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The Dutch dam against populism

By: Krzysztof Głowacki, Economist, CASE

The Dutch parliamentary elections were widely perceived as a litmus test for the populist sentiment in Europe ahead of similar ballots in France and Germany later this year. If this perception is correct, the anti-establishment trend may just have reversed itself.

In the election on March 15, the ruling conservative-liberal People’s Party for Freedom and Democracy, VVD, won (21%) ahead of Geert Wilders’s populist Party for Freedom, PVV (13%). As many as eleven other parties also made it into parliament, including Christian democrats, social liberals, socialists, and the greens. The elections had a turnout rate of 81%, an impressive result even for the Netherlands, where civic engagement is traditionally high.

Media in the Netherlands and in Europe stress the symbolism of the victory of the incumbent Prime Minister Mark Rutte over PVV’s populist Geert Wilders, who had long led in the polls. In anticipation of the election, Rutte was able to skillfully handle popular concerns without falling into the populist trap. For example, he reaffirmed his commitment to advocating “Dutch values” in an open letter published in the country’s major newspapers, and resolutely managed the recent diplomatic conflict with Turkey. While Rutte faced charges of lapsing into populism himself, his rhetorical concessions were matched by an emphasis on the party’s traditional conservative liberal agenda. Nowhere was this more visible than in the successful defense of the ratification of the EU Association Agreement with Ukraine, which required much political maneuvering as well as some compromises in the wording of the document.

A former Unilever employee, Rutte has served as the nation’s Prime Minister for two consecutive terms since 2010. Both cabinets were committed to pulling the country from crisis (which caused GDP shrinkage of 3.8% in 2009, 1.1% in 2012 and 0.2% in 2013) and consolidating public finances in line with EU recommendations. Rutte’s political affiliation, sustained tenure, and self-proclaimed commitment to “gradual improvement” in lieu of a violent change bear semblance to other dynastic rules of the European right-centrists, such as Germany’s Merkel (since 2005) and Poland’s Tusk (from 2007 to 2014). As in their previous terms, VVD will now have to find coalition parties to form a cabinet with, and the list of potential partners does not include PVV. In fact, prior to the election, all the major parties pledged not to form any kind of coalition with PVV because of Wilders’s extremist leanings.

In the coming term, VVD plans to ease tax and social contributions burdens for households, especially middle-income earners, introduce cuts in social security, and bring down the CIT rate for small enterprises from 20% to 17%. These changes are expected to increase employability and encourage consumption, providing a much-needed stimulus to the economy after years of belt-tightening. At the same time, fiscal policy will remain prudent, with cuts in social security (2.7 billion euro) and international cooperation (the same amount) outweighing extra expenditure in defense (1 billion euro) and state security (0.7 billion euro). All in all, VVD’s program appears to be the most sound economically compared to the other parties they defeated, not least of all PVV’s 18-word long dissertation.

As a vast alluvial plain, the Netherlands are always vulnerable to flooding. Over the centuries, the Dutch have developed ways to ensure that their country is not swept away by the tides, and it appears they may have just utilized these techniques politically to resist the populist wave covering much of Europe.

CASE — Center for Social and Economic Research is an independent, non-profit economic and public policy research institution, established in 1991 in Warsaw.

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