Dutch Government Faces Crucial Test In Regional Vote
01 März 2011 - 3:55PM
Dow Jones News
The Dutch government may have a harder time pushing through
EUR18 billion in budget cuts and tougher immigration laws if it
fails to take control of the Senate after Wednesday's regional
elections.
Voters will elect 566 provincial deputies, who in turn are
charged with choosing the Senate, an institution that can make or
break laws. Because the center-right government doesn't have a
majority in the 75-seat chamber, the outcome of the elections is
seen as crucial. Prime Minister Mark Rutte has said that if the
government fails to take control, as the latest polls suggest, he
will have more trouble pushing through his reform agenda.
"It will become more difficult. If we have a minority, some
plans will be watered down, which will prevent us from bringing
back the current budget deficit," Rutte said in a recent interview
with the daily newspaper De Telegraaf.
The government needs to cut spending by EUR18 billion up to 2015
to rein in the budget deficit, which ballooned during the financial
crisis and the subsequent economic downturn, and stood at 5.2% of
gross domestic product in 2010. However, the austerity package,
which includes cuts in social security and civil services, and an
increase in the retirement age, is less severe than belt-tightening
programs in other parts of Europe.
Many economists see the Netherlands as one of the bright spots
in fiscally troubled Europe. The country boasts the lowest
unemployment in the European Union and its budget deficit will come
in well below the EU limit of 3% of GDP in 2012, according to
recent estimates of the CPB, the government's economic and policy
adviser.
Failure to win a Senate majority could also further complicate
Dutch politics, already tangled after national elections in June
2010 produced no outright winner.
Rutte's Liberal Party managed to squeeze out an agreement with
the Christian Democrats to form the Netherlands' first minority
government since World War II. The coalition, established after
months of difficult talks, relies on the backing of the populist
and anti-Islam politician Geert Wilders, whose Freedom Party
provides parliamentary support, but holds no cabinet posts.
To secure Wilders' support, Rutte had to sacrifice his election
promise to overhaul social security and the labor market. In
another nod to Wilders, Rutte is planning tougher immigration
measures, such as a ban on wearing burqas and plans to evict
immigrants convicted of serious felonies.
"Apparently, this is the price [the government] has to pay for
the Freedom Party's support," Wim Kok, a former prime minister for
the Labor Party, said in an interview with daily Het Financieele
Dagblad Monday.
Rutte's government hasn't faced many setbacks, despite an
ongoing trial in which Wilders is defending himself against
hate-speech charges. Failure to take control of the Senate would be
the first blow to Rutte, whose popularity has surged since he took
office.
Rutte, a 44-year-old former human resources manager at Unilever
PLC (UNVR.LN), will have to use his negotiating skills and search
for deals with the opposition if his government loses Wednesday's
elections. "The government will have to water down its plans and
make compromises," said Ruud Koole, a political science professor
at the University of Leiden. "For every piece of legislation, [it]
will need to find a majority."
Whether government stability would be at stake is hard to
predict, analysts say. It would depend on the cabinet's negotiating
skills, said Rinus van Schendelen, professor in political science
at Erasmus University Rotterdam. But he suggested Rutte would not
want to compromise his agreement with Wilders as the Freedom Party
may then decide to withdraw its support.
Elections of this type normally don't cause much excitement in
the Netherlands--turnout is expected to be below 50%--but the
results will be closely monitored this time.
-By Maarten van Tartwijk and Robin van Daalen; Dow Jones
Newswires; +31 20 571 5201; maarten.vantartwijk@dowjones.com
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