Romania

On 23rd April, the Dutch government collapsed after it failed to agree a new austerity package, with Prime Minister Mark Rutte resigning. Rutte had been attempting to secure a deal with his coalition in order to reduce the country’s budget deficit to 3% of the GDP, in line with EU rules. Although the Netherlands has a low level of debt, and is one of the few EU countries to maintain an AAA credit rating, its economy is back in recession and it budget deficit is currently around 4.6% of the GDP.

But talks were abandoned when eurosceptic Geert Wilders and his populist PVV party, a coalition partner of Rutte’s conservative-liberal VVD, walked out, claiming that “a slavish adherence to European rules was foolish and would harm the Dutch economy.” Thus the coalition government fell. European Commissioner Neelie Kroes, who is a VVD member, described Wilders as hypocritical, as the Netherlands had been one of the countries most vociferously advocating a 3% deficit limit. She said, “ Pointing to Brussels now is dumb, it’s untrue, it’s distracting and it doesn’t solve anything.” [1]

Just four days later, Romania’s government also collapsed, when Prime Minister Razvan Ungureanu lost a no-confidence vote after just 2 months in office, amid public protests at severe spending cuts. Neil Shearing, chief emerging markets economist at Capital Economics, said that while the fall of Ungureanu’s government raised wider concerns, it should be noted that Romania has a history of fragile governments, and therefore comparisons with the situation in Holland should be made with caution.  [2]

But as two countries find themselves in political and economic turmoil, the message is clear: people are beginning to tire of austerity. The fall of these two governments, along with France electing the “soft-on-austerity” François Hollande, would seem to suggest that Europe will soon see a collision between those who believe austerity to be the answer, and those who don’t.

Image source: European Commission

This is the amount of the rescue loan that the EU and IMF have just agreed upon for Romania. The newest member state, which joined in 2007, along with Bulgaria, is the third EU member (after Hungary and Latvia) to need IMF and EU aid to help cope with the economic crisis. The IMF will contribute the largest sum, offering €13 billion, with the EU lending €5 billion, and the remaining money coming from the World Bank, the European Bank for Reconstruction and Development, and other multilateral sources. Various conditions will be attached to the loan, most of which are still being negotiated. It has already been established that the Romanian budget deficit in 2009 will need to be limited to 5.1% of GDP. The country, which is struggling with rising unemployment and falling tax receipts, will likely have to cut spending in the public sector in order to meet this target, prompting fears of social unrest and perhaps even the fall of the government, as was just seen in the Czech Republic.

Image: www.flickr.com/ GflaiG

On Wednesday 14 November a strange political marriage broke up. To the great satisfaction of the majority of the MEP’s in the European Parliament, it was announced that the extreme right-wing political group of the EP, ‘Identity, Sovereignty and Tradition’ broke up, when five Romanian MEPs abandoned the group, leaving it below the threshold of the internal EP-rules on party group formation that demand for at least 20 MEPs from six countries to be eligible for recognition. The straw that broke the camels back in a party-group, where internal quarrelling has been the order of the day, was a series of comments by Alessandra Mussolini who failed to distinguish between Roma and Romanians when responding to homicide charges on a Roma in Italy. At the Euros we respect the democratic right of representation of any MEP that the Europeans have chosen to represent them. At the same time we reserve the right to rejoice when the extremists of Europe suffer setbacks. And today we rejoice with the rest of the EP.