Tags: EU | Netherlands | Guilder

Major Dutch Party Backs Euro Exit

Monday, 05 Mar 2012 04:18 PM

 

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Dutch populist politician Geert Wilders on Monday called for a national referendum on abandoning the euro and reintroducing the guilder.

The idea is not likely to succeed in the short term, but it marks a significant change in the discussion over the euro in one of the "core" euro-zone countries — one of the few, along with Germany, that retains a top-notch credit rating.

"With the guilder, the Netherlands would be master of its own money again," Wilders said at a news conference in the Hague, Netherlands.

His call came hours after he met with the country's prime minister to discuss new spending cuts needed to comply with European budget rules that, ironically, the Netherlands itself demanded in exchange for participating in a new bailout package for Greece.

Wilders heads the Freedom Party, the country's third-largest, and is an indispensable partner for Prime Minister Mark Rutte's minority Cabinet. Rutte relies on outside help from Freedom to achieve a majority in parliament.

Wilders is mostly known for his anti-immigrant stances, but he also is a longtime skeptic of European projects. He has opposed any aid for struggling countries during the sovereign debt crisis, saying the Greeks should return to the drachma. He also was a prominent figure in the Netherlands' rejection of the European constitution in 2005.

He acknowledged Monday it would cost money to depart the euro and calculated the new guilder might rise by 10 percent against the euro in the short term, hurting exports. But he argued consumers' purchasing power would improve in compensation.

That analysis doesn't address the possible costs if a Dutch departure leads to a new acute financial crisis in Europe.

A majority of Dutch voters say they want to remain in the single currency, though most regret joining it. Enthusiasm has waned as the country's economy has weakened in recent months. The government's statistics agency announced last week that the country is now in recession.

Earlier Monday, Wilders met with Rutte at the start of negotiations to reduce the country's deficit. A government forecast last week put the deficit at 4.5 percent of GDP this year, greater than the 3 percent allowed under European rules, due to the economic slowdown.

To achieve the 3 percent target, the country would likely have to cut spending on health care and pensions.

But Wilders said his party would only accept new cuts in exchange for — largely symbolic — cuts on foreign aid and cultural programs. "And if not, not."

A break with Wilders would mean the fall of the government, followed by new national elections, which are not currently scheduled until 2014.

European President Herman van Rompuy has said the cuts required of the Netherlands are "actually not so large" in comparison with what Greece is undergoing. "I wouldn't over-dramatize the situation," he said on Dutch television program Buitenhof on Sunday.

The remarks were not well-received, given ongoing discontent over previous rounds of spending cuts. A strike by cleaners is now entering its 10th week, while police went on strike in four provinces Monday over a pay freeze in 2012. Primary school teachers are due to strike nationwide Tuesday over funding cuts.

Wilders enlisted the aid of British research firm Lombard Street for a report on the costs of leaving the euro. Study author Charles Dumas said he calculated that Dutch per-capita income would be euro1,800 ($2,375) per year higher if it had never joined the euro, in part by using comparisons to non-euro countries Switzerland and Sweden.

"It seems to me a powerful argument by analogy," Dumas said, pointing out similarities among the three countries.

The conclusion contradicts that of most other economic analysis, which says the small, export-focused Dutch economy has been one of the euro's biggest beneficiaries.

Ronald Plasterk, a leader of the opposition Labor party, called Wilders' plan "a fantasy," but said if he is serious, he should put leaving the euro at the heart of budget negotiations. The Lombard analysis says the Netherlands would save far more money by leaving the euro than it is targeting with spending cuts.

"Be a man and follow through," Plasterk said on RTL television.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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