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Dutch Houdini will lose ground in poll

Dutch Houdini will lose ground in poll

Splintered politics and populism make for complex puzzle

by Roel Janssen in The Hague

Fri 3 Feb 2017

For Dutch Prime Minister Mark Rutte, a versatile political campaigner, the result of the forthcoming general elections, scheduled for 15 March, is far from a foregone conclusion. The outcome in the Netherlands will serve as 2017's first measure of the strength of populism and nationalism in Europe.

Conditions are ostensibly favourable for the incumbent. Rutte's government, a coalition of his People’s Party for Freedom and Democracy (VVD) and the Labour party (PvdA), is the first since 1998 that will complete its entire parliamentary term. The coalition has concluded a series of structural reforms, including in labour and housing markets, pensions and healthcare.

However, this activity has won little favour with voters. According to polls, both governing parties will lose significant ground at the election. The PvdA is expected to be hit especially hard.

The Dutch are used to lengthy post-election negotiations on forming a coalition government. This time there is a particular obstacle: Geert Wilders' anti-European, anti-immigration, and anti-establishment Party for Freedom (PVV). Brexit and Donald Trump have given a boost to the PVV, just as has happened for populist parties in other EU countries. Wilders, who was found guilty in a hate-speech trial for inciting discrimination against Dutch Moroccans, might attract up to a quarter of the votes, turning the PVV into the largest grouping in parliament.

Yet the government has put on an impressive performance in managing the economy. The budget has been rebalanced by a combination of tax hikes and cuts on public spending. From 2010, accumulated adjustments in government spending and higher taxes of about €50bn have been enacted, amounting to almost 10% of GDP. The budget deficit, having reached 5.5% after the global financial crisis, is likely to reach a surplus in 2017. Government debt as a percentage of GDP, 68% in 2014, is expected to fall below the European threshold of 60%, as directed by the European stability and growth pact. Unemployment is at 5% and falling. After a double-dip recession in the wake of the financial crisis, the economy is growing at a brisk pace of 2% annually, and GDP per capita has recovered to above pre-crisis levels.

Rutte, who has been nicknamed a 'political Houdini', has accomplished some remarkable political feats. Last year, when the Netherlands held the rotating presidency of the European Union, he and German Chancellor Angela Merkel masterminded a deal with Turkey to stem the flow of Syrian refugees into the EU. He also dismantled the political imbroglio after a popular referendum in which the Dutch rejected the European association treaty with Ukraine. With legally binding guarantees that Rutte extracted from its EU partners in Brussels, it is expected that the Netherlands will sign the treaty after all.

For the opponents of the Ukraine treaty, this is a proof that Rutte does not 'listen to the people'. Three new political parties emerged from the No campaign in that referendum and will participate in the elections. Though their chances are small, they are sure to attract high media attention and can become a nuisance for Rutte.

A record 31 parties will appear on the ballot this year. Many newcomers are single-issue or one-person initiatives and have no chance whatsoever. But they underline the splintering of the political landscape and steady erosion of the support for established parties. It will certainly make the formation of a new government a complicated puzzle.

All major parties, including Rutte’s VVD, have excluded the possibility of entering into a coalition with the PVV. It is all but certain that Wilders, even if he wins the popular vote, will not be part of the next government.

Regardless, a Wilders success story will strengthen the prospects of the right-wing National Front in France, Italy's Five Star Movement and Alternative for Germany.

Roel Janssen is a Member of the OMFIF Advisory Board and an author of books on economic and financial affairs. He covered economics and finance for NRC Handelsblad, a Dutch daily newspaper, for more than 30 years.

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