Austerity Proves Popular Among European Voters

June 10, 2010 5:45 AM

Today we have the result of the first national election in the European Union—not surprisingly fought principally on economic issues—since the Greek debt crisis broke out. The Dutch results indicate that the European "austerity drive" has public support, and that the fears among financial market participants over rising public hostility toward austerity and a possible swing toward populist parties appear to have been overstated.

A quick look at the platforms of the largest parties in the new parliament, some of which any governing coalition must include, reveals how any possible new Dutch government will implement far-reaching economic austerity measures.

The biggest party, by a narrow margin, is the center-right People's Party for Freedom and Democracy (VVD, rising from 22 to 31 seats in parliament), which campaigned on a platform of fiscal austerity (€20 billion or 3 percent of GDP in spending cuts) and balancing the budget by 2015 (which is similar to what is called for in the German Constitutional Clause).1

Its leader—Mark Rutte—is, as the first appointed royal "informateur" tasked by the Dutch Queen with cobbling together a governing coalition, consequently the likeliest new prime minister. Still, his coalition negotiations will be long and hard, signaling that it won't be easy for the VVD to get all its austerity proposals through parliament.

The VVD is also, for Dutch center-right parties, relatively Euroskeptic—against further rapid EU integration and in favor of cutting the Dutch contribution to the EU budget. In that sense it is not too far from the sensible pro-EU parts of the UK Conservative Party—like, say, Ken Clarke. This suggests future Dutch resistance to another quantum leap toward more EU integration, which would be a departure from historical precedent for this founding member of the European Union.

The second largest party is the main center-left Labor Party (PvdA), which saw a small decline in parliamentary seats from 33 to 30. Labor's campaign platform called for somewhat less austerity, but still about €10 billion (1.5 percent of GDP) in such measures. These were proposed to be in the form of spending cuts and a phaseout of, for instance, the home mortgage interest rate deduction. The PvdA campaigned on a promise to reduce the current deficit (6.6 percent of GDP) to 1.8 percent by 2015. Thus the direction of Dutch fiscal policy is clear, irrespective of the ultimate makeup of the governing coalition.

Much will undoubtedly be written about the rise of Geert Wilders's Freedom Party (FP) from 9 to 24 seats, making it the third largest party. This party has been described simplistically as a rabidly anti-immigrant, right-wing populist group—precisely the kind that many (especially American) commentators trapped in their 1930s historical analogies might fear could emerge from an economic crisis in Europe.

That perception oversimplifies what Geert Wilders's represents, however. The FP's policies in many ways are similar to those of the Danish People's Party, for example—a politically shrewd amalgam of right-wing, anti-immigration rhetoric and far-left social policies. With the demise of the old left-wing Social Democratic Parties across Europe, the FP is more than a populist gadfly. It reflects a political force likely to remain, quite possibly capturing about 15 percent of the votes in European proportional representation elections.

Note that parties like Lega Nord in Italy, Front National in France, and the Austrian Freedom Party after Jörg Haider are less politically sophisticated versions (with leaders of basically poorer quality) of the same forces seen in broader political European movements.

However, the FP is not against all immigration to the Netherlands. Instead it explicitly and vocally opposes further low-skilled, Muslim immigration, while favoring gay rights and intra-EU migration (Geert Wilders is married to a Hungarian). Accordingly, it is not an explicitly anti-EU party, even if it too favors a reduction in Dutch contributions to the European Union. It has a strong position on many "value parameters" important for many Dutch voters irrespective of the economic situation.

At the same time, the FP favors protecting social policies for the elderly and the unemployed and thus opposed the VVD election campaign proposal to cut back the duration of Dutch unemployment benefits from three years to one year. It also opposed the proposal to raise the Dutch retirement age from 65 to 67. Since the election, however, Wilders has announced that he might be willing to accept an increase in the retirement age as the price of becoming part of a VVD-led coalition government. The FP, it appears, will accept a measure of fiscal austerity as the "price of power" to be part of the government.

While FP's leader Geert Wilders is clearly the dominant person within the party, it would be a mistake to dismiss the rise of the FP as based on a "single charismatic leader." Recall that the FP emerged rapidly as the heir to the similar party of the slain Pim Fortuyn, which crumbled after his murder in 2002 by an activist who claimed to be protecting Muslims from persecution. Geert Wilders didn't create the underlying political forces first captured in the Netherlands by Pim Fortuyn. He has merely taken the reins for a while.

The FP is therefore not first and foremost a protest party. Rather it reflects a political movement in many EU countries arising from the retreat of the traditional social democratic parties away from unsustainable social expenditures, like early retirement programs, high and perpetual unemployment benefits and divisive policies like tolerance of the increase in non-EU immigration in recent decades. What we are seeing is that, when presented by intelligent and charismatic leaders, a powerful and clever package of right-wing, anti-immigration stances and left-wing social policies can win support in the lower income, native blue-collar segment across EU countries.

The important message from these Dutch elections is therefore not that right-wing extremism is on the rise, but that austerity is a winning electoral platform in Europe—now that voters have witnessed the costs of unsustainable policies in Greece.

Note

1. See Dutch election results here, here, and here.

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Jacob Funk Kirkegaard Senior Research Staff

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