Dutch minister: Germany helped spawn debt crisis

By Toby Sterling

Associated Press

Published: Thursday, Sept. 1 2011 8:45 a.m. MDT

Dutch Finance Minister Jan Kees de Jager speaks to members of the foreign journalists association in The Hague, Netherlands, Thursday, Sept. 1, 2011. De Jager says he blames Germany and France in large part for Europe's sovereign debt crisis, after they violated rules laid down at the creation of the euro by running larger-than-permitted budget deficits in the early 2000's.

Bas Czerwinski, Associated Press

THE HAGUE, Netherlands — The Dutch finance minister said Thursday he blames Germany and France in large part for Europe's sovereign debt crisis because they violated rules laid down at the creation of the euro by running larger-than-permitted budget deficits in the early 2000's.

Jan Kees de Jager said that when the eurozone's two largest economies ran deficits of more than 3 percent in 2003 and 2004 without penalty, it "opened the flood gates for other countries" to flout debt rules, ultimately leading to the current crisis.

"We're here now in a situation we never should have been in. A situation in which the euro is in danger, and that could even threaten the world's financial stability," he said, speaking to the Netherlands' foreign press association.

De Jager said the Netherlands will continue to support the bailout package agreed for Greece on July 21 — despite difficulties in nailing down its final terms and reservations about whether it is the right course of action.

"In the eyes of many people, Greece is a country that has made a mess of things 10 years long, conned left and right, cheated about everything and now needs a lot of loans," he said.

"And they're partly right about that, and I wrestle with that myself sometimes."

However, "as minister of finance I have to consider interests pragmatically ... and then it's important that we make every effort to guard the eurozone's stability, and that it's better for everyone's wallet in the end, Dutch and German citizens, that the eurozone survive."

Under the July 21 agreement between Greece, the European Union and International Monetary Fund, Greece is due to receive €109 billion ($156 billion) in cash and debt forgiveness, following an earlier €110 billion bailout agreed in May 2010.

De Jager said he believes the eurozone countries will solve by next week how to deal with Finland's demands for collateral from Greece in return for its share of rescue loans. He said the question of how much bailout money Greece actually receives will depend on its success in meeting conditions laid down in the July 21 agreement.

Asked whether he thought Greece may default in any case, given the soaring yields on its government bonds, an indication investors don't believe the country is solvent, he hesitated.

"As minister of finance you have to speak with your head and not your heart," he said. "At this moment I can't do anything else but express the joint European standpoint. And that's that there should be a package to rescue Greece."

He noted that under the agreement, Greece's debt burden would be lowered as private holders of Greek debt are accept new terms on the bonds. He declined to comment on the European Central Bank's moves to buy Greek, Italian, Portuguese and Spanish debt — which some argue violates eurozone rules — saying that the ECB must remain independent of political influence.

De Jager noted that the eurozone rescue fund, the European Financial Stability Facility, is due to replace the ECB in any future government bond purchases.

Asked whether the Netherlands has a plan ready if Greece defaults, he declined comment.

"If there were one, that's not something that you would speculate about in public as minister of finance, or at least not this minister of finance," he said.

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