Interview with Dutch Prime Minister Rutte on Eurozone Reforms 'We Won't Simply Rubberstamp Everything'

All eyes have been on Germany and France recently when it comes to reforming the European common currency. But in an interview with DER SPIEGEL, Dutch Prime Minister Mark Rutte, 51, says that the Netherlands should not be ignored.

Netherlands Prime Minister Mark Rutte
AFP

Netherlands Prime Minister Mark Rutte

Interview Conducted by and


DER SPIEGEL: Mr. Prime Minister, the Netherlands and seven other European Union member states recently published a joint paper on the proposed reforms of the economic and monetary union in which they made it clear that they have no intention of diverging from the goal of stability. Did you ask in Berlin if Germany also wanted to become a signatory to the document?

Rutte: No, Germany was still busy forming a government at the time. There was no ulterior motive.

DER SPIEGEL: We thought you might be concerned that the new German government may no longer be as supportive of the Northern European countries when it comes to reforming the euro.

Rutte: There are, of course, a number of key points in the German coalition agreement that we find disturbing, I certainly won't deny it. But I hope that we can continue to rely on Angela Merkel. We are the same breed of politician: We don't beat around the bush, but instead move things forward. And we both agree that Europe must be built upon the foundation of its nation-states, and not imposed upon us by Brussels.

DER SPIEGEL: With all due respect for your optimism, there are a few elements in the coalition agreement that we believe indicate a change in course by the German government. Because of Brexit, for example, Germany is prepared to increase its contributions to the EU budget. Will you also be loosening your purse strings?

Rutte: No, we don't intend to do that. Of course the EU budget has to become more modern over the coming years -- we have to spend more money on protecting our external borders, on integrating refugees and on funding research and innovation. But I think that we should achieve this within our budget. There is perhaps a bit more generosity now in Germany. But from the past seven and a half years in which I have served as prime minister, I am also familiar with how Angela Merkel negotiates. For that reason, I would be surprised if Germany ended up paying much more.

DER SPIEGEL: The German government has also taken a stance on the issues surrounding eurozone reform. It wants to expand the eurozone's bailout fund, the European Stability Mechanism (ESM) into a "European Monetary Fund." Do you agree with this approach?

Rutte: With the objective, yes. If it were up to us, the ESM would be tasked with assuming concrete new tasks in the future, like developing and monitoring the programs -- in other words, what the ESM is now responsible for doing in the troika with the Commission and the European Central Bank. The direction is the same, but the details are different.

DER SPIEGEL: In the coalition agreement, Merkel's conservatives and the Social Democrats (SPD) indicate that they would like to see the ESM anchored in EU law. What's your position on this?

Rutte: We want the member countries to continue to have control over how the monetary fund operates. It's ultimately their money, after all. If I'm correctly informed, though, the formulation of the proposal in the coalition agreement is rather vague. And even if this were not the case, in order to transform the ESM into an EU institution, it would be necessary to amend the European treaties, and I don't see any willingness to do this on anyone's part.

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DER SPIEGEL: Your mantra that EU member states should first get their own houses in order reminds us very much of former German Finance Minister Wolfgang Schäuble. Do you now intend to assume his role in Europe?

Rutte: I don't think there has been a major change in Germany. Merkel is opposed to a transfer union, and this is one of her fundamental convictions that we share. The important thing is fulfilling the EU's promise of prosperity to its citizens. I have a concrete proposal here that perhaps not everyone in Germany is happy to hear: If we seriously pursued the liberalization of the service sector in the internal market, we could generate billions that have thus far remained untapped.

DER SPIEGEL: Why not come on out and say it? You want Germany to do away with traditional qualifications for certain professions, like the master craftsman's certificate.

Rutte: I want to create urgently needed impulses for growth. What Europe is missing is not billions more in funding, but rather overdue structural reforms -- including in the service industry. There are currently nearly 5,000 protected professions in the EU and in Germany. This hinders growth, as any economist will tell you. I find this proposal more convincing, and it does more for Europe's prosperity than, for example, the eurozone budget that French President Emmanuel Macron has proposed.

DER SPIEGEL: In Germany, though, there are many supporters of Macron's ideas on reforming the eurozone -- for instance, his call for a budget that would help eurozone member states better withstand economic shocks.

Rutte: Is that really true? Are there actually so many admirers of this idea in Germany?

DER SPIEGEL: Economists support Macron, many in the SPD leadership …

Rutte: ... well, all right. In every society you'll always find someone who favors a given idea. I don't have anything against Macron's proposals, either. I simply have other ideas. In my opinion, each individual EU country is responsible for preparing itself for crises. The best prevention is solid state finances. This is also precisely what we agreed to in the Stability and Growth Pact.

DER SPIEGEL: Instead, as you recently criticized that there are many "high-flying visions" making the rounds these days.

Rutte: Just to prevent any misunderstanding, I was not referring to Emmanuel Macron. When I think of the speech that he gave to the students at the Sorbonne in particular, I can endorse just about everything in terms of migration, common defense and climate protection. But while we have many shared goals when it comes to economic and monetary union, we have different views.

DER SPIEGEL: Are you afraid of some sort of Franco-German diktat in Europe?

DER SPIEGEL

Rutte: Not a diktat, no. We enjoy free movement of people within the EU, so the new German government is welcome to meet with the French government at any time without us being present. But this doesn't mean that we and other EU countries support everything that the Germans and the French agree to. We won't simply rubberstamp everything -- and we will continue to make our own proposals.

DER SPIEGEL: What do you think of the idea of a European finance minister?

Rutte: We have to prepare Europe for the next crisis. So, for me, the question is how we can create incentives for countries like France -- but primarily Italy -- to tackle structural reforms. To do this, we don't need a European finance minister. A new idea here is to make better use of the regional development funds, worth several hundred billion euros, that the EU distributes. We want to use this money to support the reforms that the Commission regularly proposes in its country-specific recommendations. Instead of spending money on useless highways, this allows us to target growth.

DER SPIEGEL: Chancellor Merkel, however, is pressing for regional development funds to primarily go to countries that take in refugees. Likewise, the threat of withdrawing development funding is intended to induce EU countries like Hungary and Poland to respect European regulations.

Rutte: There are no contradictions here, quite the contrary: We find Merkel's ideas interesting. But we need a bit more clarity on how she concretely intends to implement them.

DER SPIEGEL: You have emphasized on a number of occasions how important it is for the future of the EU that all eurozone countries adhere to the Stability and Growth Pact. Nevertheless, not only Macron and the occasional Social Democrat in Germany see this differently, but also European Commission President Jean-Claude Juncker.

Rutte: Juncker is an outstanding Commission president, but when he repeatedly insists that the Commission is political, I have to object. The moment the Commission gives the impression that it strictly ensures that small countries respect the stability pact but does not apply the same oversight to Italy and France, it undermines the rules that we have agreed upon together. Italy has sovereign debt of over 130 percent of GDP while France has a debt of roughly 100 percent. That is where Mr. Juncker should be placing his focus.

DER SPIEGEL: Instead, Juncker is turning a blind eye to the problem and saying that he's taking into consideration the political situation in countries like Italy, and says that France is, well, France.

Rutte: The Commission should serve the EU members, not the other way around. I know that I won't get any applause in Brussels for this statement. And of course the Commission acts politically, for example, when it initiates legislation. But when it comes to the 3 percent limit and caps on sovereign debt, the Commission isn't allowed to assume a political position.

DER SPIEGEL: When the decisive break with this principle came in 2003, it was primarily Germany and France that were the driving forces: Gerhard Schröder and Jacques Chirac agreed to suspend the stability pact for their two countries ...

Rutte: ... and then came the sequel a few years later when Merkel and Nicolas Sarkozy took their famous beach stroll in Deauville during the euro crisis. Both events sparked a great deal of suspicion and mistrust. When not only Germany and France are in agreement, but also the Commission, then the other EU countries have to be extremely careful.

DER SPIEGEL: Now, the departure of the British threatens to further exacerbate the unequal balance of power within the EU. Until now, smaller countries like the Netherlands could always rely on London.

Rutte: With all due respect, the Netherlands is the fifth-largest economy in the EU! But you're right, there will be a shift in the balance. When it was a matter of free trade or less regulation on the internal market, I always knew that I could count on the United Kingdom. I hope that the British will at least continue to closely collaborate with the EU on the issue of how we can counter the punitive tariffs that Donald Trump may introduce.

DER SPIEGEL: Should the EU take a more lenient approach with the British on the Brexit negotiations?

Rutte: What is paramount is that the 27 member countries remain together. The common internal market is our greatest asset, at least economically speaking. Theresa May has to finally realize that there won't be any cherry picking here. This has nothing to do with being lenient or severe. It concerns concrete issues, such as the future border between Ireland and Northern Ireland. Nobody wants to undermine the peace process in Northern Ireland with a hard border, but we will not allow this to become a way for goods to slip into the internal market.

DER SPIEGEL: Do you think it's possible that the British will change their minds on Brexit?

Rutte: I also occasionally dream. But we can't build a negotiating strategy on dreams. It seems to me that there is a majority in the British Parliament for remaining within the customs union, but the government is taking a different line. Speculating on this will get us nowhere.

DER SPIEGEL: During last year's elections, you managed to win over EU-critical populists, but now it looks like Italy -- one of the founding members of the European Community -- could get a euroskeptic government. Does this mean that you can forget the euro reform ideas that you intend to discuss at the EU summit this week?

Rutte: On the contrary, it's our experience in the Netherlands that the best way to counter populists is to solve the concrete problems facing our citizens. It's all about jobs and security, also in an economic sense. Take, for example, Italy's banks with their large amounts of toxic loans. Italy is a perfect example of how important it is that we make further progress in developing the banking union.

DER SPIEGEL: But aren't the Netherlands and its allies among the countries that tend to put the brakes on this development?

Rutte: For us, it's all about the right sequence: First, we need to develop a schedule with concrete goals for how to reduce the risks on the banks' balance sheets. Then we can talk about how the emergency safety net will look. Concrete decisions are not necessary until 2023.

DER SPIEGEL: And how are things looking for the common European deposit insurance scheme for savings accounts, which is something that EU countries like Italy have been pressing for?

Rutte: There too: As long as the countries concerned fail to reduce the risks on their own banks' balance sheets, nothing will happen. The Maastricht Treaty imposes public debt ceilings on the member countries, and not on Europe. Just because the Netherlands failed to qualify for the FIFA World Cup, doesn't mean that I now maintain that we have to enter the tournament as a joint European team. Our team will fight its way back to the top on its own.

DER SPIEGEL: Mr. Prime Minister, we thank you for this interview.

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