Since Britain’s vote to leave the EU a new gang has emerged within the club. It began life as the so-called “new Hanseatic League”, a 2018 grouping taking in eight northern states that sought closer cooperation to fill the gap left by the UK as an economically liberal counterbalance to France in particular. From this emerged a smaller rump group of the three largest Hanseats (Denmark, the Netherlands and Sweden) plus Austria, known collectively as the “four frugals”. The leading player in both bands was the Netherlands, the largest economy of the lot, under its conservative-liberal prime minister Mark Rutte – who won a fourth term in office at yesterday’s Dutch election.
The full significance of the new Dutch role as the leading voice of fiscal caution in the post-British union became clear last year when Rutte, flanked by his finance minister Wopke Hoekstra, led the resistance to the EU’s ambitious plans for its long-term budget and a taboo-breaking €750 billion Covid-19 recovery package backed by common debt. Things got heated. At one point Portugal’s prime minister António Costa called Hoekstra’s patronising comments about the southern economies “repulsive”. At another, Emmanuel Macron compared Rutte to David Cameron (one of the rudest things a mainstream continental leader can say to another). After agonising negotiations the frugals were won round – albeit at a cost in concessions, including larger rebates on their contributions to the common budget.
It is widely assumed in EU capitals like Paris, Brussels and Berlin that the recovery plan is not the end of the discussion on fiscal integration. As a new paper by Lucas Guttenberg, Johannes Hemker and Sander Tordoir published by the Jacques Delors Centre argues, the pandemic has transformed the debate on five fronts (common EU debt, fiscal capacity, policing of national policies, crisis management and the role of the Eurozone within the EU). “The old Eurozone reform agenda has been rendered obsolete by the events of the past year”, they conclude, calling for an extensive debate over the coming months in time for a new reform push from summer 2022, once the upcoming German and French election seasons are complete.
It is also widely assumed in those same EU capitals that the biggest brake on that new reform push will come from The Hague. And it is in this context – of the Netherlands as the frugal champion – that the European significance of Rutte’s re-election needs to be understood. The election, which ran on an extended (to accommodate social distancing) schedule from 15 to 17 March, came in the wake of a scandal over child benefit payments and violent riots over lockdown rules in some urban areas.
It produced the usual kaleidoscopically complex results. The Dutch electoral system is extremely proportional. That, combined with the socio-political fragmentation that has grown in much of Europe recently, means the next Dutch parliament will contain a record 17 parties. (Warning: here be acronyms.) According to the now almost-final results, winners include Rutte’s conservative-liberal VVD, the progressive-liberal D66, the new(ish) far-right FvD and the new pan-European federalist party Volt. Losers include the far-right PVV, Hoekstra’s Christian democratic CDA, the socialist SP and the left-environmentalist GroenLinks.
Amid all the complexity, though, the big picture is one of stability. Viewed as cultural-political blocks (the most prominent distinction in modern Dutch politics), conservative/nationalist parties still have just over 80 seats; cosmopolitan parties still have just under 70. Despite his recent difficulties, the country’s unflashy prime minister gets to govern on. And the likely outcome is quite straightforward too: another four-party centrist coalition led from the centre-right by Rutte and his VVD. They are likely to turn first to the strengthened D66, a third-placed partner in the last government which would now be a strong second. Then other options include the weakened CDA, the conservative CU and, less likely, parties of the left like GroenLinks.
All of which will confirm Rutte, who has led the Netherlands since 2010, as one of the EU’s longest-serving leaders. The question then is: will he step up to more of an elder statesman role (especially once Angela Merkel steps down as German Chancellor later this year) or continue as the quasi-insurgent frugal-in-chief?
It is conceivable that fourth-term Rutte will tilt towards some more conciliatory and (some would say) pro-European stances. As the Delors paper argues, the debate on EU fiscal policy is in flux. Economic orthodoxy in Germany has shifted slightly towards that of France, particularly under the country’s Social Democratic finance minister Olaf Scholz – a process likely to continue if, as seems likely, the next German government contains a significant Green and/or Social Democratic contingent. The Netherlands is not insulated from such changes. A Rutte who at only 54 years-old has little left to prove in the Netherlands, and has never carried much ideological baggage, may have more room to polish his European credentials with an eye to the future; he has been touted as a possible European Council president, though denies interest in the job.
Then there is the D66 factor. The Dutch reputation for flinty fiscal orthodoxy has been burnished particularly over Rutte’s prime-ministership by two long-serving finance ministers: Jeroen Dijsselbloem (2012-2017), scourge of the southern debtor states as president of the Eurogroup of Eurozone finance ministers; and Hoekstra (since 2017). A powerful D66 in a new coalition might seek the job for one of its own; say, the Europhile party’s popular leader Sigrid Kaag who has criticised some of the hardline positions taken by Rutte and Hoekstra in the EU and called for closer alignment with France and Germany. Could a newly dovish Dutch finance minister change the calculus for EU fiscal reform? Could Kaag play Yoko Ono to the frugal four?
Some scepticism is due. The Dutch finance ministry, like the British Treasury, has deeply-rooted orthodoxies that transcend the political hue of the minister in charge of it. And whether D66 would invest major efforts in overturning its instincts on EU fiscal policy is questionable. Pepijn Bergsen of Chatham House, a former Dutch government adviser, notes that the party is fundamentally economically centrist and has “never really been willing to expend political capital on the difficult questions around fiscal integration”. He expects the Netherlands to be “a lot more constructive in many areas in Brussels with D66 as the second party in the coalition” but suggests that this will more likely play out in other areas like climate policy.
So if the Dutch role in Europe’s debates is to change, and with it that of the “four frugals” more widely, that is less likely to come from The Hague than from farther afield. Whether the flexible Rutte adopts the garb of consensual elder euro-statesman or of swashbuckling Hanseat, the matter will be shaped most by the wider shifts in Europe’s fiscal and economic debates; particularly those across the border in Germany. It is something that the bicycling prime minister himself, with his knack for sensing which way the wind is blowing, will know perfectly well.