Netherlands’ Mark Rutte Wins Reelection in Close Race

The liberal party leader beats his Labor opponent in an extremely right race.

Dutch prime minister Mark Rutte became the first incumbent European leader to win reelection since the continent’s sovereign debt crisis began nearly three years ago.

In the early hours of Thursday morning, Rutte’s liberals had pulled ahead of the opposition Labor Party, picking up ten seats in the new parliament to win 41 compared to 39 for the social democrats. Neither party was expected to cling an absolute majority in the 150 seat legislature.

Dutch voters headed for the polls on Wednesday for the fifth parliamentary election in a decade. As two years ago, Labor and the liberals vied for a plurality in parliament as well as the prime ministership. Despite a fierce, two week election campaign and vast differences in economic and health-care policy between the two parties — Labor seeks room for stimulus and wants to end competition between hospitals and private health insurers — it is unlikely that they won’t end up in coalition. There is neither a left nor right-wing majority.

Labor leader Diederik Samsom, a former Greenpeace activist, rallied against the “rotten right-wing policy” of Rutte’s government and proposed to raise taxes and increase public spending in an attempt to stimulate economic growth. He chided the premier for allowing unemployment to rise by 1 percentage point during his term.

Rutte retorted this week that Labor posed a “danger” to Dutch prosperity and security because under its plans, the economy would contract 2.3 percent over the next five years while annual defense and police spending is cut by more than €1 billion. His fiscally conservative liberal party campaigned on extending the policies of the last two years, including deficit reduction, investments in infrastructure and tax relief.

The Dutch economy shrank 3.7 percent in 2009 and has seen sluggish recovery since, burdened by a high level of household debt and dependence on exports to other European countries that have been more directly exposed to the continent’s spiraling debt crisis. Modest growth is expected in 2013.

According to the Netherlands’ Bureau for Economic Policy Analysis, a government think tank that studied the effects of the platforms of the main political parties, unemployment would further rise in the short term under the liberals’ spending plan but their proposed regulatory and tax reforms should enable up to 250,000 jobs to be created over the next three decades. Labor, by contrast, would push 76,000 more people out of work during the same period.

The Christian Democrats and liberal Democrats, who polled at thirteen and twelve seats respectively, favor a centrist coalition. The support of either party is needed for Labor and the liberals to win a majority in the upper chamber of parliament which was elected last June.

Rutte and Samsom are hesitant. If they form a government, right-wing and Euroskeptic voters could defect to the nationalist Freedom Party which advocates withdrawal from the European Union while leftist Labor Party supporters may turn to the far-left Socialists who polled at thirty seats just two weeks ago.

Freedom Party leader Geert Wilders tried to frame the election as a referendum on the European Union. Despite heightened Euroskepticism and mounting opposition to the bailing out of weaker states in the periphery of the eurozone, the Labor and liberal parties want the Netherlands to remain part of the currency union. Samsom did condemn Prime Minister Rutte for refusing in an election debate to vow to “do the utmost” to keep Greece in the euro. He is willing to give the Greeks more time to comply with the terms of their latest, €130 bailout. Rutte agrees with Finland and Germany that there can be no further financial aid for the debt stricken Balkan nation. He warned that, if elected, Samsom would sever the Netherlands’ traditional alliance with Germany in favor of an “axis” with Paris where Socialist Party president François Hollande is ideologically closer to Labor.

Elections were called after the Freedom Party withdrew its support from Rutte’s minority government in April. Budget talks between the ruling parties collapsed when Wilders rejected an austerity package that was necessary for the Netherlands to respect the 3 percent deficit limit enshrined in European fiscal treaty. Rutte’s liberals and his Christian Democrat coalition partners instead gathered a centrist majority to enact a budget. Labor and the Socialists joined the Freedom Party in opposition to it.