No direct influence of EU on domestic consolidation and reform: two fiscal ‘hardliners’, Netherlands and Estonia

Abstract

In the Netherlands and Estonia, the European Union (EU) did not exert direct influence on domestic fiscal consolidation. They managed to resolve their fiscal crises and balance their budgets without external financial assistance, thanks to strict fiscal discipline. Yet, domestic consolidations in both countries were to some extent influenced by the EU. The Netherlands was subject to excessive deficit procedure. Estonia was indirectly influenced because of its top priority to join the Eurozone. This paper begins with a conceptual look at EU influencing. Then, fiscal discipline and consolidation in the Netherlands and Estonia are explored, especially their similarities and differences.

The analytical capacity of budgetary administrations: the case of the Euro area

“…From the perspective of the political economy literature, a coalition government of heavy-weight, traditional parties of different ideologies in a parliamentary (i.e. nonpresidential) system does not, in principle, constitute the best scenario for achieving budget discipline (see Kickert and Randma-Liiv, 2018 for more details).…”

Influence of the EU (and the IMF) on domestic cutback management: a nine-country comparative analysis

“…Estonia managed to stay out of the EU's EDP, so there was no direct intervention by the EU. Indirectly, however, the EU did exert influence because of the strict fiscal requirements for accession to the Eurozone, which was top of Estonia's political priorities (Kickert and Randma-Liiv 2019).…”

“…Regarding budget discipline, it was rather the Dutch influencing Brussels than the other way round. The Dutch, together with the Germans, had always been pushing for stricter budgetary rules, ever since the Maastricht Treaty and even more so since the crisis (Kickert and Randma-Liiv 2019).…”