International News • Dutch crisis puts eurozone debt rescue plans at risk
Mark Rutte, who is a key ally of Germany and the eurozone’s “hardliners” on financial discipline, has called an emergency cabinet meeting after budget talks collapsed at the weekend.
He is expected to resign today and announce snap elections, pushing yet another “core” eurozone country into political and economic uncertainty.
In France, early polls pointed to a victory of Francois Hollande in the first round of the presidential elections setting the stage for a run-off between the socialist challenger and incumbent Nicolas Sarkozy on May 6th. Mr Hollande has pledged to renegotiate the European fiscal pact that binds countries to a 3pc deficit limit by next year.
The “non-negotiable” fiscal pact, which was vetoed by David Cameron, triggered the collapse of the coalition government in the Netherlands.
Geert Wilders, the far-right leader, said he could not support the €16bn (£13bn) of cuts needed to meet the 3pc target. He wouldn’t allow Dutch citizens to “pay out of their pockets for the senseless demands of Brussels” he said.
“We don’t want to follow Brussels’ orders. We don’t want to make our retirees bleed for Brussels’ diktats,” he said.
Last week Fitch warned that the Netherlands faces a credit downgrade if it failed to deliver its austerity cuts or let political conflict disrupt economic management.
Traders are braced for another volatile week as uncertainty over debt reduction plans spreads to the eurozone’s northern core.
Hopes that the European Central Bank (ECB) will intervene and re-start its bond buying programme were doused by officials’ comments at the International Monetary Fund (IMF) meeting in Washington.
Luc Coene, member of the ECB’s governing council, told Bloomberg: “We have done what we can do so far within our mandate and within the possibilities we have. The only thing we could do is overstretch ourselves and then we would even lose the credibility we have at that moment.”
The mounting crisis in Spain and Italy has already exposed the eurozone’s rescue mechanisms as woefully under-resourced.
Christine Lagarde, the head of the International Monetary Fund (IMF), secured $430bn (£266.7bn) of extra funds from members to create a “global firewall” against the debt crisis. However experts said it is not enough to reassure markets that the debt crisis can be contained. Chinese Premier Wen Jiabao yesterday warned the crisis “is not over” during a visit to Germany.
Meanwhile Argentina accused the IMF of focusing too much of its resources on the debt crisis. Economy Minister Hernan Lorenzino, who was also speaking in Washington, said “far too much effort and human and financial resources have been devoted” to solving the crisis at the expense of other countries.
Argentina is being ostracised by some IMF members following its repatriation of YPF-Repsol last week.
Statistics: Posted by yoda — Sun Apr 22, 2012 7:25 pm
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