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Monday, September 10, 2012

What the Dutch elections could mean for Europe and the euro

We have today published our thoughts on what the 12 September Dutch elections are likely to mean for the future politics of the eurozone.

Although the EU-critical left-wing Socialist Party has had a strong election campaign, recent polls have seen a shift back towards the centre with the centre-left Social Democrats (PvdA) overtaking the Socialists (SP) to become the main challengers to Prime Minister Mark Rutte’s VVD party (centre-right).

According to the latest Ipsos politieke barometer (8 September) the VVD and PvdA are neck and neck on 35 seats each. The Socialists (21) and Geert Wilders’ PVV (19) are vying for third place, with the Christian democratic CDA (13), left-liberal D66 (11), the Christian Union (CU) (6) and GreenLeft (4) all expected to figure.

Therefore, the most likely outcome remains a centrist, pragmatic coalition, which clearly is the preferred option in Brussels and Berlin. The Dutch elections are therefore unlikely to radically change the immediate political dynamics of the eurozone crisis. The country is likely to continue to oppose more bailout cash for Greece or any topping up of the eurozone’s bailout funds and remain a steadfast supporter of austerity in the struggling eurozone economies.

In the medium to long term, however, the Netherlands could well be on the path to becoming a more assertive – and far more complicated – EU partner. With future decisions on potential eurozone debt pooling to come and the prospect of more EU powers over national budgets (including the Netherlands’), Dutch public opinion and the more or less EU-critical parties such as the Socialists and Geert Wilders' PVV are likely to shift the country in a more sceptical direction.

The traditional parties of the centre have also increasingly taken on aspects of Wilders’ narrative on Europe. Neither VVD nor the PvdA are uncritically in favour of everything European, with the VVD making several critical interventions: refusing a penny more to Greece, on the need to limit EU powers in some areas and reduce the EU budget. A huge question will be if these two parties will see an electoral advantage in becoming more EU-critical in light of more potential bailouts, a stalling economy and an ever vocal EU-critical fringe.

You can read the whole thing here.


Rik said...

Basically since your last article on this a few weeks ago Socialist frontman Roemer has messed it up. It became clear to everybody he simply doesnot have the stuff to be PM. At the same time his most direct competitor Samson (Labour) did very well. Basically what has happened is that seats moved from the Socialists (SP) to Labour (15 seats in 2 weeks or so).
Rather surprising Dutch polls have been pretty stable during the last 2 years.

-Increased the no of 'cabinetable' seat to about 100 (may be even 105) from 90 earlier.

-makes it even more unlikely that the SP will end up in the cabinet.

-starting from 100, it will be impossible to create a cabinet without VVD and Labour (PvdA), both have 35. take one of them out and you are under the 76 required for the smallest possible majority.
In all polls, with 2 days to go so very unlikely that that will change.

-starting with PvdA and VVD, they only need now one of the other cabinetable parties: D66 and CDA.
There are advantages in one and there are advantages in the other and there are advantages having them both. But at the end of the day it gives a centrist cabinet that is basically pro-Euro. And will more or less continue the current policy. With probably slightly more spending and a little less cutting than now. Possibly that this cabinet is even slightly more pro-Euro as well.

-PM. Clear 2 horse race. For Rutte (VVD) the campaign can not end soon enough he simply is making mistakes (mainly as he suffers the same basic problems as SP's Roemer (but considerably less than Roemer), very likable but not really the stuff PMs should be made of in times of crisis and he starts to show that. Bit like Cameron, not an intellectual heavyweight by far, but a guy that looks ok, too inexperienced, likable and good fun to have a beer with (Obama formula).
Samson (Labour is doing much better in that respect (probably beats Rutte by 20 points on the IQ ladder, which says unfortunately more about Rutte than about Samson).
Likely a lot of strategic voting will take place. As everything is very recent, that part looks doesnot looked to have been considered yet. So possibly more from SP to Labour, also from the Greens. But also more from Wilders's party (we has run a horrible campaign imho)and CDA to VVD. Largest party almost certain to provide the PM. 2 horse race with no clear favourite. And of no real importance for Europe most likely.

Rollo said...

The Dutch have already surrendered their independence to the EU, so no election is going to make a lot of difference; until they are driven into getting out of the EU altogether. Then they can stop borrowing to pay off other people's debts and start running their own economy. Have the Dutch the guts to do the necessary? Maybe.

Rik said...

Not this time as I see it. They are in dubio more trusted parties (which are basically pro-Euro) or Euro-sceptic (which are basically a bunch a mentally challenged). This time they are taking the trusted parties.
However VVDs Rutte already has been forced to move somewhat and state that he will not accept a 3.0 Greek bail out.
The cuts have not yet work in in Holland and probably all the budget costs are clearly under 1 Bn Euro yet. Wait till cuts start to hit in and further cuts are necessary because the officially the rescue money will have to be written off. That will be when the party really get started and probably all over the North. In the South is probably the 'really long overdue structural reforms' austerity party that will get a lot of visitors.

Saw some more scientific analysis.
They had the following differences (and looked pretty professional so are a much better source than me).
-More likely a 4 party centre coalition or a coalition VVD/PvdA/CDA as a 3 party coalition with D66 doesnot have a majority on the Senate.
-Strategic voting had already started, but mainly with moves from D66 to VVD (and not PvdA as I assumed), it appears that D66's electorate has moved to slightly right of the Centre from slightly left were they were originally positioned.
-SP voters moving to the PvdA as assumed.
Rest as I wrote.
So most likely a EU-positive cabinet with either Rutte or Samson as PM. Likely somewhat increased spending but not much.

Anyway the Dutch have a reputation to defend to mess up coalition talks. So as this is the most likely outcome by far it is by far also not a certainty.
But that would likely result in a other Centre government likely a minority one with support from ??. Anyway also unlikley to pull the plug out of the Euro at the moment.

Depends on personal relations, but any cabinet would look rather unstable. So donot be surprised when in a year or 2 there is another election. Likely at the point the Euro because of cuts will play even more (if it still exists). Probably imho but not in the current form.