A radical pilot programwhich concerns 40 to 60 families drowning in debt, is being implemented by the Netherlands, and in particular, debt cancellation that is done without terms and conditions.

The “distant” 2017 when the then finance minister of the Netherlands Jeroen Dijsselbloem caused waves of outrage when he argued that Europe’s poor and debt-ridden south squandered its money on booze and women as a flamboyant preacher of his country’s fiscal morality.

But three years later when the pandemic was at its peak, then-Finance Minister Wopke Hoekstra angered many of his EU counterparts when he wondered aloud how it was possible that other governments did not have the means to deal with the pandemic.

Holland has both drinks and women and is undoubtedly one of the richest countries in Europe. But poverty is poverty everywhere and makes no exceptions. And as strange as it sounds, there are citizens of the Netherlands who have very little money to buy good food, pay their rent and insurance, or get an education. Many have resorted to borrowing to make ends meet and are unable to repay the loans. And as time passes, they sink deeper and deeper into debt.

According to CBS Statistics, 726,000 households faced “problem debt” in 2023, compared to 600,000 two years earlier. According to Eurostat, 16.5% of the population is on the verge of poverty and social exclusion.

Poverty is the “mother” of all evil

In 2020, Amsterdam assumed the debts of young people and allowed them to repay them to the city rather than the original lender. Young people could also write off part of their debts if they took part in education or training. The country’s municipal authorities are now finding new ways to get people out of this trap. Arnhem, a city of 170,000 people just 20 kilometers from the German border, announced in late April that it intended to release “40 to 60” households from debt. Without any compensation whatsoever. Without any conditions whatsoever. And this makes a big difference compared to other similar movements. Priority is given to families with children.

On request beneficiaries will be able to get advice to help them draw up a so-called ‘exit’ plan from debt. The idea behind this unprecedented decision is that social problems can be better addressed without the debt loop, such as unemployment, domestic violence, child neglect, addiction risks or crime. It is therefore an experiment that will last two years and then analyzes will be made and conclusions will be drawn.

According to the city’s municipal authority, debts have a devastating effect on people, and the stress of paying them off often makes problems worse. “Debt leads to more debt,” explained Mark Lauriks, Arnhem’s Social Democrat councilor responsible for ensuring livelihoods. “They are creating a hole in people’s wallets and futures. And they take up so much space in the head, that there is no clear mind for correct decisions. A situation that the debt collection industry exploits to make a profit.”

The conclusion; “It is therefore time for a radical approach, which would be both much more favorable and economically lower. Debts totaling 3.5 billion euros across the country are being dealt with at 17 billion euros, meaning they cost disproportionately much.”

Mayor of Arnhem of Moroccan origin

The approach to addressing this social problem with unconditional debt forgiveness gives troubled households the opportunity to “get their lives back together immediately,” Lauriks points out. So officials from the municipality chose one of Arnhem’s eastern districts, Imerlo, the poorest area in the Netherlands in terms of household income, with 40% below the poverty line, and personally went to meet them by knocking on their door. Just the image of apartment buildings, instead of the typical Dutch brick single-family houses, testifies to the extent of the poverty.

As Lauriks says, the people who were approached were initially hesitant, because they were used to having only debt collectors, bailiffs knock on their doors. So they were surprised but quickly realized the importance of the initiative for their lives. It should be pointed out that almost 60% of residents in Arnhem are of immigrant origin, many are not even approachable for help with their debts or other services. The total amount of 700,000 euros allocated by the city to cover the debts of a total of 70 families does not come from Dutch taxpayers but from charities and are donations.

An interesting detail is also that the mayor of Arnhem is Ahmed Markous, of Moroccan origin. In 1979 the then 10-year-old Ahmet and the rest of his family were reunited with their father, who had left to work in the Netherlands. The family lived in a neighborhood of Amsterdam, Ahmet had not gone to school in Morocco.

Within two years he learned to read and write in Dutch at the fourth Montessori school in Amsterdam. He attended the so-called Individual Technical Education and started working in a nursing home, then in the police, later in the local government and today he is the mayor of Arnhem. He is the first governor of the Netherlands of Moroccan origin. The unprecedented action of the municipality got a lot of publicity, but it did not remain idle, it was even criticized for various reasons.

Figures cited by the city about the cost of “problem debt” are “fictitious,” some have claimed. A university professor warned of “moral hazard”, i.e. the risk of pushing other households into debt. Others have argued that strengthening social welfare or raising the minimum wage is more appropriate. Overall, however, the response has been positive and surprises anyone who associated the Netherlands with Dijsselbloem-style “fiscal ethics”.

SZ, Guardian, Telegraaf, dpa