Via Yahoo Finance

By Gabriela Baczynska and Anthony Deutsch

BRUSSELS/AMSTERDAM (Reuters) – As the European Union spars over an emergency economic package for countries reeling from the COVID-19 pandemic, the Dutch have revived their image of thriftiness by refusing to support a plea by southern members to take on collective debt.

EU powerhouse Germany, Austria, Sweden, Denmark had also expressed objections, but Dutch Finance Minister Wopke Hoekstra was ultimately the sole holdout in 16-hour, overnight talks that failed to work out a deal on Wednesday.

The Hague refused to compromise on terms for accessing emergency financing from the euro zone’s bailout fund as well as on possible future talks on whether to issue so-called euro bonds, EU diplomats and officials said, even after a last-ditch push from German Finance Minister Olaf Scholz to pressure his Dutch colleague.

Leaders were optimistic that some kind of a deal would be worked out during fresh talks Thursday.

However, a senior EU diplomat saw the risk that finance ministers would just patch up divisions for the sake of announcing an agreement, while effectively leaving contentious issues to national leaders.

A French presidency official expressed frustration over the the Dutch holding up the deal so far, saying it “was blocked by a single country, the Netherlands.”

“Blocking this was counterproductive, incomprehensible and cannot continue. We can’t be splitting hairs over conditionalities,” said the official.


The Dutch minister’s stance is no surprise, however.

Only days earlier a top TV satirist took Hoekstra’s side in explaining why the Dutch should not pour money into Italy.

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With a record two million viewers of his “Lubach on Sunday” show, Arjen Lubach said the Dutch wanted to help, but have legitimate concerns about the bloc’s long-term finances and preserving their own hard-fought financial health. He compared the situation to putting out a neighbour’s house fire.

“I am willing to help you put out the fire, but I don’t want to take over your mortgage,” Lubach said, adding that while Hoekstra might be irritating, he had a “fair point”.

The Netherlands, a wealthy nation of 17.2 million, emerged only recently from years of belt-tightening under an austerity program since the 2008 financial crisis that made deep cuts into social security, pensions, education and healthcare.

While the Dutch cut back their national debt to 50% of GDP, Italy’s rose to nearly 135%, or 2.4 trillion euros, Lubach pointed out.

The Hague is now openly clashing with Rome over joint debt and conditions for access to the emergency European Stability Mechanism (ESM) credit lines.

Dutch thriftiness is deeply rooted in the culture and history of the trading nation that adopted the Calvinist branch of Protestantism more than four centuries ago. In the 17th century, the English coined the phrase “Going Dutch”, which refers to the splitting of a bill so that one party does not end up indebted to the other.

The country’s neighbours still like to poke fun at the Dutch splitting of dinner bills, taking groceries on holiday, and always looking for a bargain.

“Italy says ‘we want the ESM money, but without conditions’ and the Dutch are saying: ‘yeah, right!’,” Lubach said. “We want to help, but we don’t want to go broke!”

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The fact that the issue is prime TV fodder goes a long way to explaining how the Netherlands has become the bloc’s “bad cop” opposing the kind of financial burden-sharing that its neighbours to the south say is needed to stave off an economic meltdown.

The latest round of EU finance ministers talks was resuming at 1700 GMT on Thursday.

A potential solution was unclear after the Dutch parliament passed a motion overnight rejecting any deal that would make the Netherlands responsible for the national debt of another country.

While The Hague’s tough line has the backing of the Dutch parliament, Rome was also under pressure at home from eurosceptic challenger Matteo Salvini, who has denounced the bloc as failing to show enough solidarity.

“The European debate is embarrassing not to say sickening,” said governor Luca Zaia, a member of Salvini’s Northern League in the Veneto region, one of the hardest hit in Italy.

“It is as if, in the face of the coronavirus, we said it was a problem that only affected those who were in hospital,” he said.

(Reporting by Gabriela Baczynska and Anthony Deutsch; Additional reporting by Michel Rose in Paris, Toby Sterling in Amsterdam, Francesco Guarascio in Brussels and Riccardo Bastianello in Rome; Editing by Frances Kerry)