The ongoing negotiations to form a new government in the Netherlands could significantly impact the European Union. The liberal party, known for its pro-European stance, emerged victorious in the October 29 poll. On December 2, this party and the Christian democrats outlined a joint agenda, inviting other parties to form a government with a strong pro-EU focus, particularly on defense and further market integration. A more open attitude from the Dutch government could help overcome traditional Dutch resistance to greater budgetary integration within the EU. The Netherlands is often seen as the leading EU ‘frugal’ nation, but a shift in its stance could encourage Germany, aware of its pivotal role in the EU, to adopt a more positive approach to EU integration.
More broadly, a Dutch government with a pro-EU agenda could signal to voters in other countries that there is an alternative to the empty promises of populist parties, thereby challenging the entrenched pessimism of pro-European parties. One of the first challenges for a new Dutch government, whenever it is formed, will be to respond to proposals for the EU’s 2028-2034 budget, known as the Multiannual Financial Framework (MFF). The European Commission’s proposal, made in July, features greater flexibility and a stronger focus on European public goods (EPGs)—goods most efficiently provided at the EU level.
However, the Commission’s framing of the next MFF as a ‘€2 trillion budget’ has elicited negative reactions from countries like Germany and the outgoing Dutch government. In reality, at 1.26% of EU gross national income, which includes 0.11% for repaying money borrowed to fund the EU’s post-pandemic economic recovery, the budget would be similar in size to the current MFF at 1.13%. Negativity towards the budget is misplaced given the EU’s need for common investment projects, including defense, high-speed railways, research, hydrogen infrastructure, and electricity grids.
Resisting EU initiatives is often counterproductive. For instance, initial Dutch resistance to the EU’s NextGenerationEU (NGEU) post-pandemic recovery fund had to be surrendered when Germany supported the fund. The Dutch paid a cost in terms of less influence over the design of NGEU. The same dynamic will likely apply to common EU bonds: eventually, new EU debt will be issued for common expenditures. Standing apart from the group shaping its design means having no influence over the end product.
When formed, the new Dutch government should aim to bring together a coalition of countries with shared interests and seize the opportunity to lead by proposing a package deal. This deal could involve dropping resistance to more EU budgetary integration in exchange for more market integration. Such a deal could include the following elements:
First, unused NGEU resources at the end of 2026, when the program expires, could be made available to EU governments to finance major multi-country projects and follow-up initiatives. Second, the resources of the Competitiveness and Global Funds proposed for the next MFF should be ringfenced to prevent them from being channelled as transfers to EU countries, as happened in 2020 with NGEU. Third, there should be an agreement to roll over the NGEU debt; the saved 0.11% of GNI could then be used to finance EPGs under the new MFF.
The future EU budget also requires new common resources. The credibility of the deal would be greater if the new Dutch government could declare what it would be willing to support in this respect, breaking ranks with countries known for shooting down Commission proposals in this area.
An investment of political capital is needed for the EU to relaunch the integration process and avoid geopolitical marginalization. This requires EU resources sufficient to deliver on its priorities. The Netherlands could play a vital role by breaking the deadlock on the next EU budget and helping to rebuild trust.
