The Dutch government wants to reform the financial architecture of the EU - but don't ask The Hague to go too far.
“I am neither a hawk nor a dove,” Sigrid Kaag, Dutch deputy prime minister, finance minister and leader of the social-liberal D66 party, told POLITICO on Sunday.
"We believe it is necessary to reform and modernize the [Stability and Growth Pact]," she said. "The system has become so complex with so many other mini exits and customizations that it is ultimately very difficult to align or maintain this system itself as it has evolved over time."
“We are trying to figure out how the system might work,” she added.
Kaag outlined his government's approach to the ongoing review of EU fiscal rules in a letter to parliament on Friday, writing that existing debt reduction rules are ineffective and rarely enforced. Instead, she proposed that countries set their own multi-year debt reduction trajectories, which would then be enforced by an independent body such as the European Fiscal Board.
“We want a realistic pace of deleveraging; we want deleveraging to actually happen because it's important, but [also] for there to be room for investment and room for the reforms that are so badly needed,” she said. .
"So it's a more open and constructive approach with no fixed commitments other than the 3% and 60%. But luckily no one feels the need to discuss it because it's just a side issue. “, she said, referring to the deficit and debt-to-GDP ratio thresholds at the heart of the bloc’s fiscal policy.
At the same time, she expressed doubts about a proposal by highly indebted countries, especially France and Italy, to prevent certain investments from being included in the calculation of the deficit and the debt, for example in the protection of the climate or in defence. The Commission itself has been in favor of this approach.
“An approach where you sort of put investments in a special category has risks. Because at the end of the day, we have to work on deleveraging, we have to be transparent, we have to be able to establish effective supervision," she said.
Kaag and his colleagues in EU capitals are exchanging ideas on how to reform the bloc's rules and ensure more consistent application. The commission is in listening mode and will present proposals this summer with a view to reaching a consensus by the end of the year.
Negotiations may go beyond that, but as Kaag said, "If you expect a delay, you will have a delay."