corner, a headlong rush is often the only solution they can see. That’s why I think that it would be a good idea from Dijsselbloem’s point of view if he were to redirect the Eurogroup’s agenda, putting less emphasis on budgetary goals and giving absolute priority to tackling irresponsible speculation. The Commission is just now reconsidering its strategy, following the this week’s announcement by Internal Market and Services Commissioner Michel Barnier that he will in September produce proposals for the splitting of banking activities in order to improve transparency. In addition, the Basel Commission, the leading body representing top bankers, has recently announced that demands for ‘capital buffers’ - the amount of capital a financial institution needs to hold above minimum requirements, calculated on an assessment of forecast risk – are to be softened. It is at such a moment that Dijsselbloem, citing the experience with SNS, could demand that his fellow ministers get to work.
An analysis which the SP European Parliament team has made regarding the application of the party’s action plan against irresponsible speculation demonstrates that the EU is dragging its feet and that little has been done about the intentions stated immediately after the financial crisis of 2008. If Dijsselbloem is interested, we will be happy to make our data available to him. It would be am extremely straightforward matter to draw up a new action list of badly needed measures. He could bring this before the Eurogroup and by doing so put the Commission under pressure to show more urgency and more ambition. If he were to do so, I would be more than happy to withdraw my criticism of his appointment and admit that the Netherlands had gained from it. Another benefit would be that by drawing attention away from the 3% ceiling, he could more easily insist that we urgently need an exception for the Netherlands, at least if we are to avoid drowning under a tidal wave of irresponsible spending cuts.