Dutch liberals defeat Wilders’ party in blow to populists

Bloomberg

Dutch voters turned out in force to back pro-European parties and help Prime Minister Mark Rutte’s Liberals easily beat off an election challenge by the anti-Islam Freedom Party of Geert Wilders, drawing a line in the sand over the spread of populism.
With votes counted in all but one of the country’s 388 municipalities, the Liberal Party had 33 seats in the 150-seat lower house of parliament to 20 seats for the Freedom Party. The Christian Democrats and the centrist D66 party were tied one seat behind Wilders. The result assures Rutte the first shot at forming a government, although with no obvious majority, coalition talks may take months.
The outcome was worse than the majority of opinion polls had suggested for Wilders, representing a rejection of his platform of pulling the Netherlands out of the European Union, abandoning the euro, closing Dutch borders and stopping all immigration by Muslims. It suggests that the nationalist sentiment that prompted the U.K.’s Brexit vote and won Donald Trump the White House will struggle to secure as big a foothold in Europe’s core.
“Dutch voters rejected populism and voted for Europe,” said Jacob Funk Kirkegaard, a senior fellow with the Peterson Institute for International Economics in Washington. “It seems like Rutte’s appeal for a ‘centrist fightback against Trump and Brexit’ was heard.”
The euro climbed to the highest level in more than a month on the result before paring its gains on Thursday. The Dutch benchmark AEX Index rose as much as 0.9% to 516.11 at the opening in Amsterdam and was 0.6 percent higher at 1:58 p.m.

France Next
With key elections in France in April and May, then in Germany in September, Wednesday’s vote in one of the EU’s founding members was in the international spotlight like never before. Faced with the prospect of a major shift in the direction of their country, Dutch voters responded by flocking to polling stations: Turnout in Rotterdam, the second-biggest city, was the highest in more than 30 years, while balloting stations in the seat of government, The Hague, and elsewhere were kept open later to allow queues of people to vote.
“What a celebration it was for democracy today,” Rutte told supporters in The Hague. “After Brexit, after the US elections, the Netherlands said stop to the wrong sort of populism.”
Congratulations for Rutte flowed in from around Europe. German Chancellor Angela Merkel was among those to call the prime minister.
Jean-Claude Juncker’s spokesman said the European Commission president spoke with Rutte to congratulate him on “a vote for Europe, a vote against extremists.” Luxembourg Prime Minister Xavier Bettel also tweeted his support, saying that “populism didn’t pay off.”

Labor Collapse
Dutch voters still punished Rutte’s coalition of Liberals and the Labor Party. The Liberal result is a drop of eight seats from the last election in 2012, while Labor was the night’s biggest loser, putting in doubt the future of Finance Minister and Eurogroup chief Jeroen Dijsselbloem.
Labor’s collapse, to nine seats from 38, is the worst rout in Dutch electoral history, according to Kees Aarts, professor of political institutions and behavior at the University of Groningen.
With thirteen parties in the new parliament, none of them with more than 21 percent of the vote, “the main message is that the fragmentation is unprecedented,” Aarts said by phone.
The core of a possible coalition appears clear. Rutte could team up with the Christian Democrats and D66 for an alliance with 71 seats, five short of a majority. Exactly how he’d ensure he has enough votes to pass legislation is likely to be the subject of months of
negotiations. Rutte said it may be “complicated.”

Turkey Dispute
The Freedom Party gained five seats on 2012. Wilders was a vocal supporter of the new U.S. president, but with support slipping in recent weeks, the bumpy first weeks of the Trump administration may have eroded his early lead. Polls on the eve of the election suggested a dispute with Turkey that Rutte was deemed to have handled well accelerated the trend.
“Rutte isn’t rid of me yet, not by a long way,” Wilders, who will probably lead the opposition, tweeted. He later told reporters that the Freedom Party was “among the winners,” adding: “The patriotic spring will continue.”
In January, Wilders appeared at a congress in the German city of Koblenz of fellow far-right leaders Marine Le Pen of France and Frauke Petry of the Alternative for Germany party. His electoral performance doesn’t necessarily predict how voters will respond in either of those countries — most notably in France, where polls suggest Le Pen may place first in the first round of voting next month.
Emmanuel Macron, the centrist frontrunner who is forecast to beat Le Pen in May’s presidential-election runoff, said on Twitter that the Netherlands shows “the breakthrough of the extreme right is not inevitable and that European progressives are growing in power.”
For investors, the likelihood of a euro-zone breakup has retreated, but any relief rally “could prove to be short-lived,” according to Kim Liu, strategist at ABN Amro Group NV.
The outcome in the Netherlands “will calm everybody down a bit,” said Kirkegaard. “But the French election is the big one.”