European elections could directly impact the Dutch government

European elections could directly impact the Dutch government

Jan Willem Blok May 2019

On the surface, the European election campaign in the Netherlands looks quite normal. The Dutch media covers the candidates, Euroscepticism, and the impact of EU policy on our daily lives. But these elections could have a more profound impact on the local political situation in the Netherlands.

The future of Cabinet Rutte III

Dutch Prime Minister Mark Rutte (VVD) is seen as a viable candidate to succeed President Juncker or President Tusk. His Churchill Lecture this February at the Europa Institut at the University of Zurich was seen in the Dutch media as an open job application. If S&D Spitzenkandidat Frans Timmermans doesn’t win the European elections, it increases the chance of Rutte running for a European role. This would have serious ramifications for the current Dutch coalition and could potentially lead to new Dutch parliamentary elections.

The future role of the EU in a multipolar world

Against the background of a multipolar world, the Dutch government is fundamentally rethinking its position in the global and European setup, and Brexit is also forcing the Dutch government to reposition itself. The UK used to be an important ally within the EU institutions, counterbalancing French statism and Germany mercantilism. The Netherlands has a liberal, transatlantic view on the European order, and the Dutch government often teamed up with London on all kinds of EU issues. With the UK leaving the EU, it is deemed essential to seek and find a new balance to defend Dutch interests in Brussels. 

In the Churchill speech, Rutte made the case for European power politics against the growing influence of China, Russia, and Trump’s America First policy, calling for Qualified Majority Voting on EU foreign policy, which has always been a very sensitive topic: “an important question in the (EU) Common Foreign and Security Policy is how the EU employs the instrument of sanctions (…) I do think that we must give serious thought to enabling qualified majority voting for specific, defined cases. We need to be able to pack more of a punch.”

On energy security, Rutte stated that “we must be ready to use Europe’s considerable market power as a counterweight to countries that employ pipeline politics as a tool of foreign policy.”

Last week, the Dutch Minister of Finance Wopke Hoekstra (CDA) more or less said the same in his Humboldt lecture in Berlin: “It is no longer acceptable for Russia and China to seek influence in the Balkans without a consistent European response. European coordination is simply a must.” He called on Germany to play a more prominent role in EU foreign policy.

Europe’s own Google?

From a business perspective, Hoekstra is worried that the EU is fundamentally lagging on innovation.

He wants Europe to make major investments in AI, nanotechnology, and biotech: “In 2016, more than three times as much was invested in Artificial Intelligence in Asia as in Europe. In the US, it was more than six times as much. Let’s make up for that gap and do more. We can do this by facilitating research and supporting the latest technologies.” Hoekstra also called for a European Commissioner for Cybersecurity.

The design of the banking union

In Berlin, Minister of Finance Wopke Hoekstra also called on Germany to complete the banking union by taking “real new steps”.

Germany is reluctant to introduce a safety net of the banking union, a so-called European Deposit Insurance Scheme. This has to do with the fact that the Germans are afraid that there still is too much unsolved financial risk in the European banking system. The European Commission and ECB are working on resolving issues, like the reduction of Non-Performing Loans on the balance sheet of banks.

CDA candidate and senior MEP Esther de Lange stated that the discussion on the European Deposit Insurance Scheme is really stuck in the question of whether you first have to reduce the risks on the bank balance sheets before you can share them with others or not.

She would like to see that the risk reduction, that Germany is asking for, should be measured: “and I think you shouldn’t just put that on paper, but that the result should also be measurable in practice. The amount of NPLs should be clearly reduced in percentages for a number of years in a row”.

It is interesting to note that the Dutch are playing an intermediary role on the banking union between France and Germany –  Hoekstra as part of the Ecofin, Esther de Lange as a senior MEP and Rapporteur in the European Parliament, and Hans Vijlbrief, a former Dutch civil servant who is Chairman of the Euro Working Group. After all, Dutch banks such as ING, Rabobank and ABN AMRO are large, relative to the Dutch economy. From a more political perspective, the completion of the banking union also means de facto economic convergence in the Eurozone, which makes the French case for more Euro governance seem logical.

Elections work as a signal

In that sense, the outcome of the European elections in the Netherlands could give a strong political signal on the issues described above. In the Netherlands, voter turnout in the 2014 EU Elections was low, around 37,3%, but even a low turnout could have an impact on the Dutch political situation.  

About the author: Jan Willem Blok recently joined CFF Communications as Director Public Affairs to grow their Public Affairs practice in the Netherlands. CFF Communications is a strategic, integrated communications agency. They closely work with Grayling colleagues in Brussels and Amsterdam, and with the Citigate Dewe Rogerson offices in the major financial hubs around the world.