Dutch prime minister says government austerity talks collapse

THE HAGUE, Netherlands – The ruling Dutch minority government was on the brink of collapse Saturday after anti-EU lawmaker Geert Wilders torpedoed seven weeks of austerity talks, saying he would not cave in to budget demands from “dictators in Brussels.”

New national elections that will be a referendum on the Netherlands’ relationship with Europe and its ailing single currency are now all-but-certain.

But before Prime Minister can tender his resignation — possibly as early as Monday — he must consult with allies and opposition parties on how to run a caretaker government that will have to make important economic decisions in the coming weeks and months.

“Elections are the logical next step,” Rutte said.

Opposition leader Diederik Sansom of the Labor Party joined others across the political spectrum in calling for new elections as soon as possible.

“In the meanwhile, we in parliament will take responsibility for a careful budget in 2013,” he said.

Austerity talks began in early March after the Dutch economy sank into recession and forecasts showed the 2012 budget deficit will reach 4.6 per cent — well above the 3 per cent limit mandated by European rules. Dutch politicians have strongly demanded that Greece and other countries meet that target.

Rutte leads the free-market Liberal Party in a minority coalition with the centre-right Christian Democrats with outside support from Wilders’ Freedom Party. The outspoken Wilders is widely known for his anti-Islam and anti-EU opinions, including calls for Greece to return to the drachma and the Netherlands to leave the euro.

Rutte said negotiations had been rounded off Friday to deliver a “balanced package” of cuts, but Wilders walked out after discussing the package with his Freedom Party.

Christian Democrat leader Maxime Verhagen accused Wilders of “political cowardice” for refusing to sign off on the cuts — details of which have not yet been released.

Wilders was happy to take the blame, saying he “would not accept that the elderly in the Netherlands have to pay for nonsensical demands from Brussels.” He underlined that an accord would have been possible had the coalition been less concerned with following European rules to the letter.

“We don’t want to bow to Brussels,” he said. “We don’t want our pensioners to suffer for the sake of the dictators in Brussels.”

Wilders has long been a staunch critic of the European Union, opposing an EU constitution and last month suggesting the Netherlands should return to its pre-euro currency, the guilder. Most mainstream Dutch parties are generally pro-EU.

The collapse of talks could endanger the Netherlands’ coveted AAA credit rating and drive up its borrowing costs.

The Netherlands is one of only four nations using the euro that has the top rating, though it already is under review by rating agencies. Central Bank President Klaas Knot said last week borrowing rates would rise by 1 per cent if the Netherlands’ ratings are cut.

Once considered one of Europe’s strongest economies, the Netherlands is suffering from high levels of personal debt, mostly mortgage related.

Rutte came to power in 2010 and slashed spending by €18 billion. But after the latest downturn, he needs to cut at least €9 billion ($12 billion) more, according to estimates by the Central Plan Bureau, the government’s economic think-tank.

His administration was cobbled together after months of talks following a 2010 election that returned a splintered parliament. Few analysts expected the coalition helped by the maverick Wilders to achieve a one-vote majority in parliament to survive a full four-year term.

“This was always a very shaky construction,” said Jolanda Sap of smaller opposition party Green Left.

The collapse came just days before Wilders is scheduled to fly to the United States to launch his new book, titled “Marked for Death. Islam’s war against the West and Me.” The fact that the book is being published in English and in the United States has led some observers to speculate about whether Wilders, whose party has been slipping in recent polls, might not see his future across the Atlantic.

Wilders did not return calls seeking comment.


Associated Press writer Toby Sterling contributed from Amsterdam.