The most current issue of international politics is the coronavirus response. With the world starting to slowly recover from the pandemic, the governments’ efforts are now focused on facing its aftermaths and providing support to hardest-hit countries. EU nations have expressed different positions on the matter, with the wealthiest countries, such as Germany and the Netherlands, rejecting the proposal to provide weaker nations with joint bonds to help revive their economy.
The purpose of this presentation is to explore the Netherlands’ position on “coronabonds” and analyze its consequences.
The Netherlands: Overview
Sixth largest economic power in Europe.
Fifth largest exporter of goods.
Form of government — constitutional monarchy based on parliamentary democracy.
Two-tier parliament, currently lead by the People’s Party for Freedom and Democracy and Prime Minister Mark Rutte.
Ranks among the highest in international indexes of press freedom, economic freedom, human development, and quality of life.
The Netherlands’ Foreign Policy
Characterized by its neutrality.
A member of a large number of international organizations, including the United Nations, NATO, and the European Union.
The foreign policy is based on four basic commitments:
- to Atlantic cooperation,
- to European integration,
- to international development, and
- to international law.
The country hosts a number of international organization and courts, most of them located in The Hague.
Economy is open and relies strongly on international trade.
Historical ties inherited from the country’s colonial past still influence its foreign relations.
The most controversial issue is the country’s liberal policy towards soft drugs.
Current Issue — COVID-19 Response
The coronavirus outbreak has posed an international threat to the lives of millions of people around the globe. Each government’s response included both domestic and international measures, and the countries of the EU collaborated on the matter to develop an effective strategy. As the restrictions are gradually being lifted throughout the European Union, each country faces the challenge of adapting its policy to the changing global situation and finding the balance between domestic and international interests.
The Netherlands’ international response involved the introduction of travel restrictions that have been gradually lifted since the beginning of June 2020.
Since 15 June, Dutch citizens can visit all countries within the EU without restrictions, with Sweden and the UK remaining out of bounds except for essential travel.
The Dutch government has adopted the decision of the EU to tighten entry conditions for people wishing to travel to the Netherlands from third countries until 15 July 2020.
Current Issue — “Coronabonds” Controversy
Another important international issue is providing financial support for the countries hard-hit by the pandemic.
On 8 April 2020, a teleconference was held by eurozone ministers with the aim of finding an agreement on the collaborative measures to tackle the economic impact of the coronavirus. The proposed strategy included issuing financial guarantees in the form of government bonds issued jointly by the European Unions’ 19 eurozone states. During the conference, the Netherlands have recoiled at the idea of issuing bonds to highly indebted nations.
Dutch Finance Minister Wopke Hoekstra accused southern EU states of “fiscal profligacy and irresponsible spending in their demands to create coronabonds.”
The Dutch government insisted on imposing strict conditions for soft loans to hard-hit countries, such as Spain and Italy, under the eurozone bailout fund / imposing strict conditions on governments seeking to tap into the eurozone’s bailout fund. Furthermore, the Hague demanded a country-specific memorandum on “growth-enhancing” reforms that governments should implement once the pandemic is under control. This position was supported by other wealthy Northern countries: Germany, Austria, and Finland who expressed concerns that they would have to pay the loans back in the event of the default.
The final agreement stated that states would be supported with credit lines through the European Stability Mechanism under the condition they the funds should only be used for immediate and indirect needs related to the pandemic.
Perry Anderson, CEO of Quadra Global Capital Corp, describes the nature of the conflict in the following way: “Joining hands and collectively going at this together, would spread the risk and diversify the odds of systemic failure. However, fiscally responsible countries would argue that this is being done at the expense of countries who have been previously able to successfully manage their respective budgets”. (CCSKRF)
International Reaction & Outcome
The compromise left most of European leaders and citizens unhappy, and The Netherlands’ position provoked an extremely negative reaction from some nations’ leaders.
The Portuguese Prime Minister Antonio Costa noted that the attitude of the Dutch Finance Minister at the Eurogroup meeting was “disgusting.”
Italian MPs and mayors launched an attack on Germany and The Netherlands, accusing them of immorality and lack of solidary with the rest of Europe.
Former president of the European Commission Jacques Delors made a statement warning that the lack of solidarity in the face of the virus posed a “mortal danger” to the EU.
Debates over coronabonds have opened up a rift between Northern and Southern European member states and had a negative impact on The Netherlands’ international image.
The Netherlands’ decision could have negative consequences on the country’s economic policy that depends primality on international trade.
With the Dutch market suffering from an 80% decrease since the outbreak, the Dutch government has demanded the EU to help to save its flower, fruit tree, and potted plant industry (CCSKRF).
It has been reported that Dutch diplomates have spent several days trying to calm outrage among their EU partners.
Conclusion
The Netherlands has been trying to find a balance between domestic and international interests in holding the aftermaths of the COVID-19 pandemic. It resulted in the Dutch government’s strong opposition to the European Union joint proposal to issue “coronabonds” to hard-hit countries. The decision can have deep consequences on the country’s economy and political relations.