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Dutch Socialist Leader Says Doubtful Euro Will Survive Crisis

Aug. 20 (Bloomberg) -- The Dutch Socialist Party, leading in most of the polls ahead of elections Sept. 12, is doubtful whether the euro will survive as the economic crisis may only get worse amid a wave of austerity measures.

“Whether we get everything resolved, I am not sure,” Emile Roemer, 49, the party’s leader told a press conference in Arnhem, Netherlands, yesterday. “I can’t tell whether we will be able to preserve the euro but I do hope it because the misery will be bigger if we fail to do so.”

The SP, as the party is known, is leading with 34 seats, ahead of caretaker Prime Minister Mark Rutte’s Liberal Party with 33 seats, according to a TNS-NIPO survey published Aug. 15. The poll surveyed 1,384 people between Aug. 12 and Aug. 14 and has a margin of error of 2.3 percentage points.

The Socialist Party wants the Netherlands to meet its euro budget deficit limit of 3 percent of gross domestic product by 2015 --not 2013 as targeted by the present government -- and it prefers a broader mandate for the European Central Bank. More government spending is needed to help the economy while drastic budget cuts will harm growth, according to the party’s program.

Wrong Way

“The pace of austerity measures implemented throughout Europe doesn’t work, it is the wrong way,” Roemer said. The northern European countries need to grow in order to help boost the economies in southern Europe, he said. “We also want to get the budget in order for the long-term but if you cut that much you make society weaker,” he said.

Elections in the Netherlands were called after Rutte submitted his Cabinet’s resignation on April 23 as Geert Wilders’s Freedom Party withdrew support for spending cuts and tax increases. After that, investors demanded as much as 79 basis points of extra yield to lend to the Netherlands for 10 years rather than to Germany, the highest premium in three years.

Since April 23, the extra yield, or spread, that investors get for holding Dutch 10-year bonds instead of similar-maturity German bunds has narrowed 43.2 basis points to 35.8 basis points. Demand for the securities rose after Rutte’s Liberals agreed with the opposition on a package to meet the European Union’s budget deficit limit.

Economic Contraction

The fifth-largest economy in the euro area may contract by 0.75 percent this year even as the economy unexpectedly expanded in the second quarter. Gross domestic product rose 0.2 percent from the first quarter, when it increased a revised 0.2 percent, national statistics agency CBS in The Hague said Aug. 14. Unemployment increased to 6.5 percent in July from 6.3 percent a month earlier.

Almost three years after the debt crisis erupted in Greece, Germany’s Angela Merkel, as leader of Europe’s largest economy, is facing calls from Italy and Spain to pool debt to bring down bond yields, from Greece to back an easing of its austerity timetable and from the European Central Bank for politicians to take the lead in fighting the crisis. The Dutch elections take place the same day as the German Federal Constitutional Court rules on the 500 billion-euro ($616 billion) European Stability Mechanism.

Greece has required two bailouts totaling 240 billion euros since the European debt crisis erupted in the southern European nation and is now grappling with measures to qualify for more disbursement. European leader have struggled to contain the debt crisis that’s roiling the 17-nation region and also pushed Ireland, Portugal, Cyprus and Spain to seek help.

‘Take Responsibility’

Roemer, a former school teacher, said throwing more money at Greece is not the solution. The country needs to get its fiscal policy in order and bring corruption under control. “If they meet certain conditions, then I will take my responsibility,” Roemer said, when asked whether he would support another aid package to Greece.

“The development of Europe should be about people and not only about more room for big multinationals and the financial sector with all the risks that come with it as we’ve seen the past few years,” Roemer said.

Roemer took the helm of the party in March 2010 and was a member of the city council of Boxmeer, 87 miles south of Amsterdam, from 2002 until 2007. He was elected for parliament in November 2006. His party is four seats ahead of Rutte’s VVD at 36 seats, according to another poll published yesterday by Maurice de Hond. A survey by polling company Ipsos Synovate gives the VVD the top spot with 35 seats, six more than the Socialists. That poll was published Aug. 17.

It has taken an average of almost three months to set up a coalition in the Netherlands since World War II while the formation of the Rutte cabinet in 2010 took four months.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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