The Dutch prime minister on Tuesday said he continues to back the European Central Bank's reluctance to step up purchases of Italian and Spanish government bonds, despite spreading turmoil in European financial markets.
"I know some in the U.S. are saying: Have the ECB solve the crisis," Mark Rutte said in an interview before meeting with President Barack Obama Tuesday afternoon. "Well, that would mean two things: You would have a lot more money in the system with the risk of inflation and....it would take off the pressure on Greece and Italy and others to reform."
Mr. Rutte leads a minority government in the Netherlands that has relied on votes of opposition parties to win approval for its role in European bailouts. He has generally sided with Germany in intra-European haggling over a resolution to the widening crisis.
"I would love us to move faster," Mr. Rutte said, acknowledging the growing anxiety inside and outside Europe about the slow pace of European decision-making. "But I do believe in the next couple of weeks there will be a lot of decisions. There is no easy solution." He said he is "pretty much convinced" the current round of talks will bear fruit.
If Italy or Spain need money, he said, they should turn not to the ECB but to the European Financial Stability Fund or the International Monetary Fund. In return, they should be required to embrace far-reaching changes—of pensions, labor markets, and the like—and accept strict outside supervision to assure they keep their promises. Despite widespread skepticism about current efforts underway to leverage the EFSF in some fashion, Mr. Rutte expressed confidence they will succeed.
But the EFSF may not be enough, he added. "I believe the IMF should get more involved," he said, and the Netherlands is willing to kick in some money "to fund the IMF with more money because they have not enough. "
"The good thing about the IMF," he said, "is there is no European politics involved. So you have this strict supervision from Washington from the IMF from [managing director] Christine Lagarde and her team, and there is no chance of any cozy European get-together where the rules could be bent a little bit and counties which get money could get away without implementing all the necessary reform."
"Never waste a crisis," Mr. Rutte said. "This is an opportunity to have these countries reform their economies. They have not done so in the past.
"I want the pressure of the markets because it helps," he said. "Look what has happened in Spain, a new government. In Italy, a new government. In Greece, a new government. We have the French president speaking for 45 minutes on television, basically telling his audience we want France to become more like Germany. Could you imagine this happening a couple of years ago? Inconceivable," he said.
Mr. Rutte, who doesn't face a general election until 2015, said domestic political opposition to the Greek bailout was strong, but that the spreading of the crisis has softened the public opposition to doing more for the rest of Europe. "We are an exporting nation, we are responsible for 625,000 jobs in the U.S. The U.S. is investing three times more in the Netherlands than you invest in Brazil, Russia, India and China put together. The common currency has been a huge benefit for it.
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