Are Europe's conservatives now dependent on the far right?

Yesterday’s news that the government of Dutch Prime Minister Mark Rutte had collapsed sent almost immediate shock waves through the world’s financial markets.

Investors, who were already feeling skittish about the first-round victory of French Socialist presidential candidate Francois Hollande on Sunday, found themselves with something much more serious to worry about. The government of the Netherlands, one of the core austerity-pushing states of the Eurozone, couldn’t even pass the tough medicine they helped design for Europe.

Holland and the three other euro-using countries that still have triple A ratings (Germany, Finland and Austria) have pushed for every eurozone country to make massive cuts by the end of the month. But yesterday Rutte was forced to tender his resignation after it became clear he could not get his own parliament to approve the tough medicine he had helped design for all of Europe.

But perhaps more interesting from a political perspective is who it was that precipitated this crisis – the infamous far right leader GeertWilders. Rutte was only able to form his governing coalition in 2010 by relying on the backing of Wilders and his far right Party of Freedom group, which had polled at 15.5% in that year's election. Wilders has been tried in the Netherlands for hate speech against Muslims, and has been banned from entering the UK in the past.

War of words between PIGS and FANGs

The European Commissioner from Spain delivered a surprising attack yesterday on the Northern European countries pushing Southern Europe to adopt painful austerity measures. The comments follow a controversial proposal from the Dutch prime minister earlier this week which called for EU member states struggling with debt to be put under the 'guardianship' of the European Commission, surrendering their ability to make their own financial decisions.

"There are member states, in particular some of the most powerful -- Germany, Netherlands, Finland, Austria -- who feel that they don't have this kind of problem," Almunia told a group of business executives in New York. "[They believe] they don't need to make an additional effort to compensate the lack of resources of the countries who have the most difficulties to reduce imbalances."

The rhetoric was then ratcheted up to an even more dramatic level today when the European Commissioner from Germany told the tabloid Bild that if indebted (read: Southern) EU countries refuse to comply with new rules on debts and deficits, their flags should be flown at half mast outside institutional buildings. Mourning the loss of fiscal prudence, perhaps?

Could Strasbourg battle pit country against country?

The long-running battle between the European Parliament and France over where the institution's permanent seat should be located has reached boiling point in recent months, following the parliament's vote in March to combine two of its mandated Strasbourg sessions into one. The fight has now been taken to the European Court of Justice, and following a call from Dutch parliamentarians today, the war could for the first time pit member state against member state.

The official headquarters of the European Parliament, as mandated by the EU treaties, is Strasbourg, France. The EU treaties require the parliament to meet there twelve times a year. But for well over a decade the working offices of the parliament have been in Brussels, where the other EU institutions are based (they surreptitiously built a giant parliament building there by telling France it was going to be a "conference center"). So once a month the entire European Parliament is made to make a five hour trek from Brussels to Strasbourg to hold three-day sessions. It would be like the US Congress uprooting itself once a month to hold sessions in Pittsburgh, Pennsylvania.

The majority of members of the European Parliament (MEPs) hate the monthly "traveling circus". A 2007 survey by Liberal MEP Alexander Nuno Alvaro showed that 89% of MEPs want to end the Strasbourg sessions. MEPs have tried to force the issue several times, but changing the treaties to end the Strasbourg requirement would need the unanimous approval of all member states – and France has always promised to veto such a move. They are insistent that one of the EU capitals should remain in France – even if no actual work is done there and it is merely a place where things already agreed are rubber-stamped.

A day of deal-making in Brussels

As European leaders meet in Brussels today everyone seems to have something to sell. David Cameron and new Dutch prime minister Mark Rutte have stepped off their trains this morning with demands for an EU budget freeze for 2011. Angela Merkel and Nicolas Sarkozy arrived this morning having formed a pact between them a few days ago to jointly demand treaty changes allowing the EU to sanction eurozone countries who misbehave. And representatives of the European Parliament will be on hand to demand the introduction of direct EU taxation that would go directly to Brussels. It will be an intense day of horse-trading as each block tries to get what they want.

The British and Dutch conservatives want to freeze next year's budget at 2010 levels, opposing the 6% increase approved by the parliament last week. They say it would be obscene to increase the EU budget, which is financed by member states, at a time when national governments are pursuing drastic budget-cutting measures. Members of the European Parliament (MEPs), on the other hand, point out that a 6% increase is significantly lower than what they usually call for. But they say they would be willing to consider a freeze if the member states agree to new forms of direct EU taxation on things like aviation, financial trading and carbon credits. Right now the EU is entirely funded by member state governments.