The Dutch Taliban

Dutch tolerance, in sofar as it exists, might be traced to the early middle ages when Holland was rather unruly and the Dutch learned in the hard way that fighting was dumb and bargaining was better. The dykes are a result of co-operation and not a cause for it.

Justice and the records of property have a role too. Amsterdam city hall, built between 1648 and 1665 and now in function as a royal palace, contains the “vierschaar“, the square formed by spanning ropes in germanic legal tradition where court took session. Jonathan Israel traces radical enlightenment to Spinoza (1632-1677) living in relative tolerance in Holland, see also Israel’s new book Democratic Enlightenment. The English 1688 Glorious Revolution also was a Dutch invasion that brought stability, more freedom and commercial power to England, and from there over the globe. Holland was the first nation to recognize the United States of America in 1776. The Dutch image has become tolerance and openmindedness.

Yet “apartheid” is a Dutch word. The Dutch North above the Rhine was protestant and it considered the catholic Dutch South below the Rhine with apprehension. Dutch cities blocked slave traders from bringing slaves to Holland as unchristian but allowed the human trafficking to America. In the 20th century Holland stuck to the gold standard too long. Holland closed its eyes to the rise of fascism in Germany and seriously hoped that it could remain neutral in World War II. Regaining its freedom after the war, Holland started a colonial war in Indonesia to block their freedom. In 1954 catholic bishops wrote a “mandement” forbidding the vote for the social democratic party. Also today we don’t see true tolerance and openmindedness but this Taliban mixture of principles and partial blindness. The policy on drugs allows sales in “coffee shops” and neglects the supply from a criminal netherworld. The policy on the red light districts neglects the human trafficking in a supposedly free country. The lack of true tolerance and openmindedness is especially problematic in the political landscape.

Perhaps the Dutch South now acts in ressentment toward the Dutch North, as a boomerang for ages of contempt. Maxime Verhagen, the leader of the christian democrats (with 14% of the vote), comes from the South and has a surprisingly strong apprehension towards the Dutch social democratic party PvdA (with 20% of the vote). Xenophobic Geert Wilders (with 16% of the vote) comes from the South with a strong electoral base there. Verhagen is proclaimed pro-EU and Wilders is anti-EU but these Southerners are united in priority against the social democrats.

Wilders has an agenda against a “tsunami of islamism”, throwing Greece out of the eurozone or return to the Dutch florin, abolishing international development assistance, and maintaining various national arrangements behind the dykes. A recent gimmick is the website for complaints about migrant workers from Eastern Europe. A website of Southern Dutch against Northern Dutch might have some success too. There is also a national-socialist party SP (with 10% of the vote) that has a nationalistic course like Wilders but without the xenophobic card though there were some flirts in the past. PvdA is a member of the international PES but SP is not.

If we want to understand the current crisis in Europe then it helps to see that Holland helped cause and prolong it because of its lack of tolerance and openmindedness.

Holland has been running an export surplus for 30 years, fueled by a low wage policy that effectively exports unemployment. Ten years ago Germany started to copy that example. The export earnings of Northern Europe were loaned to Southern Europe. The EU Stability and Growth Pact (SGP) doesn’t monitor trade balances and it doesn’t check whether loans are invested wisely. The crisis needled the financial bubble in the South. Now it may needle inflated Dutch ego’s. But the Dutch can be hardheaded. Vested interests in Dutch internal closed market and spoiled external markets have been able to shield off changes for 30 years. They may continue to resist change. The Dutch may opt for ever lower wages to increase competitiveness, and this race to the bottom will aggravate the depression in Southern Europe.

In the crisis since August 2007 the Dutch government opted for austerity rather than tackle the internal vested interests and taking active countermeasures in investments in the home market. First there was a coalition of christian and social democrats that relied on automatic stabilizers. Since Fall 2010 there is the tougher austerity course by the minority government of conservative Mark Rutte and christian democrat Maxime Verhagen, and supported by xenophobic Geert Wilders.

While Wilders opposes the policy of keeping Greece in the eurozone and transferring sovereignty to Brussels, the social democrats have been supporting this. The social democrats oppose the minority government but kept it afloat in the pro-EU line including the austerity. The social democrats didn’t see an alternative, wanted stability in the financial markets and avoid a total collapse.

The Dutch social democratic party is a member of the international PES but still makes a distinction between worker families in Holland and those in Southern Europe. François Hollande, the French socialist presidential candidate, opposes the EU austerity programme, and will wonder why the Dutch social democrats didn’t use their leverage to cause a breakdown of the Dutch minority government and to block the EU austerity policy. There doesn’t seem to be a strong rational reason for the behaviour of the Dutch social democrats except for the gut feelings mentioned above. Partly they are pro-EU and they tend to adopt anything that the EU invents, also the compacts by Angela Merkel and Nicolas Sarkozy. Partly they seem to be defenceless against the populist apprehension against spoiled Greece and Berlusconi. Partly they belong to the vested interests who in their blindness think that the Dutch low wage policy is the only way to fight unemployment in Holland. One element is that the new financial and economic spokesman of the PvdA since 2010 is Ronald Plasterk, a professor of biology but now a politician in blind ambition who is clearly deficient in his command of economics and finance.

Policy results were the EU commissioner for the national budgets, no bail-out for Southern Europe except for the stability funds and the “private sector involvement” (PSI) in Greek debt, and the December 2011 compact on stricter deficit rules (“Schuldenbremse”). Results were also more unemployment, less growth, some risky transfer of sovereignty to the EU, ressentment in the EU, and the ECB cheap credit line for 3 years for EUR 1 billion with some risk of zombie banks and lack of clarity where we will be over three years.

Last Friday the Dutch Central Planning Bureau (CPB) forecasted a Dutch deficit of 4.5% over both 2012 and 2013. Cutbacks of 1.5% are required to reach the target of 3% while the Schuldenbremse requires a structural level of 0.5% later on, not counting negative multipliers. With a GDP of EUR 600 billion the 1.5% would be at least EUR 9 billion. With a population of 16.7 million it would be EUR 540 per capita. National debt stands at 70% of GDP but Holland has a large banking sector and the crisis support funds are kept off-budget. Holland currently has a double dip recession and the cutbacks will not help quick recovery. The challenge of 1.5% is much less than for e.g. Greece or Ireland. Especially given the earlier tough position, the Dutch can only comply to the new rules and adopt austerity themselves.

If Holland had true tolerance and openmindedness, it could have adjusted its trade policy and could have presented an alternative to the current EU policy. A sound voice from the North could have done wonders where Southern Europe is forced to silence by dependency. Sadly, Taliban aren’t easily converted, and they have a world view to defend.

PM. Related blogs: Pillars of Dutch politics and An economic plan for Europe

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