Dutch PM under fire over euro zone bailout

AMSTERDAM Sat Oct 22, 2011 3:51pm EDT

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AMSTERDAM (Reuters) - Dutch opposition parties took aim at Prime Minister Mark Rutte on Saturday, demanding the minority coalition government secure a definitive and sustainable solution to Europe's debt crisis or risk a loss of parliamentary support.

The minority coalition government of Liberals and Christian Democrats needs the support of the pro-European opposition for any measures to solve the debt crisis because its main ally, the eurosceptic Freedom Party, is firmly opposed to bailouts.

"The package that comes from the summit must be sufficiently robust to actually lead us out of the crisis and we will ultimately judge the results from the summit on that basis," said Job Cohen, leader of the largest opposition party PvdA.

Euro zone leaders will meet on Sunday and Wednesday in a bid to resolve the debt crisis.

Under pressure from the PvdA, Democrat D66 and Greens party, the two government parties agreed to back motions calling on Rutte to push for sustainable reform in Europe instead of more austerity measures and a division of retail and investment banks to stop them "gambling" with consumer savings.

"This minority cabinet cannot simply take our support for granted," Greens leader Jolande Sap warned.

Rutte earlier told parliament that negotiations in Brussels were already difficult and he was not in favor of complicating the talks now with the opposition parties' proposals.

Euro zone countries are working on a plan that involves leveraging the euro zone bailout fund, recapitalising European banks and putting together a second financing package for Greece that entails deeper losses for private investors.

German Chancellor Angela Merkel said she expected a breakthrough in efforts this week.

A succession of opinion polls in the Netherlands has shown that public backing for euro zone bailouts is wearing thin, however, with a Maurice de Hond poll indicating on Friday that 72 percent of Dutch voters believe that European leaders no longer know what to do.

BAILOUT FUND

Rutte said the Netherlands would support the International Monetary Fund (IMF) taking on a greater financial role in the euro zone bailout, but refused to be drawn on other options being discussed in Brussels, sparking irritation from parliamentarians.

"The Netherlands is in favor of a bigger role for the IMF, both in expertise ... but also financially," Rutte said.

"The discussion within the IMF and G20 on giving the IMF greater financial power is very welcome."

He said that Brazil, Russia, India and China had reacted positively to an IMF agreement to evaluate the idea of giving the IMF greater financial power and the Netherlands was urging Europe to take a positive stance on that.

The fiscally conservative Netherlands has consistently said that euro zone members must stick to the budget rules and has proposed that tough sanctions be imposed on budget sinners.

Roland Plasterk, Labour's finance spokesman, said Europe's leaders had made an "enormous mess" of things and the European Central Bank should gain a greater role in the bailout fund.

Under questioning from Plasterk, the prime minister said the government had become more amenable to the idea of a tax on financial transactions, having earlier opposed the measure.

Rutte said he had recently discussed the idea with Germany's Merkel and French President Nicolas Sarkozy and the proposal would be discussed at the G20.

"The cabinet is in favor of this tax, but we are not in favor if it is introduced by just a number of countries because the effect could be enormous," Rutte said.

Rutte said the tax could have "great consequences" on the competitiveness of Dutch banks if only a couple of countries implemented it.

(Reporting By Aaron Gray-Block)

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