On Wednesday, September 12, the Dutch electorate will decide what sort of state they want. But their choice will redound on more than just The Netherlands and its own sovereign problems; the results will signify something bigger for the euro
In April, Geert Wilders brashly broke away
from austerity talks between his far-right and anti-Islamic (now anti-Brussels) Party for Freedom and the minority coalition, prompting the demoralized cabinet to resign and Queen Beatrix to call
for new elections.
Wednesday’s elections will almost certainly act as a measure of the euro’s vitality and a calculus of the people’s political will in a country relatively untroubled compared to, for instance, Greece and Spain.
Indeed, critical issues in The Netherlands include bailouts for other countries in crisis and austerity measures taken to reach the 3%-of-GDP deficit target demanded by the EU commission, such as pension cuts and a rise in the retirement age. So let’s take a look at the competing parties and what their presence on the ruling end of parliament might mean for the euro.
People’s Party for Freedom and Democracy
Labor’s (or PVDA) Diederik Samson has debated his way to a tie for leader in the polls with his opponent, the incumbent Prime Minister, Mark Rutte of the center-right People’s Party for Freedom and Democracy (or VVD). The rhetorically gifted leftist supports allotting Greece more time to meet its deficit requirements and wants to (even if he’s not anti-euro) lessen Dutch attention to spending cuts, favoring social welfare and surplus as solutions. Samson wants to balance the budget by 2017.
According to Netherlands expert Ernst Labruyere
, “some of the most successful cabinets of the last 40 years had a PVDA PM” — the question is, of course, whether Labor’s left-social-democrat bravado is right for the euro. Rutte insists that it isn’t. The upshot, naturally, is that they’ll end up cooperating in a coalition.
Mark Rutte is the incumbent Prime Minister, endorsed here
by Great Britain's Prime Minister David Cameron; unsurprisingly, the two share an approach to the economic recession/crisis/black hole. Rutte has such bête noires
as bailout money for Greece and health care spending, so he stands in good stead with Angela Merkel’s hawkish Germany.
Like Samson, he believes the budget can be balanced by 2013, but insists that 2013’s deficit can be brought below 3%, an idea which his lefty enemies reject. The Dutch people see him as an uncompromising leader without the ingenuity of his rival — he’s viewed as more of a double-talking smoothie, a strident wonk.
The hard-left socialists have at their helm the outspoken Emile Roemer, who, like Samson, considers austerity a nostrum for a problem that was caused by a deficit in government spending. So Roemer would hope to stimulate the economy, all while cutting Greece off from bond-buying programs, the European Stability Mechanism (to be ratified tomorrow by the German constitutional court), and other forms of bailout. It’s interesting that he shares this position with both the Liberal VVD Party and the far-right Freedom Party. Like other candidates — after all, how economically heterodox can a party politician be? — Roemer wants to balance the budget within two years. He also plans to scotch bank bonuses and hike up the banking tax.
Perhaps riding the coattails of Greece’s far-left Syriza
, Roemer was the election’s frontrunner according to polls. But since the debates, in which Roemer’s position came across as paper thin, he’s been in freefall. Now he’s in third place.
This splenetic right-wing faction, headed by Geert Wilders (who looks dangerously like David Lynch
), was responsible for the collapse of Rutte’s minority coalition in April. Wilders, who's polling in fourth place, balked at cuts to pensions and health care and effectively ruined the alliance by walking out on it. He’s recently muted his anti-Islamic rhetoric and replaced it with a call for a breakaway from the eurozone. He also, according to Labruyere, shares the Keynesian approach of Roemer’s socialist party.
Wilders has seen a falloff in support since the debates, when he erroneously claimed that every Dutch family pays €14,000 in a de facto
tax to the European Union. In reality, the figure is around half of that (and then there’s the question of why
the EU exacts this money).
Wednesday’s election will be a test and a kind of experiment for both the citizens of The Netherlands and the euro at large — not a pass-or-fail exam, but a grade that will only be given long after the test has been taken, when and if we understand what is happening to the euro.
There’s a reason for the attention lavished on these elections: The Netherlands have the representative democratic problems of a beleaguered European nation with very little economic uncertainty, or at least without the small margin of certainty afforded by Greece, Spain, Ireland, et al.
Its budget cuts constitute housekeeping and preventative measures against a miraculously inoffensive property bubble
, which seems to have wounded most democratic domestic economies. Yet the country has what’s often seen as a far-right and far-left polarity that paradoxically makes of one the mirror image of the other, and which is written in red ink across the long, brutal history of economic downturn. So here we go. Deep breaths.
No positions in stocks mentioned.