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Thursday, August 23, 2012

A Dutch election primer

Emile Roemer, leader of the Dutch Socialist Party

On 12 September, elections will take place in the Netherlands. Due to the country's traditional role as an ally to Germany in monetary affairs, they will be watched with close attention (and by coincidence the German Constitutional Court is due to rule on the ESM Treaty the same day).

What do the opinion polls say?

The latest opinion poll shows that caretaker Prime Minister Mark Rutte’s right-of-centre-liberal VVD party and the EU-critical left-wing Socialist Party would get the most votes, with each obtaining 34 seats in Parliament. Sniffing around third place are four parties: the social democratic PvdA (21), the Christian democratic CDA (16), Geert Wilders' PVV (14) and the left-liberal D66 (13). The Christian Union, which sits with the Tories in the ECR-group in the European Parliament, would get around 7 seats, and GreenLeft 4.

What are the coalition options? 

There are broadly two possibilities:

- Firstly, a centrist coalition might emerge from the VVD, PvdA and CDA. However, the polls suggest this currently falls a few seats short of the necessary majority. This coalition could be expanded to include D66, which would make for a eurofederalist formation, but this might not be convenient in the face of an EU-critical, although disparate, opposition composed of the Socialist Party and Wilders' PVV.  Alternatively, the seats of the moderately EU-critical Christian Union might be sufficient but then the government would only have a narrow majority, if the current poll results materialise.

- A second option, the preferred solution of the Dutch social democrats (PvdA), would be a government with the Socialist Party, CDA, and GreenLeft. This would only narrowly obtain a majority and probably also need the support of D66. While the CDA would need to be convinced, it is questionable whether a government led by what many consider a far-left party is a viable political option in the Netherlands. The Socialist Party started off as a Maoist formation (a bit like the current European Commission President) but has moderated its tone and could now be described as left wing populist. Its current leader, Emile Roemer, who vehemently opposes the fiscal pact, has repeatedly warned that he won't pay any EU fines for breaching budget deficit limits, saying he would "put his body on the line".

Other options are theoretically possible, but unlikely: the divisions between the VVD and Socialists look too deep, while it's unlikely that the VVD would choose a new deal with Geert Wilders, after the previous  Dutch government fell due to Wilders' opposition to austerity. The most likely outcome remains some kind of centrist government, possibly after several months of negotiation (last time around, it took four months to form a government).

What are the campaign themes?

Unavoidably, Europe is high on the list. The last government fell over EU-imposed austerity and it is no surprise that Socialist leader Roemer has raised it as an issue. Roemer has also warned that any transfers of power to the EU would need to be agreed by referendum (in a similar vein the UK's 'referendum lock'). Things have been moving in a more EU-critical direction for a few years now. Only 58% of Dutch voters are currently in favour of EU membership, a stunning drop from 76% in May 2010. Two thirds of Dutch voters want to see less of their cash going to the EU budget. Last, but certainly not least, there is general discontent about the eurozone bailouts, with  at least half of Dutch citizens saying in May that they wanted to see a stop on money being sent to Greece and a majority opposing the eurozone's permanent bailout fund, the ESM.

Another important issue is pensions, following reports that cuts very likely will need to be made. Dutch pension rules are also under threat from upcoming EU initiatives such as Solvency II, which are being fiercely opposed by the Dutch government.  

Economic policy is, as always, high on the agenda. Dutch PM Mark Rutte entered the campaign this week, promising tax cuts in order to reward those who work, in a bid to present his party as the alternative to voters who are scared of the SP and draw left vs. right battle lines.

What's the political context?

Much of what's happening in the Netherlands today is still seen in the light of the murder of Pim Fortuyn in 2002. The Pim Fortuyn List, certainly started to break down the consensus in Dutch politics on issues such as immigration and the EU. Of course, a lot of has happened since: a range of unstable coalition governments, the no-vote in the referendum on the European Constitution in 2005, the rise and influence of Geert Wilders.

The sluggish Dutch economy also appears to have become somewhat decoupled from the German economy. There is particular concern about the housing market.

What will be the consequences for the EU and the euro?

Dutch daily De Volkskrant ran an article earlier this month noting that the current Dutch government has increasingly been playing EU hard-ball behind the scenes, under the headline "European patience with the annoying Dutch is almost up". An EU diplomat was quoted as saying, "the problem is not that the Netherlands is obstructing, the problem is that the Netherlands is almost always obstructing".

Given that around a third or more of the Dutch electorate now seem prepared to vote for more or less EU-critical parties, that isn't going to change anytime soon. Still, it will make a big difference whether the Socialist Party will make it into government or not, and perhaps more symbolically, whether it will become the biggest party in the country. Both remain uncertain.

However, it is clear that the consequences could be far reaching, especially for Chancellor Merkel if one of her most loyal allies starts to make things even more politically fraught at the level of the eurozone.


Bob Lagaaij, Netherlands said...

Compliments! A clear view of ,,the mess in perspective''.

FreedomLover said...

An EU diplomat was quoted as saying, "...the problem is that the Netherlands is almost always obstructing". If only Britain would follow the Netherlands' example. The path to freedom in & from the EU is to say "No" to Brussels - continuously!

Rik said...

1. Polls are all over the place, most show the SP (socialists) as the biggest party. But differences are huge up to more than 20 % differences (while 2% should be the max).
Not that an SP victory would mean they would form a cabinet and provide the PM. The party is in fact a semi pariah.
2. Look at peil.nl for the coalitionpossibilities. Something around the centre is by far the most likely.
Left wing looks unlikely simply becuase they donot have a majority and realistically will not get one.
You donot get into a clearly unstable coalition that is completely unpopular with your potential voters.
A more realistic option than the one you present as second one would be a minority with support (although there are bad experiences with the prior one).
CDA going with the left would likely make them lose even more of their natural electorate which is right from the middle and social rather conservative (basically rather similar to that of VVD and PVV). Although they make one strategic miss after another and subsequently make the habit of fighting over it in public without a clear outcome, so another mistake can not be excluded.
3. The issues as you say but also healthcare is a big one and certainly not no. 4, more like 1 or 2.
4. Rutte looks a complete nitwit imho but is apparently still very popular with voters . Had a couple of major misses about the rescue packages, simply the technical stuff looks way above his head.
SP's Roemer basically does well because he resembles a nice friendly likeable guy. Technically on economics likely even poorer than Rutte.
So as far as the quality of the main players goes it is simply horrible.
5. RE market is a disaster a lot of hot air still in the prices. Comm RE much worse even than houses. Measures proposed simply look awful all over the board.
6. The populist parties have caused that the main stream parties have had to adjust their programms on things like immigration and now Europe. That is probably the real longterm danger for the EU/Euro.
That and the almost certain unstability of a cabinet (so elections are always just around the corner, or anyway could be so).
7. Most likely outcome imho a central (slightly right from a Dutch perspective) cabinet. That is highly unstable as the populist are tearing both on the left and on the right.
Likely Holland simply will remain teaming up with Germany until a critical point is reached or there is a gamechanger (like a Finnish exit, German stop on further rescues, or the neeed for a referendum (likely a referendum would be about giving up national rights to the EU or paying much money down South (both look a certain no go)).
8. Like the EU Dutch politics simply needs a major overhaul (same or even more than the UK), should have had onea few decades ago. As it is now it is simply a bunch of very poor managers pointing the country in a direction a majority of the voters donot want to go.
9. But as said I donot see a big problem for the Euro coming out of it at this stage.
10. Good for the EU haters that the EU keeps making problems eg on the pensionfront (rightly so imho (for one time)), but it will not make them more popular. The other way around.
A lot of the necessary cuts have not properly hit in btw. Usually when they do they will be even more unpopular with many. Most likely people will also link them with Euro-bail out. So imho very unlikely that that will become more popular.
A lot of guarantees are simply Off BS financing a Greek haircut will mean at best a higher debt and more likely a negative on the budget (to be compensated somewhere else). A bit unclear Rutte tried to explain it one time somewhere but the explanation looks complete BS (the non-Balance Sheet one).

Rik said...

Lot of movement the last days.
-Roemer SP messed it completely up in the TV debate and looks exposed as a nit wit, seats look to move massively to the PvdA (Dutch Labour);
-Rutte VVD has excluded getting in a left wing cabinet.

Meaning as things are now (but the players are specialists to make a mess of it and do stupid things):

-VVD will most likely be the largest party (and start with the formation);

-Very unlikely we see a cabinet with the SP Socialist party. Most 'cabinetable' parties will prefer a normal party to a heavily left populist one (even at the left); would require parties to join that have voters that like the SP as much as the plague; would make a 5 party even 6 party cabinet necessary to get a majority; create discussions about the PM (rule largest party and the SP leader is as mentioned clearly not suited for that job and let another party provide the PM would mean admitting by the PM he is not suited to be a PM);

-Therefor by far the most likely is a cabinet of VVD and 2 or 3 of the PvdA (Dutch Labour), Christian Democrats, D66 (left liberals). Most likely all 3, making a 4 party cabinet, as 3 likely will not have sufficient seats for a majority.
Alternative one of the Christian Union or Greens joining iso one of the 3 earlier mentioned.

-VVD is simply necessary there are around 90-100 seats (of the 150) that are 'cabinetable'. The rest are considered weirdos like the SP or Wilders's party.
With close to 35 seats the VVD is simply needed to get a majority as there are simply without the VVD approx 60 (of 150) other cabinetable seats. Plus it is most likely the largest party (most likely to start the formation).

Likely PvdA also needed. Moving close to 25 seats all remaining cabinetable (5 parties) would likely struggle to get a majority. Plus one is strongly religious which gives problems in other areas. Probably the others would have preferred another one, but likely simply needed to get a majority without at least 5 parties being required.

So my bet: VVD (PM), PvdA, CDA, D66. Rutte therefor is likely to continue as PM. Not really a strong PM imho, but Dutch voters have clearly another opinion.