Dutch Prime Minister Mark Rutte lashed out at the European Union for letting Italy off the hook with its budget violations.
“The commission not acting on Italy and fining them for the fact that they’re not implementing the stability and growth pact has again alerted the northern European countries that” there are two standards, Rutte said during a panel at the World Economic Forum in Davos, Switzerland. This behavior “is creating distrust between the North and South” of Europe, he said.
“You need to evaluate the consequences of toughness,” she said. “We haven’t let Italy off the hook, but for the moment there is dialogue and we hope we can get them to comply within the margins of what has been agreed.”
The EU’s executive arm decided against launching a disciplinary procedure against Italy in December after the country’s populist government pledged to rein in some of its spending plans. While the Italians put off some of their more ambitious projects, the commission turned a blind eye to their failure to lower the structural deficit this year—which excludes one-off expenditures and the effects of the economic cycle.
The protracted standoff had triggered a selloff in Italian assets, dampened economic activity and may have helped tip Europe’s most indebted state into recession.
The Dutch already complained about the deal earlier this week with Finance Minister Wopke Hoekstra asking the commission to explain in writing how Italy’s budget math adds up. He demanded that the bloc’s rules be applied to everyone in in full.
“If Italy, and in the past France, can get away with not implementing what they have collectively agreed,” Rutte said. “Why should we?”
The commission’s credibility in enforcing its fiscal rules has been scrutinized in the past after it opted against fining repeat-offenders Spain and Portugal and gave France more time to meet its targets on multiple occasions.
