The EU Has Bigger Trouble than Brexit alone

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Trouble brewing in the Netherlands

By Pim Beaart, Netherlands, economics & politics editor at Veren Of Lood:

The referendum in the Netherlands on April 6th is going to cause a lot of trouble, possibly axing the strong Dutch commitment to the European project.

The plebiscite is about the Association Treaty between EU and Ukraine, into which the EU inserted some curious clauses about military cooperation and such. It is not a trading treaty per se, since those are the sole responsibility of the European Commission and would not require ratification by the member states.

Another fact that points toward bigger issues at stake is the last-minute involvement of the US government that recently urged Dutch voters to vote YES.

Although Parliament already ratified the Ukraine Treaty, it did so under the provision that under Dutch Law it might be open to a challenge by a plebiscite. The road to such a plebiscite is so difficult that it obviously was never meant to be possible. But the immensely popular Dutch anarcho-liberal blog Geen Stijl managed to gather 470,000 signatures, way more than the 350,000 required by law. A lot of signatures in a country with a total population of 17 million!

And it forced the government to organize the plebiscite.

Though the formal outcome is not binding, it seems unlikely that the ruling coalition will be able to even partially ignore its result. The coalition of Social Democrats and Liberals has only a fragile majority in parliament. With elections coming in March 2017, unless the government falls within the next two months, disregarding the result is a road to political disaster.

Polling consistently shows a halving of the liberal party and the annihilation of the Social Democrat party that might lose as much as three quarters of its current seats in parliament.

As if this were not sufficiently difficult for the European Commission, there’s the subsequent Brexit referendum in the UK. The time span between both referendums is such that the Dutch government won’t be able to postpone a decision on whether or not to disregard the outcome of April 6th, in a valiant attempt to avoid a Brexit and the troubles that torpedoing the Association Treaty with Ukraine (subject of the Dutch referendum) will cause.

In short: Disregarding the outcome on April 6th guarantees that the Dutch government will fall without hope of revival in the foreseeable future. Worse, it might also sink the chances of the Cameron-government in the UK to prevent a Brexit.

Polling shows that the decision in the UK hangs very much in the balance. But a Dutch government decision to ignore the results of its own referendum, felt as purely antidemocratic, will arouse more distrust in the UK of Brussels and of the UK government’s promises about the special status within the EU that the UK craves. The British people will also remember what was promised in the Scottish independence referendum last year, and what remained of it after the Scots decided to remain.

History plays a part. The British government has a bad record of keeping promises made during referendum campaigns. And the Dutch government faces a similar problem.

In 2005, the Dutch rejected the European Constitution in a referendum with a very strong 61% against 39%. Upon which the Dutch government decided not to take chances that might hamper the ambitions of the Eurocrats, accepted some minor changes in the rejected Constitution, and ratified it as The Lisbon Treaty, without a referendum. Although this fooled nobody, the Dutch political class felt it had done its job — particularly towards the EU.

However, Dutch politics has never been the same again.

Knowing the extent of its own unpopularity, as well as that of the EU, the Dutch government decided to try a course of obstruction. A turnout of less than 30% could be safely ignored because the referendum law states so. This was shown by underfunding the polling preparations, causing a 10% fewer polling stations to be opened on April 6th than usual. And strangely designed ballots appeared, where only the small white dot may be filled in for the ballot to be valid.

Despite little media coverage, the most recent polls signify an expected turnout of about 42% (above the usual 40% turnout for European elections), about 60% of the vote will be against the Ukraine Treaty.

One week to go. This scrapped the possible strategy of YES-voters to remain at home and try to sabotage the turnout-requirements.

The campaign so far has been a mess. The YES-vote fell back on accusations that the NO-vote is supported by Russia. On the other hand, the YES-vote was openly supported by the American billionaire George Soros. A leaked strategic plan showed that the Dutch government would try to seem uninvolved. But over the last few days, this has obviously been revoked because of the surging NO-vote.

What to watch for? The percentages will be essential. A NO-vote below 55% may be only effective in the case of a turnout of 50% or more. A lower turnout will definitely require a higher NO-vote. There is little doubt about the overall outcome, since a large chunk of the Dutch electorate considers this referendum a second chance after the result of 2005 had been stolen from them. Talk about chickens coming home to roost. By Pim Beaart, writing as “Hannibal,” is economics and politics editor of the Dutch opinion blog Veren Of Lood (Feathers or Lead).

Project Fear is in full bloom over the Brexit referendum. In the event of a wrong answer, all manner of biblical disasters can be expected to befall the nation. Read…  Brexit Meltdown at the Bank of England

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  21 comments for “The EU Has Bigger Trouble than Brexit alone

  1. John Doyle
    April 3, 2016 at 10:46 pm

    Without bothering too much with the Dutch details, the EU is so badly served by the Treaties that failure is the only option left, unless the treaties -Lisbon etc- are revised and the Neo-Liberal policy bias destroyed. the wilful destruction by the “Troika” of Greece’s chance at reconstruction is a lesson, even for Germany. Neo-liberalism at it very worst.

    A pity, the initial idea was a good one. The execution has been worse than poor, wilful more like it

    • Debravity
      April 4, 2016 at 1:28 am

      John, thanks for all of your insights over the past wee while..
      Wilful? What do you think the ends, for the elites, specifically were (at the time of ‘wilfully’ engaging in poor execution of the eu treaties)?

      • April 4, 2016 at 8:17 am

        Google on “Panama Papers” for some insight. This information from one law firm, times the number of such law firms per tax haven, times the number of tax haves is mind boggling. Big question is how much were these account holders co-operating against the majority and the market.

        • Debravity
          April 5, 2016 at 12:58 am

          Ok, thanks George. Will do. What do you think about Nick Kelly’s comments?

    • walter map
      April 4, 2016 at 7:36 am

      It’s been hugely profitable for the perpetrators. They’re just glad nobody caught on until it was too late.

  2. Keith
    April 4, 2016 at 6:36 am

    Getting to the rotten core of Neo-Liberalism, a UK journey.

    1) Tony Blair announces the UK is a meritocracy where anyone can get to the top through hard work, drive and ambition.

    Next elected prime minister – Eton educated and married into the aristocracy.
    Eton boys occupy a myriad of positions of power.
    Privately educated elite firmly re-established.

    2) Everyone must be subject to market discipline and compete in a global market place.

    Industries that cannot compete in the global market place must fail.
    Heavy industry, manufacturing and mining decimated, severely affects the North of England and Midlands.

    The financial sector fails and is given unconditional bailouts with no effort to punish those who made the losses, the tax payer will just pick up the bill.

    3) The lasting damage to the economy caused by the financial crisis must be passed onto those at the bottom of society through austerity to balance the budget.

    Are you rich or are you poor?

    Neo-Liberalism helps the rich and disadvantages the poor.

    Nice rich bankers – how much do you want?
    Traditional industry – left to the whims of the global market place.

    • April 4, 2016 at 8:19 am

      Seems like an accurate recap. With a few name changes applies to US also.

  3. Keith
    April 4, 2016 at 6:39 am

    Which way am I going to vote in the UK referendum?

    The EU has been corrupted and needs to be rebuilt from scratch.

    Let’s help it on its way.

    I used to think the EU was a good idea for many, many years.

    The bad times since 2008 have forced it to show its true colours and investor and bank interests always come first and those of the people last.

    Its treatment of Ireland, Spain, Portugal and Italy have been atrocious.
    Its treatment of Greece, the worst one could imagine.

    The current EU needs to disintegrate to be replaced by a better institution sometime in the future.

    It has been corrupted beyond repair.

    It follows the Neo-Liberal ideology that fails time after time and lays waste to countries and continents.

    Bankers have been following this ideology before it was even called Neo-Liberal, with disastrous effects for whole continents:

    When South American and African nations were in trouble the World Bank stepped in and offered loans as long as they reformed their economies with less public spending, austerity and privatising previously public companies.

    It was a disaster.

    In the Asian Crisis in 1998 the IMF stepped in and offered loans as long as they reformed their economies with less public spending, austerity and privatising previously public companies.

    It was a disaster.

    When Greece got into trouble recently the IMF stepped in and offered loans as long as they reformed their economy with less public spending, austerity and privatising previously public companies.

    It was a disaster.

    The same has been done in Spain, Italy, Portugal and Ireland.

    Hundreds of millions of people made to suffer by following a stupid, failed ideology.

    One nation refused to follow these stupid ideas that the IMF wanted them to follow, Malaysia, in the Asian crisis. It was the first to recover.

    Globally the technocrat elite are locked into a failed ideology; it’s time to get out of their failed institutions.

    Adios banker EU, hello new people’s EU.

    • nick kelly
      April 4, 2016 at 3:51 pm

      RE: Greece. The IMF never ‘steps in’ it has to be invited by the host government. This is done only in an emergency, one created by the Greeks.
      The following may be somewhat dated, but as of 2012 was still accurate It is from Micheal Lewis’s book ‘Boomerang’ He is also the author of ‘The Big Short’

      Re: public spending; when the IMF did arrive its first job was to find out the obligations of the government- what does it have to pay? Which means finding out how many people worked for the government. Problem- nobody knew.
      What they did know was that over 100 occupations had been deemed arduous, permitting retirement at 55. Example: disc jockey.
      Greece had 4 times as many teachers per student as Finland- Greece has the worst results in the EU, Finland the best.
      It was common for a Greek civil servant to be paid more than his German equivalent- however, the civil service barely functioned. One way of paying them more was to be paid for a 13 or 14 th month.
      No one has ever gone to jail for tax evasion- the rare actual charges dawdle on for a decade.
      No receipt is ever given for a service- the swank hotel where Lewis interviews did not give receipts.
      Greek finance has been a mess literally for centuries. It was a member of a sort of pre-EU- The Latin Union founded in the late 1800’s. At the time people asked ‘why include Greece?’ It was eventually expelled for alloying silver coins.
      But until it got the EU credit card it could only dig itself in so deep. No one in their right mind was going to accept bonds payable in drachmas- especially the Greek population.

      Re: all this ‘austerity, neo-liberal’, buzz words of the day- why shouldn’t countries live within their means? Why does everyone who wants to get elected have to promise a slew of government spending?
      As for the Asian Financial Crisis being followed by a disaster- recovery was actually pretty quick.
      Not so the ongoing African disaster: e.g, Nigeria, which has a lot less to do with any nasty people from the IMF or World Bank than incompetent and corrupt rulers who have stolen the country’s once vast oil wealth.
      BTW: in Nigeria as in much of Africa- tribe is still a main political factor.

      • Keith
        April 5, 2016 at 6:09 am

        The bribes to those at the bottom in Greece ensure they put up with the corruption at the top.

        In a democracy this is the only way for those at the top to keep their snouts in the trough.

        The same runs through most of the Club Med nations.

        Strangely the IMF only targets those at the bottom (or not so strangely).

        Demand is the problem today and there is a glut of investment Capital.

        Wealth is concentrating very fast:

        2014 – “85 richest people as wealthy as poorest half of the world”
        2016– “Richest 62 people as wealthy as half of world’s population”

        Doing the maths and assuming a straight line …….
        5.4 years until one person is as wealthy as poorest half of the world.

        Looking at today’s problems, raising taxes on those that can consume no more would seem to be the answer for balancing budgets and not austerity.

        (The IMF and World Bank turned over South America, Africa and Asia last century).

        • nick kelly
          April 8, 2016 at 12:09 am

          In 1974 the UK had to go to the IMF. It was a basket case, and had just tried actually almost begged West Germany for a loan. This was the mess handed to Margaret Thatcher.

    • Agnes
      April 4, 2016 at 7:04 pm

      Don’t forget Iceland :)

  4. April 4, 2016 at 7:45 am

    Sooner or later all Ponzi type schemes always collapse when everyone at last expect the profits/benefits they were promised. Indeed, the various trade pacts and treaties have been extremely profitable, but with significant costs to certain economic sectors, e. g. UK steel, and the profits/benefits have been largely “skimmed” by the elite, which evade taxes on this wealth, while the public infrastructure crumbles. It’s time for the elites to deliver, or go home and let some one else have a go…

  5. Stavros h
    April 4, 2016 at 8:07 am

    This is a very interesting development in the increasingly rotten EU. A strong NO vote will create an untenable situation for the Eurocrats. If they choose to ignore the result, then Farage will be provided with even more ammunition for his Brexit campaign. And the possibility of Brexit is worse than rejecting the Treaty with Ukraine. If on the other hand, the Eurocrats begrudgingly respect the Democratic vote of the Dutch electorate then the weakening of the “European Project” becomes even more evident and at the same time Russia gains a small but valuable victory over her NATO enemies.

  6. Mad Max
    April 4, 2016 at 8:47 am

    The remarkable thing about the UK’s relationship with the EU is that the UK’s exports to the EU have actually grown far slower than many other developed non-EU countries including relatively comparable ones like Canada and the US, etc… Preferential trade access to the EU is supposedly the main economic advantage of EU membership right? The UK has become a net importer to the EU and non-EU European countries have had faster GDP growth than EU countries.

  7. Chicken
    April 4, 2016 at 7:28 pm

    I expect distrust of Brussels is well deserved, in most aspects.

  8. frederick
    April 4, 2016 at 9:17 pm

    Nick Kelly defending the usurous İMF How pathetic is that?

    • nick kelly
      April 6, 2016 at 2:39 pm

      The rate on the IMF loan to Greece is 3.6 %. This number is from the Jubilee Debt Group which is a critic of the IMF, and apparently thinks it should run more like a charity than a bank.
      The IMF is currently arguing with the European Central Bank ( which gets most of the IMF money) and saying that a lot of Greek debt should be forgiven.

      • April 7, 2016 at 3:09 pm


        You can nit-pick as much as you like about Keith’s comments above, but he is actual making an important point about the institutions of the EU and the IMF and how well (err, maybe not) they have served the average citizen in their respective regions of the world.

        I do not think for one minute that he is trying to give us an economics lesson. And nor should you.

        Many, just-above-average non-economists now can easily see through all of this arithmetical mumbo-jumbo for the twaddle that it really is. The “experts” have tried putting so many bandages on the EU “patient”, hooked it up to life support and still now try to convince us that a full recovery is just around the corner.

        Pleeeze, give me a break!!!

        “…..The current EU needs to disintegrate to be replaced by a better institution sometime in the future.

        It has been corrupted beyond repair……”

        • nick kelly
          April 8, 2016 at 1:00 am

          Oh I agree with a lot of what you say- I actually think the IMF could do a bit better on the rate. I’m reacting to the tone of the comments- which is more a kind of evil- versus- good, black- and- white world where an evil IMF and World Bank and evil Fed and so on and so on.
          They don’t think they have to do anything except string words together like a mantra- but just saying ‘neo-liberalism’ or ‘austerity’ is not an argument. I happen think of this site as a place where views are defended not just stated.

          This stuff has real world consequences. It’s all very well for us in North America or the UK to philosophize. Venezuela, where the government of Maduro totally buys into this “capitalism =evil’, may actually collapse- with the largest oil reserves in the world, it may become a failed state. We may have a former member of the developed world become a Haiti. What happens then?- the strong devour the weak.

          On this site you can read about the impending insolvency of Petro-bras, Brazil’s oil co, Pemex- Mexico’s oil co and of course Venezuela’s. What do they have in common- they are all run by the government.
          Moving on, I just came back from Uruguay a socialist country that seems to function well. At a gathering there I met some folks originally from Argentina who were appalled that the left wing had been voted out- but note, they no longer lived there.
          Last night on Bloomberg (!) I saw the new minster of finance, a
          very impressive Mr. Prat-Gay who spoke very good English- describing some first steps-‘you no longer have to get a license to export’ etc. ‘but we are trying to undo 40 years of mismanagement’
          Maybe there’s hope for Argentina, but not yet for Venezuela.

      • Keith
        April 10, 2016 at 4:37 am

        I just looked at the abysmal track record.

        If it looks like a duck, sounds like a duck and swims like a duck.
        It’s a duck.

        If you behave like an idiot you are an idiot.

        Q.E.D. (Quod erat demonstrandum)

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