Going Dutch

The much-maligned and long-drawn-out project to save the euro faced two crucial tests on Wednesday. The first bit of good news for those who do not want to see the euro area break up came in the morning, when Germany’s constitutional court gave the green light for the operation of the European Stability Mechanism, the Eurozone’s permanent rescue fund. Then, at night, there was further cause for rejoicing: In parliamentary elections in the Netherlands, it emerged that Dutch voters had returned an unexpectedly clear pro-European verdict, rejecting the far right’s anti-bailout populism and the hard left’s more moderate skepticism of the euro.

With 99 percent of the votes counted on Thursday, Prime Minister Mark Rutte’s center-right Liberals (VVD) were set to win a narrow victory over the center-left Labor Party (PvdA), led by nuclear scientist and former Greenpeace activist Diederik Samsom. The Liberals were polling at 26.6 percent, which translates to 41 seats in the 150-seat parliament, and Labor was close behind at 24.8 percent and 39 seats. Although both sides avoided discussing a possible coalition between them before the election, it now seems like the likeliest outcome, since together they control a majority of the seats in the House of Representatives. Such a coalition could also include the Christian Democrats, who dropped from 21 seats to 13, or the progressive pro-European D66 Party, up from 10 seats to 12. One can only hope, given the crucial period ahead for the Eurozone, that forming the new government will require less than the 127 days it took last time around.

Both mainstream parties, in particular Labor, did considerably better than polls predicted. Against the conventional wisdom that holds that voters in northern Eurozone countries are fed up with bailing out the South, both increased their voting share by nearly 30 percent since the last election, held in June 2010, at the dawn of the euro crisis.

 As Dick Oosting, CEO of the European Council on Foreign Relations, notes: “No one expected them to get an overall majority between them. “Euroskeptics of the left and right seemed to be gaining ground over the past half year. But what happened in the final weeks of the campaign was that—unlike the referendum on the European Constitution in 2005, which was all about domestic politics—this time Europe really was the issue and the parties were forced to address the very real dilemmas that it faces. There was a real debate, instead of fearmongering and misinformation, and common sense began to prevail.”

This is not to say that the path ahead is straightforward. Both parties have voted in favor of Eurozone rescue packages and are committed to structural reforms to increase labor-market flexibility, contain health-care costs, and improve the efficiency of the housing market. But on the crucial issue of whether to maintain the primacy of austerity in economic policy or to go for a short-run stimulus to lift the Netherlands out of its state of near recession, agreement may be harder to reach. “It’s going to be tricky. The VVD and Labor come from the different ends of the spectrum on this,” Oosting says. The extent to which Labor can wean the Liberals away from the failed dogma of “austerity first” will be critical to the success of the coalition.

The biggest loser of the contest is the Freedom Party (PVV) of the iconoclastic xenophobe Geert Wilders. Wilders, who rose to prominence in Dutch politics on the back of aggressive rhetoric against immigrants and Islam, controlled 24 seats in the previous parliament. Although he did not formally take part in the governing coalition, his party’s votes were often necessary for the coalitions bills to pass. When, last April, he decided to walk out of budget negotiations, leading to the collapse of the government, he took a major gamble. He bet that at a time of economic slowdown—the Dutch economy is barely growing this year—voters would rally to his call for an exit from the Eurozone, so that government spending could benefit the hard-working Dutch instead of lazy Greeks and other feckless Southerners. He lost that bet, in quite spectacular fashion: The PVV’s share of the vote dropped from 15.5 percent to 10.1 percent, and he now controls only 15 seats.

Oosting warns, however, that we have not seen the last of Wilders’s venomous brand of politics: “He didn’t come out of nowhere. The mainstream parties had for a very long time left issues of immigration, of ghettoization, untouched. This is what gave him the space to emerge.”

Another party leader who will be disappointed about Wednesday’s results is Emile Roemer, the former schoolteacher who heads the Socialist Party (PS). As recently as mid-August, polls put the PS on track to win the election with more than 20 percent of the vote. Instead, in large part because of strong performances in TV debates by Labor’s Samsom, support ebbed and the Socialists ended up with almost the same percentage of the vote and the same number of seats as in 2010. Roemer has argued against the current European bailout strategy, saying it is too hard on the people and too soft on the banks and that it threatens the viability of the euro. He has called for increased government spending to boost the Dutch as well as the European economy and for a deceleration in the pace of fiscal adjustment for the Netherlands (Rutte’s budget is set to bring it under 3 percent of gross domestic product in 2013). He has also called for the Eurozone rescue funds to be able to borrow directly from the European Central Bank.

As Oosting explains, the PS, which used to be a fringe party with Maoist roots, has risen rapidly in recent years and has had to veer away somewhat from socialist orthodoxy as a result.: “As they reached a sphere where they could likely form part of a government, they had to make compromises and to become more constructive in their criticism.” Even so, it would have been next to impossible for them to get into bed with the VVD had the electoral math beckoned them in that direction.

  

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