Finance Minister defends stance against Eurobonds in parliament

Flags of Netherlands and Europe
Graphic showing the flags of the Netherlands and EuropeImage: Fredex / DepositPhotos

Finance Minister Wopke Hoekstra received support from a majority in parliament for the government's stance on European Union aid for countries in trouble due to the coronavirus. The Dutch government is against so-called coronabonds, and wants strict requirements attached to any emergency financing, NOS reports.

Later in the evening, reports emerged that the European Stabilization Mechanism (ESM) could instead be used to make a quarter of a trillion euros available to help countries in the EU pay for the medical problems caused by the coronavirus pandemic.

Eurobonds, lately referred to as coronabonds due to the coronavirus, are joint European loans that the European Union member states as a whole guarantee. According to Hoekstra, these bonds are unwise. "It will cost the Netherlands a lot of money. I don't see the reasonableness of it. Ordinary Dutch people ultimately pay the bill," the Finance Minister said in a debate with the Tweede Kamer, the lower house of Dutch parliament on Tuesday. 

Hoekstra proposed a fund through which countries with high medical costs can be 'gifted' the money they need. The Netherlands can contribute 1 billion euros to this fund, Hoekstra said last week. According to him, several countries showed interest in such a fund. The parliamentarians also supported the idea.

Hoekstra emphatically pointed out that no European country has yet run out of money and is already asking for help. Due to the low interest rate and measures taken by the European Central Bank - the ECB made 750 billion euros in government bonds available to make it easier for countries to borrow - countries can still take out loans themselves, Hoekstra said. 

However, the government can foresee a future in which countries will have to make use of the existing European aid program, the European Stability Mechanism. As far as the Netherlands is concerned, only countries who are in a "medical emergency" because their healthcare system was overloaded by the coronavirus, can get aid from the ESM under lower requirements than usual. All other emergency loans must be subject to the current strict requirements - countries borrowing through ESM must adjust their budgets and implement economic reforms.

The Netherlands is opposed to relaxing these measures due to the coronavirus crisis, Hoekstra said. "Otherwise, why are we raising the retirement age here? Why do we set strict requirements for our own budget?" he said.

While a majority in parliament supported Hoekstra and the government's stance, some parliamentarians worried that he was being too harsh. "During the financial crisis, half of Greece had to be sold to Russia and China in order get the country out of debt. What did that bring us?" SP parliamentarian Renske Leijten said.

The PvdA hoped that Hoekstra would not again anger countries like Italy and Spain with his tone when speaking to his European counterparts via video call later on Tuesday. "The Minister does not have a good track record on that," PvdA MP Henk Nijboer said.

Coalition party ChristenUnie also expressed concerns that the Minister will again have to apologize for his tone after his meeting. 

Hoekstra reassured the MPs that he has something to offer the other EU countries, but added that the Netherlands will never solve other countries' old financial problems. 

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