Corona: Netherlands vs Italy

There is a lot of fuss about the Netherlands blocking aid to Italy. To prevent any misunderstanding (especially by my non Dutch readers), I’ve written this small explanation. And I’ll be using the words “sneaky bastard”. 😀

After the banking crisis in 2008 the Dutch national debt grew to 68% of our GDP, well past the maximum of 60% required by the EU. As a result we started to reduce expenses, and in 2019 our debt was below 50%.

In the same period Italy’s debt grew as well, but they never reduced their expenses. So it kept on growing to 138% in 2019. They were addressed on this by the member states of the EU, but the populist government gave the EU the big finger.

With the Corona crisis upon us all, countries need additional money to navigate the crisis. Because of our low debt we are able to loan a lot of money at good rates, so my government has several tens of billions of euros available to help out our people and companies. Italy on the other hand has to pay a very high interest rate on their loans, because of the choices they made.

With loans turning out to be expensive, Italy wants access to the EU’s 400+ billion bailout fund, but without any of the restrictions that comes with the money in that fund. Or, as an alternative, they do want to place loans, but the other EU countries have to co-sign (eurobonds) so the interest rate becomes lower. But there is go guarantee that after the crisis we won’t see the big finger again. Basically they want the other countries to carry the consequences of their policies of the last years.

Well, that is not going to happen.

Don’t get me wrong. They can access the bailout fund now, but they just have to adhere to the preset restrictions; nothing was added, this was all in place prior to corona. And as a sign of solidarity those restrictions have even been waved for any money which goes to medical expenses directly related to the corona crisis. On top of that my government has offered a 1 billion euro gift, no strings attached.

But they refuse; only unrestricted access to the bailout fund, or eurobonds will do. And they try to make it seem like the Dutch government is not showing solidarity. Giuseppe Conte is a sneaky bastard; the lack of solidarity was in Italy’s attitude in the last years. I personally think they see a way to postpone the looming train wreck that their economy is about to become, somewhere in the near future; no country can maintain such a debt growth.

We have a saying here, freely translated: “he who burns his bottom has to sit on the blisters”. (In this case the blisters being the restrictions, not the people of Italy suffering.) The Dutch people have ‘suffered’ because of the cuts the government made. But we understood we had to, because it is good financial management.

So if someone can explain how this situation should be interpreted differently, I’m all ears. Until then: go Wopke Hoekstra.

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