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Sunday, 24 November 2013

Finance Minister Jeroen Dijsselbloem unfortunately showed last week why he is not a good chairman of the Euro-group… and a good Minister after all.

Before the Dutch parliamentary elections in 2012, I had high hopes for the current Dutch Finance Minister and chairman of the Euro-group, Jeroen Dijsselbloem.

I saw this prominent PvdA (Dutch labour) member as an intelligent, gifted and sympathetic politician, who seemed less ‘slick’ and more reliable than the fast and smooth talking party-leader Diederik Samsom. That was the reason that I gave my vote to him.

Unfortunately, the first year of Jeroen Dijsselbloem as Finance Minister and chairman of the Euro-group gave me some very mixed feelings.

  • he showed decisiveness while nationalizing SNS Reaal, in order to prevent a default of this Dutch bank;
  • Also in the Cyprus case, he showed a gutsy approach that initiated a new road ahead for the handling of defaulting banks: not at the expense of the European tax-payers alone, but partially at the expense of the large depositholders too; 

  • In the same Cyprus case, Dijsselbloem could not take away the impression – set by PM Mark Rutte – that the Cypriot banks had been treated differently than earlier (nearly) defaulting banks, as a consequence of the fact that many Russian people had their money stashed away there. “We don’t want to pay for you, because we don’t like you” does not sound like an objective and thorough decision;
  • Dijsselbloem also made a bad impression, when he blamed his predecessor Jan Kees de Jager for the way that the latter had treated the Rabobank-Robeco bonus case. “On top of things” were not the first words that came into mind.
  • His last blunder [to these eyes - EL] was, when Dijsselbloem skipped the annual meeting of the IMF in October – in his role as chairman of the Euro-group – in order to glue the Dutch annual budget together. The fact that the Cabinet succeeded with this budget shortly after, does not change the fact that Dijsselbloem should have been present in New York. 

For the rest, neither the domestic actions of ‘Dutch finance minister’ Jeroen Dijsselbloem, nor the foreign actions of ‘Chairman of the Euro-group’ Dijsselbloem made a lasting impression in 2013. His performance over all seemed moderate: not bad, not good, just moderate…

That was until last week, when unfortunately the narrow-minded, resentful and politically clumsy Jeroen Dijsselbloem popped up again.

This political clumsiness started last Tuesday, 19 November, when Dijsselbloem snarled at Rabobank economists that “they better should keep their mouths shut this week…”.
This was a nasty, “below-the-belt” remark upon:

Of course, the latter event was something in which the Rabobank economists were not involved at all and, on top of that, what they could have done nothing about…. 

This is equal to blaming the tellers of a bank for the circumstance that their CEO is a crook.

“Jeroen D., for all your nonsense” was the brief, but lethal reaction of BNR News Radio’s “favorite perma-bear” Kees de Kort, after the outburst of Jeroen Dijsselbloem: “You can state this, when you ‘live in a condo in Simpleville’, but not when you are the Dutch Finance Minister!”.
Kees de Kort, macro-economist of BNR Newsradio
Picture copyright of : Ernst Labruyère
Click to enlarge
The second political nosedive of Jeroen Dijsselbloem came in his role as chairman of the Euro-group, when he tried to teach the French a lesson. Het Financieele Dagblad (FD) wrote about this story and the follow-up by France. Here are the pertinent snips:

Dutch finance minister and chairman of the Euro-group Jeroen Dijsselbloem thinks that the European Commission should force individual countries into reforms.

Only when a country makes rock-solid agreements about this, it should get more time to get its annual budget in order. This is stated by Dijsselbloem in an interview with some financial newspapers. Indirectly, he criticises Euro-Commissioner Olli Rehn with these remarks. 

Rehn gave France two more years to reduce its budget-deficit, without adding ironclad conditions to this agreement. Nowadays, France is reluctant to carry through economic and political reforms.

Especially Germany is very worried about the tempo in which France reforms its economy and reduces its deficits. “France should do more and the country itself knows that too” was also the opinion of Jeroen Dijsselbloem.

Irrespective of  whether Dijsselbloem was right or not, he makes again the impression of being "his Master’s voice" for Germany, heavily irritating France in the process.
And to make things even worse, he still seems in favour of the mindless austerity that caused the Euro-zone so much economic harm in the past, just like his ‘boss’ Mark Rutte.

On top of that, Dijsselbloem is heavily opposing to the further integration of Europe and the European financial industry, through the formation of a European budget and banking union. 

This, in spite of the fact that such unifications would make the Euro-zone and the European financial industry much more resilient against financial shocks.

The French, represented by French Finance Minister Pierre Moscovici, reacted annoyedly. Again the FD:

The French Finance Minister Pierre Moscovici thinks that Jeroen Dijselbloem, as chairman of the Euro-group, should not take an outspoken stance in issues in which there is no broad consensus yet. 

“I don’t want to start a controversy with the minister, but as far as I’m concerned, the chairman should build on a broad consensus”, according to Moscovici, after the Finance ministers of the Euro-zone had discussed their annual budgets.

Moscovici reacted to an interview of Dijsselbloem with a.o. this newspaper, in which the Dutch Finance minister opposed to the plans to let the Euro-zone have its own annual budget. 

“Dijsselbloem made it all too clear that he does not fully agree, or should I say, does not agree at all with the French position. I repeated one more time that France attaches value to an ubiquitous and ambitious banking union and better economic guidance for the Euro-zone. This includes a permanent chairman of the Euro-group”. Dijsselbloem is also opposed against that. 

In order to reinforce the stability of the Euro-zone, it should get a buffer fund or a budget facility, in the eyes of France. “Solidarity should not be an empty concept”, according to Moscovici.

Again, Dijsselbloem showed here that he misses the political “Fingerspitzengefühl” (roughly translated “Spider sense”) to be a good chairman of the Euro-group, like Jean-Claude Juncker was before him. 

Too often, you think that you hear Dutch PM Mark Rutte or German Finance Minister Wolfgang Schäuble talk, when Dijsselbloem speaks. Instead of being a chairman for all Euro-zone countries, Dijsselbloem seems to be a chairman for himself and his bosses, chancellor Angela Merkel and Mark Rutte. 

Especially the French are allergic to such behaviour: they consider this disrespectful, as it seemingly denies the importance and power of France, the second-largest economy in the Euro-zone and one of the diplomatically most capable countries in the world. In my humble opinion, the French do have a point.

Yes, you could argue that France – as an economy – went through twenty years of anemic growth. The country only had three years with more than 2% growth (amidst the internet bubble) during this period, as the following chart by Eurostat shows:

The French economic growth 1993 - 2003
Data courtesy of: Eurostat
Chart by: Ernst Labruyère
Click to enlarge
And people could rightfully argue that the French should do much more to reform their economy, in order to make it grow harder.

However, in spite of all the undeniable high-tech developments and economic achievements of the country during the last decades, France is a country where grandeur, centuries-old traditions, cultural inheritance, enjoyment of life (‘joie de vivre’) and craftsmanship are still extremely important.

The French love their traditions and are willing to battle for every inch of them, even when this paralyses the country for a long time. Everybody, who saw the French strike in the past, understands that it is an extremely hard task to reform this country.

And to be honest, these traditions and craftsmanship are exactly the reason why so many Europeans – including yours truly – adore this beautiful country, with its astonishing landscapes and nature, wonderful food and drinks and its sometimes peculiar, but nevertheless adorable people. When France would stop to be France, it would be missed by many people in the world.

French president François Hollande could indeed do more to help the economy of the country, but I seriously doubt whether ruthlessly reforming the French economy, following a neoliberal agenda, is the answer that the country is waiting for. In case of France their are no easy answers and instantly successful recipes.

And Jeroen Dijsselbloem…? 

After his domestic and foreign nosedives of last week, he should be worried about the follow-up of his brief career as Finance Minister and chairman of the Euro-group: he seems to already have lost all credit from the French and probably from many, many more people inside and outside The Netherlands.

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