Dutch prime minister on the future of the eurozone

Kai Ryssdal Nov 30, 2011

Dutch prime minister on the future of the eurozone

Kai Ryssdal Nov 30, 2011

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.

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