Britain outside Europe? The Dutch view

Opinion piece (German Council on Foreign Relations (DGAP))
Rem Korteweg
04 August 2014

The Netherlands wants the United Kingdom in the European Union, and the government of Mark Rutte will work with London to push a reform agenda – but not at any price. If David Cameron hopes to attract the support of the allies he needs, then he must be a team player and show greater awareness of the EU debates in like-minded countries. Regrettably, a British sense of “narcissistic victimization” toward the EU risks alienating even its natural ally in The Hague.

David Cameron considers Prime Minister Mark Rutte of the Netherlands to be one of his main allies in Europe. This is not surprising since both leaders share a similar approach to EU issues. The two center-right politicians support free trade, promote austerity to remedy the economic crisis, and seek a “leaner and meaner” EU. Their domestic political environments are comparable too. Both lead a coalition government with a pro-EU junior partner, but have to align this with a growing challenge to their leadership from euroskeptics, within as well as outside their parties. These commonalities are a sound basis for cooperation, and, regardless of the current leadership, the Netherlands has traditionally been politically close to the United Kingdom.

The Hague championed British EU membership in the 1970s and still considers it central to the effective promotion of Dutch interests inside the Union – whether it is an open, liberal European economy and a deeper single market or a more ambitious European foreign policy with an Atlanticist touch. Economically, relations between the two countries are very close. The UK is the most popular destination for Dutch investment, and the Netherlands is the second largest investor in Britain (after the US). The Netherlands is the UK’s third largest trading partner (after the US and Germany). In 2013, Dutch imports from Britain totaled £34 billion, and exports to the UK were worth £36 billion. Moreover, the UK values the Netherlands as a like-minded country that sits at the heart of the eurozone. Downing Street uses its relations with the Dutch to pursue common objectives, among others, to help shape favorable outcomes in eurozone decision making. (For example, the Netherlands helped the UK oppose a European financial transactions tax.)

Brexit would be troubling for the Netherlands: the Dutch are wary that it would rearrange the political balance inside the Union in favor of southern countries that support greater state intervention in the single market. Moreover, the Netherlands has traditionally sought a triangular balance of power in which France, the UK, and Germany keep each other in check. Were the UK to leave, the Netherlands would need to recalibrate its diplomacy toward Paris and Berlin – something it is less comfortable with. In security policy, in the past two decades the Netherlands has avoided the need to choose between NATO and the development of the EU’s common security and defense policy. Britain leaving the Union, however, would force the issue on the Dutch. This explains why political elites and policymakers are hostile to the idea of the UK leaving the EU, and it makes the Netherlands a natural ally for Cameron’s pursuit of EU reform.

The Hague winced, however, when Cameron announced his intention – should he win the next UK general election – to renegotiate the terms of British EU membership, pursue treaty change, and hold an in/out referendum by 2017. Not only does the Netherlands have experience with the unpredictability of referendums (we need only recall the Dutch No vote for the European constitutional treaty in 2004), but politicians are concerned about the impact of Cameron’s agenda on Dutch politics; it has already spurred calls for a Dutch referendum, and talk of a Brexit has energized a domestic debate about a “Nexit.”

Over the past decade, euroskeptic opinion has increased in the Netherlands. Its most obvious, current exponent is the Freedom Party (PVV) led by Geert Wilders. Much like Nigel Farage and his UK Independence Party (UKIP), Wilders has become an important political force, changing the terms of the Dutch EU debate. He has tapped into popular discontent about the EU, raising concerns about immigration, eurozone bailouts, welfare fraud, and the EU budget. Many Dutch voters feel that their political elites did not take the No vote in the constitutional referendum seriously and have instead promoted further EU integration. The majority of Dutch citizens say that the EU is neither on the right track nor that Dutch national interests are being adequately protected within the EU. Cameron’s Bloomberg speech in January 2013 catalyzed this sentiment. Following the speech, in an effort to preempt Wilders, even mainstream opposition parties such as the Christian Democrats suggested EU competences should flow back to member states. In March 2013, a public opinion poll [NL] found that two-thirds of Dutch respondents believed that too many national competences had been transferred to Brussels. In January 2014, another survey [NL] found that two-thirds of Dutch respondents would want a referendum if new competences are assigned to the EU. It even sparked a grassroots initiative that lobbied, unsuccessfully, for a referendum on Dutch EU membership.

Reform, not referendum

A change to the EU treaties would trigger such a referendum in the Netherlands. This would occur if EU leaders decided, for instance, to codify new eurozone governance structures or certain British opt-outs following a renegotiation process. Even though public opinion polls suggest that in a referendum the Netherlands would in fact narrowly vote for staying in the Union, the government does not want to find out. Instead The Hague favors reforms that do not require treaty change.

Rutte agrees with many of Cameron’s principles. He too wants a more competitive Europe and a more modest European Commission. He too wants a stronger role for national parliaments and issues to be tackled at the “national level where possible, European where necessary.” Like Cameron, Rutte wants to reduce EU red tape and to confront welfare fraud.

But although the substance is similar, the style is different. Cameron has tried to manage British euroskeptic sentiment by announcing a referendum; Rutte has taken a softer line. In an effort to stem the rising tide of domestic euroskepticism, his government has focused on subsidiarity – a concept enshrined in the EU treaties that says the EU should only legislate if it leads to better results than legislating at the national level – and stricter policy priorities for the new Commission. A subsidiarity agenda was launched in 2013, identifying 54 points where the Netherlands does not want the EU to be involved. The Hague also said that “the time of an ‘ever closer union’ in every possible policy area is behind us.” The rhetoric chimes with Downing Street’s, but the Dutch agenda does not imply a repatriation of powers and it promises less far-reaching change than many Tory backbenchers would like. Moreover, the Netherlands seeks a political “gentlemen’s agreement” involving the European Parliament, the Commission, and the member states to focus the Commission’s agenda in the coming years.

In Brussels, Cameron uses the threat of leaving as a negotiating instrument, while Rutte seeks reforms through political deals and a better application of the existing treaties. This divergent style threatens to cause a rift between the two governments. For instance, in June 2014 Cameron was disappointed that the Netherlands did not publicly back the UK’s campaign to stop Jean-Claude Juncker from becoming Commission president. The Juncker debate laid bare the limits of The Hague’s support for London. Rutte might have agreed that the Luxembourger is not the best person for the job, but Cameron’s uncompromising attitude made it difficult for Rutte to support him. In EU politics, the Netherlands understands the need to reach compromises behind closed doors and disapproves of public brinkmanship. Besides, Cameron’s very public dismissal of Juncker – and his implicit threat that Juncker’s appointment would bring a UK exit closer – hit another nerve. As a general principle, the Netherlands favors a strong EU and a balance of power among the larger states precisely so that one large member state cannot force its position onto others. The UK’s tactics over Juncker’s appointment questioned this. As a smaller country with an economic stake in the EU’s political success, the Netherlands has an interest in being a team player.

This leads to the root of Dutch concern about the “British question.” In spite of close bilateral relations, in private senior Dutch policymakers share their exasperation about what they perceive as British “narcissistic victimization” regarding the EU. With this they mean the self-absorbed quality of EU debate within Britain, which fails to appreciate that many of Britain’s concerns are shared by numerous member states – as if “Brussels” is uniquely unpopular in the UK, and Britain uniquely suffers from EU policies. It has created greater British antagonism toward the EU, a transactional mindset, and it reduces Britain’s willingness to compromise. Dutch policymakers are concerned that this will produce British alienation rather than British allies. The Netherlands wants the UK in the EU, and it will work with the UK to push a reform agenda, but not at any price. If Cameron hopes to attract the support of the allies he needs, then he must show greater awareness about the EU debates in like-minded countries and adjust his tactics accordingly.

Rem Korteweg is senior research fellow at the Centre for European Reform.