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Rutte must show Merkel risks for EU of being too accommodating

20 Sep 2017 - 14:17
Source: Minister-president/flickr

The German tendency to accept compromises means risks for the Eurozone that are often underemphasised, writes Adriaan Schout. A small and serious country such as the Netherlands should be making those risks clear.

How much influence does the Netherlands have in Europe? As one negotiator in Brussels summarised it, “The Netherlands is nicely involved in the negotiations until ten minutes before the kick-off. The real power relationships are what matter once the game is under way.” Whether we like it or not, the centre of power in Europe consists of Germany and France. And the Netherlands depends on Germany. This is all the more pressing now that people are talking about a window of opportunity to make progress and strengthen the Eurozone further.

If you don’t have the brawn, use brains. Our influence depends on the extent to which we can hold up a mirror to European politicians – Germany in particular – to show what is at stake. The Netherlands and Germany share common interests in the EU: both want a euro that is based on rules, independent supervision, an independent ECB and a no bail-outs clause banning countries from passing debts between them. This is also referred to as the ‘German Europe’.

The tragedy for the Netherlands is however that Germany always makes compromises with France, where the Netherlands would rather have seen a bit of backbone. And where Germany goes, the Netherlands has to follow. Germany feels a responsibility – rightly – for keeping the EU and the Eurozone together. It has rational considerations for making concessions. And there are the shadows of two World Wars. But that also makes Germany a vacillating partner that wants to be a ‘European Germany’. The Netherlands is in fact keener on the ‘German Europe’ than Germany is.

Twenty-twenty hindsight sometimes reveals German compromises to have been pretty naive. The euro came, even for countries that were not ready for it. The no bail-out clause has proved to be highly elastic. Italy is decades away from the targets it signed up to. The ECB has pushed the envelope of its mandate and (according to Commission President Juncker) the independent supervision does not apply to France “because it is France”. Significantly, French pressure in 2010 meant that Merkel abandoned the automatic sanctions wanted by the Netherlands and Germany for violations of the euro rules.

The Netherlands must expose the consequences and dangers of European compromises

Further integration is now on the European menu. Macron has already produced proposals and will come up with a new European agenda after the German elections on 24 September. Merkel has already announced that Germany might agree to a European Minister of Finance. There is an emphasis on the fact the ‘minister’ is just a title and that this step can even be seen as strengthening European supervision, but it could easily turn out otherwise in practice. Particularly if you see it in the context of other ideas that are doing the rounds, such as the introduction of specific European taxes, positioning the European emergency fund under the European Commission and the Franco-German discussions on tax harmonisation. On top of that, a ministerial post such as this will gain gravitas the moment the next crisis appears.

The opportunity to strengthen the Eurozone has arisen because of economic growth, the threat presented by Putin, the whole Brexit mess, and inward-looking US attitudes under Trump. The concomitant need to compromise – which Juncker also emphasised in his State of the Union address – can have major consequences for European finance, for the authority of the European Commission and the European Parliament, and for the position of the Netherlands. Given the well-intentioned German malleability, it is understandable that Rutte prefers not talk about European views. He only has a limited influence on Germany’s choices.

So what can the Netherlands do? The risks of European compromises are sometimes severely underexposed. Creeping integration and declining public support for the EU will be lurking in wait as a result in no time. The German electoral battle shows us that Merkel and Schulz are unwilling to politicise European choices. This leaves the stakes for the near future unclear. It is nice that there are opportunities for strengthening the euro, but details of any agreements must be made clear beforehand. Risks should not be swept under the carpet and financial effects must be estimated. The impact on the power of the Commission and the European Parliament must be specified. This is not about a critical attitude to the EU but about principles of good governance: clarity and transparency. These will not come from either Germany or the European Commission. The German election, Franco-German intermingling and the European tendency to misuse windows of opportunity all go to show that the Netherlands has an independent task: it needs to provide clear insights into the consequences and dangers of European compromises.

The original Dutch version of this opinion, titled 'Rutte moet inschikkelijke Merkel risico's van meer Europa tonen' was published in NRC Handelsblad on September 20, 2017.