Dutch Presidency to the Economic Rescue!

The chain continues! Of articles examining EU economic performance and policy and/or that of individual member-states, that is. And, as half-promised previously, this time we go to the French press, specifically flagship Le Monde, which announces that The Netherlands Makes the Modernization of the European Economy Its Priority.

Why do we care about the Netherlands’ priorities when it comes to the European economy? Because that country holds the rotating EU presidency until the end of this year, of course. Its immediate predecessors, the Irish, set as their goals agreement on both an EU Constitution for presentation to member-states for ratification, and finding a new EU Commission president to replace Romano Prodi on schedule at the end of this month, and even achieved them – no mean feat. The Dutch, in their turn, “intend to help Europe escape from economic stagnation,” reports Le Monde writer Arnaud Leparmentier.


It seems the main method they intend to use is resuscitating the “Lisbon Strategy” or “Declaration” from the year 2000, in which then-EU leaders made known their intention to make the EU “the most competitive knowledge-economy in the world” in ten years’ time. In response to which the Dutch premier, Jan Peter Balkenende, asked an EU meeting on Wednesday of last week, “Did you know that it is eleven times more difficult to start a company in Europe as in the US? Did you know that more than a third of Europe’s active population does not work? . . . And did you know that in Japan the number of researchers is one-and-a-half times more than in Europe?”

“The problem,” Balkenende went on, “is that we lack the dynamism to put into action the strategy that we formulated together.” Unfortunately, Leparmentier then notes that the Dutch recognize that about the most they can do about it is this short of exhortation, rather than any sort of direct action via EU institutions – maybe they read yesterday’s treatment from Die Zeit that maintained that the Union’s constitutional arrangements, now and in the future, don’t allow for much common action when it comes to economics.


The rest of Leparmentier’s article also sounds notes that jibe rather awkwardly with this idea of “helping Europe out of economic stagnation.” There’s the EU budget, which is supposed to be bigger from 2007. Most member-states want it to amount to around 1.15% of combined EU GDP, but those states which contribute more to EU finances than they receive back intend to keep it to just 1%. Among those countries is the Netherlands; Balkenende has been heard to complain about “a Dutchman paying six times more [into EU coffers] than a Frenchman.” What’s more, his finance minister (and deputy premier), Gerrit Zalm, has pronounced quite clearly that, if the Commission fails to come up with a budget that respects the 1% limit, then the Dutch presidency can just faire cavalier seul (that’s of course the French translation of what he originally said in Dutch or in English; it roughly means “play the lone knight,” i.e. go it alone – think George W. Bush) and come up with its own “more clear” spending priorities. Balkenende is supposedly so hot-under-the-collar about how much Dutch citizens are paying that he has started to agitate for a give-back mechanism for the Netherlands to get two-thirds of that excess as a rebate, something only the UK presently gets. (It was extracted from the EU under threat of handbag by then-prime minister Margaret Thatcher back in the 1980s.) Does that sound like Dutch leaders are really prepared to play the white knight – not the lone knight – and lead the rest of the EU out of stagnation?

Balkenende and Co. also want to re-open the subject of expenses for the CAP, the EU’s Common Agricultural Policy. That’s always a good idea in principle, but changes to the CAP inevitably give rise to bitter argument between EU countries, and furthermore the last time those arguments raged part of the settlement was an agreement to freeze the CAP budget (i.e. not argue about it anymore) until 2013. There’s also supposed to be a debate getting underway – this one not necessarily sponsored by the Dutch presidency, although it could be a good means to get the EU budget back down to 1% – about cutting the monies the EU pays out to help its poorer regions, the prospect of which is making a whole new set of EU actors uncomfortable.

All of this, and a lame-duck Commission, too, for most of that Dutch presidency! (The present Commission stays in office until 1 November, at which point a new and expanded one – 25 commissioners, one per member-state – comes in under new President Barroso.) It’s a mess! Don’t get your expectations up.


As a footnote, also from Le Monde, we have this article, The Weight of “Black” Work in the New EU, “black work” of course defined as work-for-pay that is itself a legal activity, but that is simply not reported to the authorities, for tax-avoidance and various other reasons. A recent study undertaken for the European Commission by a Dutch and a Swedish research center shows that “black” work in the EU varies from 1.5% of GDP in Austria to more than 20% in Greece (16% or 17% in Italy; only 2% in the UK; etc.). Among the corollaries to this phenomenon: “black” work is caused – as we more-or-less already know – by “the rigidity of the labor market, the weight of the tax authorities, and a lack of confidence in the function of the State”; women have worse working-conditions and worse pay in “black” work than men, and also are more likely to undertake it because they need the money, rather than for extra, non-essential spending-money; and particularly in some of the new Eastern European member-states (Poland, Hungary, and Slovenia are cited), the authorities aren’t particularly interested in acting against “black” work, since they view it as useful for relieving unemployment and so easing social tensions. Plus, they have a long tradition of such activities under the old Communist regimes.

The study was undertaken as the Commission embarks on the goal it has set for itself to “regularize” black work, i.e. stamp it out, I suppose. Good luck; the only recommendations it can come up with so far to do that is to undo as much as possible the conditions cited above that move people not to report such income in the first place, and to offer amnesties whereby people can report past income and not get into trouble for not having reported it back when they were supposed to.

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