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March 18, 2021

Europe

NETHERLANDS: No alternative to Rutte’s course

BY Carsten Nickel

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As widely expected, PM Mark Rutte has won the 17 March Dutch elections, gaining a fourth term after a decade in office. Some final district results are still being counted, but it appears that Rutte’s center-right Liberals (VVD) won two additional seats, taking him to 35 members in the 150-seat lower house. One of Rutte’s coalition partners, the left-liberal D66, were the surprise winners, gaining five seats and becoming the second-strongest party. This means that Geert Wilders’ far-right Freedom Party (PVV) fell back to third position, losing three seats. However, internal fragmentation within the broad political camps cannot gloss over the fact that, overall, the far-right side has once more been strengthened: Thierry Baudet’s Forum for Democracy (FvD) vastly outperformed the polls, winning eight seats, while a new FvD breakaway group, JA21, won another four seats.

Seventeen parties will be represented in the new lower house. This fragmentation means that government formation might again take some time. As previously discussed, the big question now will be whether the current mostly center-right coalition continues. Based on the numbers, the combination of Rutte’s VVD, D66, the Christian Democrats (CDA) and the Christian Union (CU) would comfortably surpass the required threshold of 76 seats. But the gains for D66 as well as the four seats lost by CDA could pose political challenges: the rise of the left-liberals could lead to policy demands that might further increase the pressure on an already weakened CDA. This situation might render the inclusion of center-left parties such as Labor (PvdA) a potential alternative, after the party remained constant at nine seats.

Among the biggest losers were the Socialists falling back to nine (-5) seats and GreenLeft, obtaining seven (-7) seats. Together with gains for D66 and the new pro-European Volt party winning three seats, this picture suggests transfers largely within two broad, but internally fragmented political camps. Internally, the center-left camp seems to be becoming ever more liberal, while the center-right side remains under continuous pressure from the far-right. Firmly at the center of these two overall camps sits Rutte’s VVD with its specific center-right brand of liberalism – regardless of public complaints about his allegedly uninspired and overly managerial approach to politics over the last decade.

It follows that major shifts in areas of interest to investors – for instance, the Dutch stance on fiscal policy in Europe – should probably not be expected, despite the great attention paid publicly to headline stories about the rise of D66 and the emergence of Volt. Instead, yesterday’s result confirms that only a firmly center-right version of liberalism marks the true center ground of Dutch politics; a more socially liberal variant is becoming more popular only within one of the two political camps, not in the country as a whole. Overall, far-right, anti-immigrant and Euroskeptic views continue to have considerable appeal with some parts of the electorate.

Against this backdrop, as PM and leader of the largest party, Rutte will likely see himself in no position to significantly alter his course. The exact composition of the next government coalition could make a difference in nuances. But when Europe emerges from the pandemic, expect the Netherlands to remain an advocate for national sovereignty, limited burden sharing, and a quick return to sound fiscal policies.

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