Greek tragedy in The Netherlands

Finding itself up against European rules on emissions, the Dutch government seems to want to stretch or break EU rules—in contrast to their view on rules during the Greek Crisis.

Written with Laurence Groot Bruinderink first published in Dutch in Financieele Dagblad, the Dutch Financial Times, on April 18^th 2023

During the European Financial Crisis, The Netherlands took a hard line when Greece flouted European rules. Now it finds itself paralyzed as it attempts to put-off or even side-step its European obligations when it comes to the preservation of its established nature preserves.

The Dutch preservation drama has all the elements of a Greek tragedy: an unrelenting conundrum that pits societal forces against each other, with strong, political characters and an inescapable conclusion.

Since 2003, the Dutch government has been trying to strike a balance between European agreements regarding the protection of nature preserves and its economic model growth. In that year, the Dutch registered 141 nature reserves for the European Natura 2000 network. Brussels has since repeatedly warned that The Netherlands must get on with protecting these nature preserves from further deterioration. Instead, The Netherlands continues to harbor too much polluting activity per square meter to comply with this binding agreement. This incompatibility has been clear to policy makers for years yet has not resulted in the Dutch government adopting and implementing anywhere near sufficient mitigating policies.

Patience of the European Commission, as well as leeway granted by Dutch courts having to uphold European and national law, is running low; and they no longer turn a blind eye. Various blanket freezes of key construction projects, enforced through the courts, are turning the thumbscrews on the Dutch economy and society in an uncoordinated effort to cut down on polluting activity. Thankfully, The Netherlands still has the policy space to protect its Natura 2000 network and can freely choose which polluting emissions to reduce, as Caroline van der Plas and Frans Timmermans discussed in The Hague last week. That said, it has to get on with it and fact is that there is no painless solution.

Administrative juggling

The European debt crisis that started in 2009 was another Greek tragedy. Here Greece itself was at the center of the crisis. The country was in a significantly worse economic and financial position than had long been represented by its government. For years, Greece managed to get away with administrative juggling, smoke and mirrors and violations of agreements made at the European level.

At the time, The Netherlands advocated an unrelenting approach: Greece simply had to comply with European rules and agreements. A Grexit was imminent, with many in The Netherlands wondering out loud whether Greece was actually worthy enough to remain a member of the European institutions. That, so reasoned the Calvinistic Dutch, depended on Greece’s determination and perseverance to find and implement tough solutions within the European agreements. The result was social, economic and political suffering for the Greeks.

On several occasions, Greek politicians tried to postpone these drastic measures, their compliance and to mitigate the dire effects of economic austerity. As a dramatic exit from the Eurozone was deemed even more disastrous, Greece eventually accepted the necessary measures. At least partially due to the hard European line propagated by The Netherlands, Greece ended up in a severe economic depression, resulting in a more than 25% contraction in economic activity – not to mention the resulting social hardships for Greek citizens. All this is quite in line with a Dutch proverb: gentle healers make for stinking wounds.

Stretching the rules

In its current crisis, Dutch determination and perseverance is under the European looking glass. Now that the country itself is up against European rules, the Dutch seem to wonder how far the rules can be stretched, or whether they can simply stop complying altogether. The Netherlands is faced with the choice: Stage the next act in an unfolding Greek tragedy, or attempt to limit the economic, social and political consequences as quickly as possible with a well-thought through plan. A choice between muddling through or biting the bullet.

In many ways, the question comes down to how much pain The Netherlands opts to suffer before doing what’s needed. Without a well-thought-out policy, judicially imposed emergency measures will increasingly paralyze the country. Sooner or later The Netherlands will have to come to a difficult compromise and actually implement the policy associated with it. The longer it waits, the more difficult and drastic necessary measures become.

Earlier policies proposed by Dutch governments have already led to a great deal of resistance from various groups in society. Moreover, this resistance shone through in recent regional election results, which also determine the composition of the Dutch Senate and turned political relations in The Netherlands upside down. It is encouraging that there now is a renewed democratic outcome that reflects the wishes and interests of various groups in The Netherlands. That said: the country must remain honest and realistic about the policy space it has in light of binding national and European agreements. However, if the new political situation enables the Dutch to arrive at a better solution to the problem through compromise: yes please!

Making and implementing decisive decisions will hopefully remain a lasting feature of Dutch society. The country has also demanded and imposed this on other European countries. A complex conflict should not lead to stymieing stubbornness and further delay and decay, but rather create the space for compromise and progress. With this The Netherlands - hopefully - prevents its own Greek tragedy.

The content in this piece is partly based on proprietary analysis that Exante Data does for institutional clients as part of its full macro strategy and flow analytics services. The content offered here differs significantly from Exante Data’s full service and is less technical as it aims to provide a more medium-term policy relevant perspective. The opinions and analytics expressed in this piece are those of the author alone and may not be those of Exante Data Inc. or Exante Advisors LLC. The content of this piece and the opinions expressed herein are independent of any work Exante Data Inc. or Exante Advisors LLC does and communicates to its clients.

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