Dutch prime minister on the future of the eurozone

NOVEMBER 29: U.S. President Barack Obama (R) meets with Dutch Prime Minister Mark Rutte (L) at the Oval Office of the White House November 29, 2011 in Washington, DC. The two leaders met to discuss the economic ties between both countries, as well as the current situation in the eurozone, and the preparations of the 2012 NATO Summit which will be held in Chicago.

Kai Ryssdal: Among all the countries in the European Union, the Dutch economy is in the top 10. No. 6 to be exact. It's been described as a mini-Germany -- prosperous and stable. And like much larger Germany and France, eager to see the euro come out of this crisis intact.

That's where Dutch Prime Minister Mark Rutte and I started our conversation -- with me asking whether saving the euro is worth all the trouble.

Mark Rutte: Yeah, this is vital. Our policy for the Dutch government is to have the block of 17 countries intact and at the same time have very good relationships with the 10 European Union member states which are not part of the euro group -- like the U.K. and Sweden -- because these are the countries which are very much oriented towards more jobs, growth and prosperity. So we need -- also -- their input in the whole project.

Ryssdal: Why is this so hard then? If everybody agrees that the goal is to save the euro and take care of this debt crisis, why can't we get from point A to point B?

Rutte: Two reasons. One is that in the southern part of Europe -- in Greece, in Italy, in Spain -- the public debt has run to a too high level. They have done not enough to get it under control. So that's one reason. The second is that markets want to see from the currency area -- from all 17 -- that we stand ready to help a country like Greece or Italy if it needs support. There is still debate. Should you do this by the Central Bank -- increase the money supply? Or should it be done by the European front itself. We believe it should be the latter -- European front -- because otherwise you run the risk of inflation, monetary financing and increasing the amount of money itself. And it would take away the pressure from Greece and Italy to reform.

Ryssdal: Why is that pressure still not having any effect though? I mean there's pressure from the entire global economy.

Rutte: Well, the pressure is having an effect. It's not having its effect where we want it to which is in the interests rates. So, there you are right. But it is having a huge effect in the sense that Italy now has a new government. We've had the French president on television for 45 minutes telling his people that the French should behave more like the Germans. Well, could you imagine a couple of years a go a with a president having this message on his television. Impossible! Take Spain, where we now have the socialist government leaving, a new conservative government coming in with a pledge of getting the budget deficit under control. So I would say, so far, the result has been extremely good. The only problem is -- and that's because there is no firepower now in the European pot of money -- to tell these countries that -- the markets are not sure that others are willing to help if something goes wrong.

Ryssdal: You said the results have been extremely good. I'd have to quibble with you there because I don't think anybody say that what is happening in Europe is extremely good -- the markets are upset, countries are on the brink and yet there doesn't seem to be a solution.

Rutte: Well, let's also take another look: Portugal and Ireland. A couple of years ago they seemed at the brink of disaster. In the meantime, they came around. They're still in programs, they still get help from the European stability mechanism, but they are coping. They are not any longer at the brink of disaster. So Ireland and Portugal are cases in points that we can deal with this crisis.

Ryssdal: Mr. Prime Minister, thank you so much for your time, sir.

Rutte: Kai Ryssdal, thank you so much for your time.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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I understand that Mr. Rutte, as the Dutch Prime Minister, needs to put on a happy face, but that's been the problem with the Euro Zone for over 2 years: just putting on the happy face and saying, "things are getting better, and we will solve this." But, not surprisingly, the facts simply do not agree with him. His shining examples, Ireland and Portugal, are not out of trouble; their economies are stagnating, and unemployment is increasing. In fact, in all the countries where austerity has been enacted, unemployment is going up while economic activity is grinding to a halt. In many ways, the Euro Zone is a macrocosm of the wealth gap that exists here in the US: the poorer countries went on a borrowing spree and bought the goods and services of the richer countries in the good times, and now in the bad times, the richer countries don't want to pay the bill and instead want the poorer countries to tighten their belts. And, to top it off, the recent ECB liquidation of Euros further provokes the question: will the Euro survive?

It’s probably going to take a little more than quibbling, with the likes of this clown, to affect meaningful economic change in Europe or anywhere. Characterizing the financial crisis as primarily one of debt incurred by “Socialist” countries like Spain and Greece is not only ignorant and arrogant, it’s inaccurate. Most of Greece’s debt accrued under conservative governments who bought into (literally) the free market ideology proselytized by Wall Street and neo-conservatives everywhere. Instead of lauding the triumph of governments like Ireland, whose people are eating all the losses generated by the excesses of financiers and investors—as taxpayers, wage-earners, and consumers—we should be looking to Iceland’s example and at least one financial analyst’s suggestion to “ . . . put the insolvent banks into receivership, fire management, liquidate holdings, sell all the assets off, wipe out shareholders, and pay the bondholders whatever was left over.” —Barry Ritholtz
Now that would be progress.

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