Dutch Government Calls Timeout on Euro Bailout Deal

Although there is no formal requirement for the Dutch parliament to approve the EFSF bailout deal, members of the prime minister's coalition are having second thoughts about the deal following the Greek referendum proposal.

Amusingly, members of the opposition are pleased with the referendum stating a preference for tossing "the whole rescue package into the trash bin".

Please consider Dutch govt wins time on euro bailout deal

The Dutch government won time on Tuesday to get parliament's backing for last week's euro zone rescue plan, promising details on the package and facing demands to have a strong budget commissioner and more IMF involvement in the debt crisis.

Despite anger among coalition and opposition parties about Greece's plan for a referendum on the rescue plan, the Dutch parliament agreed to wait for details how the euro zone rescue fund EFSF would work and what powers the commission will get to enforce budget rules before reaching a view.

The package negotiated last week does not need the formal approval of euro zone national parliaments.

But with the cabinet's main ally outside the ruling coalition, Geert Wilders' anti-immigration Freedom Party, strongly opposed to such bailouts, Prime Minister Mark Rutte relies on help from the opposition.

The opposition party Labour, whose support is crucial for securing majority support for the minority government, called Greece's referendum plan a "deal breaker" and "spontaneous self-incineration".

"The package is not strong enough, and it is effectively wiped off the table now that Greece has placed a bomb under it," Labour MP Ronald Plasterk said in parliament.

Plasterk called for strong budget supervision to prevent Italy's Prime Minister Silvio Berlusconi from "throwing a party on the costs of the EFSF fund".

Wilders, who dislikes last week's deal and wants Greece to leave the euro zone, told reporters he was pleased about the referendum because it would mean "the whole rescue package can go into the trash bin".

Right now this delay appears to be a mere formality. However, politics can take a U-turn at any time as we have seen.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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