Irony alert as Poles ride to UKIP's rescue in a classic Brussels stitch-up

We reported only a few days ago that UKIP's EFDD group in the European Parliament collapsed after a Latvian MEP resigned, meaning the group no longer met the criteria of having MEPs from at least seven different EU member states. The news drew a lot of media attention (not to mention schadenfreude) mainly due to the financial implications for UKIP - which, according to our estimates, stood to lose nearly €2 million a year in EU funding.

Today, it was announced that Robert Iwaszkiewicz, an MEP with Janusz Korwin-Mikke's KNP (pictured) has joined the group. Korwin-Mikke himself was deemed too toxic to join the UKIP group after the European elections given his controversial views on rape (women always "pretend to resist") and the Holocaust (no evidence Hitler knew about it), and that was before he provoked a full-blown race row. Iwaszkiewicz himself is hardly baggage free; during an interview about with Gazeta Wrocławska a couple of months ago, when asked about domestic violence, he said that:

"I'm convinced that many a wife would benefit from such a response in order to re-connect with reality."

When asked about his Korwin-Mikke's views as described above, he said that "these are taken out of context... when considered broadly, they make sense". In any event, this does not appear to be a principled defection - but rather a classic Brussels-style dirty deal. Polish daily Rzeczpospolita reports that Korwin-Mikke and Farage struck an agreement which would see Iwaszkiewicz's transfer mirrored by an MEP from the EFDD move to the 'far-right' bloc led by France's Marine Le Pen, which also includes Geert Wilders's PVV, the Austrian Freedom Party and Lega Nord, and fell one nationality short of forming an official group during the summer. The paper describes this a "binding transaction" and quotes Iwaszkiewicz as saying that:

"Negotiations are on-going. It was necessary to save them and I had to join urgently".

It remains unclear therefore whether an MEP from the EFDD will definitely join the Le Pen group - but that seems to be the implication. Because of the way the nationalities are represented over the two groups, it would either have to be one of UKIP's 24 MEPs or one of the two Sweden Democrats.

If the former, UKIP and Nigel Farage will face some uncomfortable questions given the extent to which they have tried to distance themselves from the Front National. Regardless, this incident just underscores the absurdity of these taxpayer subsides for European Parliament groups.

Farage wraps up his European Parliament group faster than Le Pen...thanks to a Front National defector

Nigel Farage has managed to form a new Europe of Freedom and Democracy (EFD) group in the European Parliament. The group comprises 48 MEPs from seven EU member states. The anti-immigration Sweden Democrats and the Latvian Farmers' Union both joined forces with UKIP. But the story of the day is that the seventh nationality Farage needed to wrap up his group has been provided by...a French MEP who defected from Marine Le Pen's Front National.

Joëlle Bergeron (see picture) was elected to the European Parliament with Front National last month. However, according to her, she came under pressure to give up her seat to another member of the party deemed as more 'orthodox' and closer to Le Pen. A couple of days before the European Parliament elections, Madame Bergeron had raised a few eyebrows in Front National's leadership by speaking out in favour of giving immigrants the right to vote in local elections in France. She eventually decided not to step down as an MEP, but she quit Front National and joined UKIP's group.   

How these parties will coexist remains uncertain. For example, UKIP wants to quit the EU, and Beppe Grillo’s Five-Star Movement is a rather unpredictable quantity that doesn’t want to leave the EU and supports a financial transaction tax. Indeed, the fact that parties will be allowed to vote independently on each specific issue could help make the alliance more sustainable.  

As we noted in a recent briefing, European Parliament rules mean the EFD group - as all the others - will be entitled to millions of subsidies every year. According to our estimates, based on 2012 figures, Farage's new alliance could claim in total around €5.6 million a year - €3.8 million for the group in the European Parliament, and €1.8 million for the affiliated pan-European political party and foundation. UKIP is not a member of the latter two, so it will only be entitled to a portion of the money specifically devoted to the European Parliament group.

So Nigel was faster than Marine, but Le Pen still has a good chance of forming her own group. She was in Brussels yesterday for a meeting with her new allies, and Polish MEP Janusz Korwin-Mikke was sitting at the table (see picture) - most likely a sign that Poland's Congress of the New Right (KNP) is on board. This means Le Pen only needs one more national delegation to finish the job. Difficult, given that the deadline to register new groups expires next Tuesday, but definitely not impossible.  

Farage suffers another defection: can he still put together a group in the European Parliament?

With the deadline for the registration of European Parliament political groups set to expire early next week (the European Parliament's equivalent of a transfer window), even the moves of individual MEPs can be decisive.

Nigel Farage suffered an unexpected blow yesterday, as Dutch MEP Bastiaan 'Bas' Belder (see picture) announced that he would leave UKIP's Europe of Freedom and Democracy (EFD) group and join the European Conservatives and Reformists (ECR) - the Tories' group.

This complicates things for Farage, who now needs MEPs from at least three more member states (other than UK, Italy, Czech Republic and Lithuania) to gain the seven countries needed to keep his EFD group alive.

Time is running out, but there are still a few options out there, including:

• The Sweden Democrats (who have also applied to join the ECR group); 

• German satirical party Die Partei; 

• Poland's Congress of the New Right (who are also in talks with Marine Le Pen);

• Bulgarian MEP Angel Dzhambazki of the Bulgarian National Movement (VMRO).

Meanwhile, there has been no news from the Le Pen-Wilders front this week. They also need two more countries to wrap up their group. Given that Farage and Le Pen have both ruled out joining forces with Golden Dawn, Jobbik and the German neo-nazi NPD, the room for manoeuvre is now narrower, and the two may well end up contending for the same MEPs. The next few days are going to be interesting.

What does Wilders' defeat in Dutch euro elections mean?

For various reasons that we don’t quite understand, most of the UK press has deemed it illegal to report on the exit polls from yesterday’s European elections in the Netherlands - with the exception of the Telegraph and the Guardian. The Netherlands is the only country to conduct exit polls ahead of Sunday night (10pm GMT roughly) when the results from all 28 EU countries are announced.

Geert Wilders’ Freedom Party (PVV) took a clear a beating. If the exit polls stand, the party will have dropped from 17% in 2009 to 12.2% this time around, translating into a loss of 1 seat (the PVV had 5 seats in the last parliament but one MEP defected). This is no doubt an unexpectedly bad result for Wilders.

Source: Ipsos

Wilders’ defeat has given rise to a hilarious conspiracy theory in Brussels that the UK media isn't reporting on the Dutch elections since the result doesn't conform to its alleged anti-EU bias. Apart from the fact that the BBC and others genuinely worry about breaking the law (even though it’s a ridiculous law) this is also a wrong reading of the results.

Wilders screwed up. His controversial comments about Moroccan immigrants caused him real damage. Three of his four sitting MEPs even refused to campaign as a result. But to see this as a victory for the EU status quo in the Netherlands is pretty heroic.

- The strongly Eurosceptic Socialist party gained an extra 3% of the vote, translating into 1 extra seat, which sees it overtake the established centre-left PvdA. Together with the PVV, these strongly EU-critical parties are set to win 22.2% of the vote.

- While it's difficult to know what to read into this result, the parties that we've dubbed “critical reformers” have done relatively well. Prime Minister Mark Rutte's VVD party maintained a respectable share at 12.3%, despite leading an unpopular government, while the Christian Union/SGP increased its share by a percentage point. 

- The two biggest victors are the D66 liberals and the CDA, which are vying for first place on just over 15% of the vote. These parties are clearly pro-EU - and D66 is doing a lot of good work in the EP - however, please do resist the temptation to see this as an endorsement for more EU integration. Firstly, the D66, the great winner of this election, called on a freeze for transfer of powers just before the election, prompting Foreign Minister Frans Timmermans to post on his facebook page "D66 is suddenly also 'very euro critical'". Meanwhile, the CDA vote of 15% is down nearly 5% on its 2009 vote. It would be just as plausible to see the D66 and CDA vote as anti-incumbent vote against the PvdA-VVD coalition government.

- Lastly, turnout in the Netherlands remained stable, but at an incredibly low 37%. With Europe so much more in the headlines over the last few years and the Lisbon Treaty giving MEPs more powers, why in the world hasn't turnout gone up dramatically if it's true that more EP powers and greater awareness will lead to greater voter engagement?

These results certainly present a mixed picture. Wilders' failure to translate his polling into votes is notable but whether this pattern will be repeated elsewhere (in France, for example) remains to be seen - and probably has much to do how badly his campaign went.

Irony alert: Farage could be the biggest loser if Le Pen and Wilders manage to form a new anti-EU group in the European Parliament

Belonging to a group in the European Parliament matters. Groups receive money on top of individual MEPs' allowances and are given additional group staff. It also boosts chances of representation on committees (where EU laws are discussed and amended before they are put to a vote in the plenary).

Therefore, the prospect of Marine Le Pen, the leader of France's Front National (FN) and Geert Wilders, the leader of the Dutch Freedom Party (PVV), forming a new anti-immigration, anti-EU group in the next European Parliament is causing some distress around Europe. When this was last attempted - with the so-called Identity, Tradition, Sovereignty (ITS) group - it quickly fell apart. The Greater Romania Party (PRM) didn't quite approve of Alessandra Mussolini - the granddaughter of you-know-who - labelling Romanians "habitual law-breakers" and thus withdrew from the group. Rather telling.

So will Wilders and Le Pen succeed to unite parties that, per definition, don't always like each other? According to EU rules, 25 MEPs from at least a quarter (seven) EU member states are needed to form a group.

By our count, at least four more parties from as many EU countries look willing to join forces with FN and PVV: Italy's Lega Nord (who currently sits in the same group as UKIP), Belgium's Vlaams Belang, the Austrian Freedom Party (FPÖ) and the Sweden Democrats (whose leader today said they are considering joining). This leaves FN and PVV only one party and country short.

This could be filled by, for example, the Slovak National Party (SNS) - which is pretty hardcore, and currently sits with UKIP. Bulgaria's Ataka would probably also be quite keen to join, though Le Pen recently called the party "the real extreme right" (not meaning it favourably). Greater Romania may struggle to reach the 5% national threshold needed to win seats in the European Parliament, but could be another possibility.

The Danish People's party has said it won't join the group, while Greece's Golden Dawn and Hungary's Jobbik seem to be off-limits for everyone.

So this might come down to the wires. An interesting twist, though: if Le Pen/Wilders succeed, this could mean problems for Farage. UKIP currently sits in the Europe of Freedom and Democracy (EFD) group - which includes 31 MEPs from twelve different countries, but:

• Farage could lose several MEPs from Italy, with Lega Nord joining FN and PVV, and the other Italian, Magdi Cristiano Allam, standing for re-election with a different party (Fratelli d'Italia);
• The Slovak National Party might join the Le Pen/Wilders group in the end;
• The (True) Finns are talking to the European Conservatives and Reformist (ECR) group, where the UK Conservative Party sits;
• The two Greek MEPs in UKIP's group are from LAOS - a party which is currently polling below the national threshold of 3%. This means their re-election is not certain;
• In addition, seven out of twelve EU countries in UKIP's group are currently represented by only one MEP.

So Farage could need both new parties, additional MEPs and more countries to be able to set a group after May's European elections. And if not managing a group of his own, where will he go? Will he reconsider his decision not to join forces with Marine Le Pen, something he ruled out in the past  when he said UKIP and FN are from "completely different political traditions and background"?

What is clear is that the formation of political groupings in the European Parliament will be a messy affair - and then we haven't even begun to discuss the ECR...

Is an EU referendum back on the Dutch agenda?

Thierry Baudet

This week, the Dutch Parliament held a debate on whether it is necessary to hold a referendum on transferring new powers to the European Union. The debate was triggered by a campaign, called "Citizen's forum - EU" which managed to gather over 63,000 signatures, above the threshold needed (40,000 signatures necessary) to force it on to the agenda of the Lower House.

The campaign demands:

1. An end to the creeping transfer of powers to the EU.

2.  If powers are transferred to the EU, a referendum must be held so the Dutch population can have a say on this transfer of powers.

Two of the campaigners, Dutch academic Thierry Baudet (photo), and economist Ewald Engelen said in a speech to MPs: 

"The Lower House is about to lose its core competences...You won’t be able to decide policy any more. You abolish yourself. But you don’t have the right at all to do this. Because the sovereignty is with us, the people. You are merely the representatives of the Dutch people."

As De Volkskrant reported, the reception was more positive than expected. It was not only the "usual suspects", like Geert Wilders' PVV, the Socialist Party and the Party for the Animals that welcomed the idea. These parties have expressed support for a Dutch-style "referendum lock" in the past,

More interestingly, the social-democrat PvdAalso  came out in support, with its EU-spokeswoman Marit Maij MP, saying: "the PvdA wants to proceed quickly with a possible referendum" - albeit with a lot of qualifications,The party is only in favour of a non-binding referendum, and wants it to be held according to new rules currently being negotiated in the Dutch Senate, which would make it necessary to first obtain 300,000 signatures, a high threshold in the Netherlands (but something which the EU referendum campaigners are considering).

The Christian Union, which sits with the Tories in the ECR Group in Brussels, support the idea, with its spokesman, Gert-Jan Segers MP, saying that "by means of exception we accept an advisory referendum".

Dutch PM Mark Rutte's governing VVD reiterated its support for strengthening national parliaments (something which the PvdA also wants), but is against referendums as a tool of policy.

Meanwhile, a new poll, by prominent pollster Maurice de Hond, reveals that 67% of Dutch citizens want a referendum in the event of new powers be transferred from the Netherlands to the EU:

Ja = Yes, Nee = No

This is against a tricky backdrop: current opinion polls show that Geert Wilders' PVV would have almost as many seats the governing VVD and PvdA combined, if an election was held today (though that goes far beyond Europe as an issue). With the Dutch government's campaign to set limits on the powers of the next European Commission shows, the European election campaign could prove interesting in the Netherlands.

The Dutch coalition is facing stormy waters

According to prominent pollster Dutch Maurice de Hond, just one year on from last year's elections, the Dutch government coalition of the centre-right VVD and centre-left PvdA would lose more than half of its parliamentary seats if elections were held now. They would only retain 30 of their 79 seats, representing 12% (in the case of the VVD) and 7% (in the case of the PvdA) of Dutch voters.

Geert Wilders’ right-wing populist PVV remains the most popular party, which it has been since late last year, and would double its number of seats from 15 to 32, representing one in five Dutch voters. We commented after the elections last year that the relatively bad results for Wilders and the eurosceptic Socialist Party - which would also see an increase in its seats from 15 to 24 according to the latest poll - was hardly the victory for the centre that some had suggested.

The opinion poll also reveals that 48% of respondents do not believe that the coalition will still be in power in 6 months time, while 37% believe it will.

While there is a majority in the Lower House, the coalition doesn't have one in the Dutch Senate. The Dutch government has already announced that there is an agreement within the coalition on €6 billion in extra austerity measures and that the details will be unveiled by Finance Minister Jeroen Dijsselbloem on "Prince's Day" on 17 September. The plans would see the Netherlands closer towards the EU budget deficit target.

Although the Senate does not traditionally reject the government budget - the last time this happened was in 1907 - the VVD-PvdA coalition has reportedly approached two opposition parties, the D66 and CDA, to see whether they'd like to join the coalition in order to obtain a majority in the Senate. The D66 have refused.

The Dutch economy faces huge challenges, with a housing bust which saw house prices falling 20% below their 2008 peak, while no less than one million Dutch households find themselves in negative equity. That's one in four households with a mortgage. The ECB has expressed concern that mortgages are putting enormous pressure on the financial positions of Dutch banks, while the world's largest bond investor, PIMCO, has noted the Dutch economic crisis may spill over to government bonds, suggesting it will no longer buy Dutch government paper and that the triple A country may face French borrowing levels in future.

The Dutch economic advisory council of the Dutch government has a stark warning:

"Dutch households now have the highest level of long-term debt in the euro zone. In 1995, the debt ratio in Germany was at the same level as in the Netherlands (about 56%); for Dutch households, it is now twice as high as in Germany"

At the same time, the newspapers continue to run stories about the ongoing eurocrisis, with extra assistance to Greece on the horizon. This is something Prime Minister Mark Rutte said would not happen. In addition, as we report in today's press summary, immigration has become a heated topic; according to a recent poll, 81% of the Dutch population are opposed to the lifting of labour market restrictions for Bulgarians and Romanians in January 2014.

In an attempt to address the public's sense that things are out of control, the Dutch government has published its EU “subsidiarity review”, an assessment of what the EU should and shouldn't be doing, which it will present to other EU governments in the coming months.

However, the above would suggest that the Dutch electorate will need a lot of convincing if it is to put its faith in the mainstream parties again at the next election.

Three months is a long time in Dutch politics

Since the elections in September, international attention on the political situation in the Netherlands has faded.

But, over the weekend, a new opinion poll by Maurice de Hond revealed a big change. Only three months after his defeat, the party of right-wing populist Geert Wilders (photo), who campaigned on a platform in favour of the Netherlands leaving both the eurozone and the EU, is resurgent.

Wilders' PVV would be the country's most popular party were these results repeated at an election. That this would be with only 16% of the vote illustrates how volatile Dutch politics has become (it should be noted that at the last election many voters made their minds up at the last minute). But it is still striking that Wilders' Party for Freedom would jump from 15 seats in the September elections to around 24 now, according to this poll.

The two governing parties, the liberal VVD and social democrat PvdA, would fall from 41 to 22 and from 38 to 23 seats respectively, after only a few months in power.

The far left SP, which is also critical of the EU, has likewise profited from the fall in support for the government parties, increasing its number of seats to 22 from 15. The opposition D66, 50PLUS and the Christian Democrats would also see a large increase in votes.

The September election squeezed out the centrist CDA and forced together the VVD and PvDA, which are not natural political bedfellows (besides their shared 'pragmatic' attitude to Europe). The coalition has therefore resulted in several unpopular decisions among each party's supporters. The VVD had to backtrack on the agreed introduction of an extra healthcare levy which would have hit the Dutch middle class hard. In return, it was also forced to sacrifice a number of tax cuts which the party thought it had secured.

However, another important conclusion we can draw from the renewed success of both Wilders and the SP is that criticism of the eurozone bailouts and the EU in general is not going to go away. We noted this in our pre- and post-election analysis of the elections, with the parties of the centre increasingly taking their cues, if not their entire narratives, from the parties on their flanks.

One example of this was Mark Rutte's election promise not to send any more money to Greece. A few weeks ago, at the occasion of the third Greek bailout - or extension of the second - Rutte was forced to admit that he thought it was a real pity "he couldn't entirely keep" his promise, describing it as a "necessary concession".

Some were quick to proclaim the September election as a sign that the Dutch had "voted for Europe", but this was always a simplistic reading of the results and downplayed the potential for future volatility. These results would suggest that Dutch politics remain very unpredictable, and that Wilders and the Socialists are rubbing their hands in the wings.

Too soon to jump to conclusions: the Dutch debate on Europe has only started

As we said in our pre-election briefing, the Dutch elections saw a shift back to the centre, compared to the early signs of the campaign. Granted, a stronger combined majority for the two main parties - centre-right VVD and centre-left PvdA - than many had expected. The Socialist Party stayed on the same number of seats as last time around, while the populist Party for Freedom suffered a pretty heavy defeat (losing nine seats).

Senior Brussels figures were quick to hail the result as a victory for the pragmatic, pro-European centre over the crazy fringe. A victory for further European integration, euroscepticism can't win votes, sort of thing. Some media outlets drew similar conclusions - with some exceptions - claiming the anti-bailout mood in Europe is much over-stated. But is this interpretation right?

There's no doubt that the centre parties mounted a strong comeback, in the face of an increasingly sceptical public on Europe. But to see this election as a victory for the very specific vision of Europe that involves "ever closer union" is spurious. A few points:

First, Geert Wilders is no proxy for unease about where Europe is heading. In almost all aspects of policy Wilders is extreme, and his decision to bring down the last government has undoubtedly worked against his party. The Dutch may not like bailing out other countries, but they do not like reckless politicians either, and some voters considered a vote for him wasted.

As we noted in our pre-election briefing, the centre parties too - particularly VVD - have struck a more euro critical tone of late, perhaps in response to the strong rhetoric coming from Wilders and the Socialist Party. On Europe, the VVD may have crowded out Wilders, particularly by talking tough on bailouts. Regarding Greece, almost exactly repeating Wilders's words, Prime Minister Mark Rutte said, for example, that:

“Enough is enough…An exit may be inevitable, but it will be up to Greece to make that decision…An orderly exit is possible, but not desirable.”

In a comment piece in the FT last year, Rutte was one of the first to call for a clear mechanism to push countries, which do not meet the austerity targets, out of the eurozone – at the time widely acknowledged to be a shot across Greece’s bow. On the EU budget, he has sided with the UK in trying to achieve a real terms payments freeze in the EU's 2014-2020 budget, saying, "If we countries need to cut our budgets, also the European institutions need to do with less."

The Social Democrats, led by Diederik Samsom, played a role in triggering the elections by refusing to support the previous government’s budget dictated by EU deficit rules. It is true, this was their prerogative as the opposition. Nonetheless, they did their fair share of anti-Commission posturing such as:

"[It's about] how the Treaty is being applied…The economy is suffering damage in an unnecessary way because of the demands of the Commission".

And during the election campaign, the party had some other interesting things to say about European integration, such as:

“I’d reserve [Eurobonds] for the moment Europe is away from the abyss. Eurobonds are no rope to drag you out of the abyss. Economies need to converge and public debt needs to stabilise first.”

“I don’t support the blueprint of [EU-federalist D66 leader Alexander] Pechtold with his European government, Finance Minister and Parliament.” 

In the party manifesto, it called for a reduction to both the EU budget and the Dutch contribution to it - not even the UK Tories did that.  

Equally, Europe Minister Ben Knapen, a CDA member - whose party may be needed to achieve a government with majority in both houses of the Dutch parliament - said that "there should be a legal possibility for countries to voluntary or forcefully leave the eurozone. Only then the moral hazard - which is like a hostage - can be dealt with". He also urged to "correct the power the European Commission, which has been enormously growing in recent years."
 
On the wider point about the Netherlands in Europe - and whether this election will make it more or less assertive - the centre parties may be far more supportive of the status quo in Europe, but they are different on economic and social policy, completely different sides of the political spectrum in fact. Making the coalition work at all will be a huge challenge. Throwing the difficulties of the eurozone crisis into the mix makes the task even harder, while any pressure for greater integration may force the governing parties to be seen as acting tough, under the pressure from opposition parties.

No, the Dutch haven't turned into head-banging eurosceptics. But all of this is to say that the debate about the Netherlands' role in Europe, in the face of further euro integration, may just be kicking off.

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.
 

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.

They may have the cup...

It's election campaign season in the Netherlands, with Dutch voters due to choose their next government on 12 September. Caretaker Prime Minister Mark Rutte's VVD party has come up with a rather original way of planting the eurozone crisis into domestic political debate.

On 29 June, the party published the following campaign poster on its Facebook page:

The two players on the right - Andrea Pirlo of Italy and Xavi Hernández of Spain - need no introduction. However, the slogan on the left is quite interesting, as it says,

They may have the cup, not our creditworthiness.

The picture also had a short description above, saying,

Italy or Spain will become European football champions [as we mentioned, the post is from 29 June, two days before the Euro 2012 final]. Now they also need to become champions in cutting their budgets, because if we get things our way, there will be no arrangement through which they can benefit from our financial discipline while not putting their own things in order. Please like if you agree!

To date, the VVD post has 864 'Likes'.

As the elections get closer, tough rhetoric on the eurozone crisis, such as this, is likely to become a feature as Dutch politicians bid to 'steal' votes from Geert Wilders' far-right, notoriously anti-euro (and anti-EU), PVV.

Today, Dutch magazine Elsevier also reported that, at last week’s meeting of the ‘Future of Europe’ group, organised by German Foreign Minister Guido Westerwelle, Dutch Foreign Minister Uri Rosenthal warned that it was not the time to discuss any further transfer of national powers to the EU, especially in areas such as pensions, labour market and social security.

In light of what we have seen, for instance, in Finland ahead of the latest presidential elections, the picture above is another example of how further fiscal integration and eurozone bailouts are now at the forefront of election campaigns in the Triple-A countries.

What next for the Netherlands?

The political situation in the Netherlands continues to look uncertain, following the fall of the Dutch government, largely due to EU-imposed austerity targets.

Yesterday the Dutch Parliament debated the crisis (which we live-tweeted) with at times heated exchanges. So what has come out of it and where are we at?

• Outgoing PM Mark Rutte announced that he would propose 12 September as the election date, despite many parties calling for a June election to allow the new government to get on with business. 

• There is still disagreement over an absolutely vital issue: how to deal with EU austerity rules. The Dutch government has to present its 2013 budget to the Commission before 30 April, which needs to comply with the EU's 3% deficit limit or, says Rutte, the Netherlands could face a fine of up to €1.2bn (though it would take a lot for that to actually come to pass).

• Diederik Samsom, the leader of the social democrat PVDA, remains opposed to sticking to the the 3% rules, saying that going beyond that limit (his proposal is 3.6%) is allowed in "exceptional circumstances" - which was immediately denied by PM Rutte.

To put the Dutch economic problems into context, we are talking about a country with a deficit of 4.7% and debt to GDP of 65% (2011 figures), although high household debt and falling house prices are creating some trouble right now. Many countries would love to have this problem (the UK, for one). The problem, of course, is that these figures do not conform to the eurozone orthodoxy of austerity - of which the Dutch have been major cheerleaders, and in many ways the Dutch have made a rod for their own backs here.

In any case, talks are ongoing and a new debate is scheduled for Thursday. Our bet is on the political parties reaching an agreement to send to Brussels before the deadline and that will serve to appease the Commission.

But this runs far deeper than whether the Dutch can pass this year's budget, it raises fundamental questions about whether the country will be able to prodcue stable government in the longer term. Political fragmentation in the Netherlands has been a feature of the last decade. In 2003 the three 'mainstream parties' (PvdA, CDA, VVD) held 114 (76%) of the 150 seats in parliament. In 2010, this was down to 82 (54%). In 2012, who knows?

The one to watch is clearly Geert Wilders and his populist PVV party - if they gain, passing the EU fiscal treaty will be far more difficult in the Netherlands, as will eurozone politics in general. However, interestingly, Wilders is currently polling at the lowest level in two years, at 12.6%. What's also interesting is that the left-wing Socialist Party (SP), which has also been quite critical of the EU in the past, is polling close to 20% (governing VVD at 22% and centre-left PVDA at 16%).

But as we've noted before, the Dutch crisis is an indication of how unsustainable the current eurozone path is, and the tension involved in having key decisions on spending and taxation subject to supranational rules rather than votes in national parliaments.

Yesterday, Bild presented a list of eurozone countries where governments have already collapsed over the euro: the Netherlands, Ireland, Portugal, Italy, Greece, Spain, Slovakia and Slovenia.

The eurozone crisis used to be perceived as the the core versus the indebted periphery. What happened this week in the Netherlands has bent these assumptions.  But the common theme is that voters feel powerless to change the status quo. Whichever mainstream party they vote for, the answer is the same. For as long as this persists, no one should be surprised by the alternatives that people might seek.