September 13, 2012

Dutch PM Wins but Could Be Forced to Form Coalition

Euroskeptics turned back, but Rutte’s hard line may have to soften

Dutch Prime Minister Mark Rutte’s Liberal Party emerged triumphant from the Netherlands’ election on Wednesday, defeating far-right euroskeptic voices, but he may be faced with the necessity of forming a coalition with the Labour Party, which finished only two seats behind his own.

Reuters reported Thursday that the two parties have drastically different notions of how to run the country, with Rutte’s government having taken a hard line on austerity and Labour’s Diederik Samsom championing growth through fiscal stimulus and more leniency toward Greece.

Rutte is also likely to lose one of his key supporters, Finance Minister Jan Kees de Jager of the Christian Democrats. That party plunged to fifth place in the elections, its worst showing ever.

With the Socialists finishing in third place a considerable distance behind Labour and Geert Wilders’ Populist party, which advocated a departure from the eurozone and the European Union (EU), taking fourth, the election’s decisive outcome was good news for the euro; a battle from a formerly solidly entrenched country in the region would have injected additional turmoil into an already tough situation.

However, with Rutte’s party only two seats ahead, in order to govern, he may have to form an alliance with Samsom’s party. Although Rutte has said he will continue to talk tough, along with eurozone allies Finland and Germany, Samsom has already begun to do so from his own party’s position.

In the report, Samsom was quoted saying, "Nobody knows exactly what will happen tomorrow [Thursday], but one thing is certain. The course can be changed. The course must be changed because the right-wing policies of the past two years cannot continue."

Samsom, a former Greenpeace activist, has already advocated giving Greece additional time to comply with bailout conditions and hinted that he might support a third bailout. He has also advocated implementing cuts at a slower rate so that the Netherlands can better grow its economy, and his party has stumped for a gradual phaseout of an expensive tax credit for homeowners.

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