🔒 The broader consequences of the upcoming Dutch election – Lionel Laurent

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As Dutch voters head to the polls, ASML Holding NV faces challenges amid domestic discontent. Prime Minister Mark Rutte’s 13-year tenure ends, reflecting frustration over soaring housing costs, decarbonisation expenses, and calls for stricter immigration policies. The fragmented voter landscape includes protest parties, signalling a shift from globalist to nationalist sentiments. While financial abundance hasn’t ensured political stability, a right-of-centre political landscape may emerge. The outcome could impact not only the Netherlands but also influence wider European trends, shaping geopolitical and economic policies in the region.

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Where Dutch Voters Go, Other Countries Will Follow: Lionel Laurent

By Lionel Laurent

All is not well in the land of ASML Holding NV, Europe’s most valuable tech firm. Dutch snap parliamentary elections on Wednesday will mark the end of Prime Minister Mark Rutte’s 13-year tenure, and an increasingly fragmented voter landscape reflects domestic frustration at odds with the image of one of Europe’s richest, most globalization-happy countries. And where Dutch voters go, other countries will likely follow.

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The cost of living in the Netherlands will be top of mind when voters cast their ballot for the 150-seat “Tweede kamer,” after house prices rose 65% in five years and fueled anger over an affordability crisis. Then there’s the cost of decarbonization in a country sitting atop one of the world’s biggest gas fields and where farmers have staged protests over pollution curbs. And there’s a desire for tougher immigration policy, with Rutte’s successor as liberal candidate Dilan YeƟilgöz-Zegerius — herself a former refugee — saying the tolerant Dutch have become too tolerant. It’s not just asylum seekers: The Dutch parliament recently voted to end juicy tax breaks for expat workers, despite protestations from firms including ASML and Adyen NV.

After a good decade for the globalist Anywheres — with Brexit driving jobs and money to continental hubs like Amsterdam — the country’s Somewheres are now cracking their knuckles: Protest parties, from Geert Wilders’ eurosceptic PVV to the farmers’ party BBB, have the potential to grab 40% of votes from the last coalition government, according to one pollster that sees Wilders’ party running neck-and-neck with Rutte’s.

Financial abundance hasn’t paved the way for stable politics, ING economist Marieke Blom tells me, with the inflation shock exposing gaps between economic winners and losers. Government spending has stepped up, but some bold measures, like free childcare, have been postponed until 2027. You only have to look at this week’s victory of libertarian presidential candidate Javier Milei in Argentina, admittedly a far more extreme case with triple-digit inflation and a history of debt default, to see how economic frustrations can drive political upsets.

Read more: Top SA banker urges voters to oust ineffectual politicians in 2024 elections

Still, the twist might be that the center holds — just about — as moderates compete by tacking right. Polls have in recent months showed a consistent coalescing of votes around three candidates other than Wilders: A left alliance under former European Commission Vice President Frans Timmermans, Rutte’s liberals under YeƟilgöz-Zegerius and a new party created by trusted MP Pieter Omtzigt, who made his name campaigning to clean up politics and who combines a left-wing stance on social issues with tough anti-migrant policies. The BBB, at one point polling at 20%, has slumped as Omtzigt has risen. It’s a tight race “dominated by the right,” says the University of Leiden’s Simon Otjes.

Sure, none of these three candidates is polling above 20%, making some kind of compromise and coalition necessary, and raising the risk it includes a party like PVV. But rather than a far-right “wave,” it seems a right-of-center political petri dish would better reflect European voters’ current state of mind — and not just in the Netherlands. The mix of domestic concerns and weak economic growth is shifting Germany and France rightward, too, as are security concerns in the aftermath of Hamas’s Oct. 7 attacks in Israel. YeƟilgöz-Zegerius has taken a tough law-and-order line and left the door open to a possible coalition with PVV.

The volatile and competitive Dutch political system often foreshadows wider political trends — this is a country that was grappling with euroskeptics long before the Brits voted to leave the EU. The Dutch are early bird “hipsters of European neurosis,” as the Economist put it in 2016.

Amid all this uncertainty and instability, there could be an opportunity for a more assertive geo-economic policy that tries to break Europe out of its low-growth, low-investment, export-focused traps. The frontrunner Dutch candidates support more defense spending and a more geopolitical Europe. A Netherlands that wields its tech and industrial policy strategically could be good for the rest of the continent if it spreads innovation: ASML is more key to the region’s industrial future than that other four-letter giant LVMH (no offense, Mr. Arnault). Binding the Amsterdam capital market closer to Paris and Frankfurt’s would be a good move, too, given funding challenges ahead as interest rates stay high.

But there is also a risk of the kind of zero-sum thinking that brings contradictions. If education and labor supply are a key future battleground, it isn’t reassuring to see centrist Omtzigt sweep up universities and foreign students in his proposed blunt cap on immigration. 

And maybe the biggest contradiction is with the Dutch tradition that supposed radicals want to keep: frugality and a preference for “less Europe” at a time when rising geopolitical stakes should encourage more of it. Delivering on Omtzigt’s calls for more sovereignty against American and Chinese economic patriotism, and for more European cooperation on migration, are hard to square with his push for a thriftier EU. “A traditional Dutch European policy dominated by budgetary concerns and competence restrictiveness would be missing a great opportunity and an urgent call,” writes Herman Quarles van Ufford, of think tank ECFR. He has a point.

The biggest election test of the EU’s future remains a year away, when the US election could bring back an energized Donald Trump. But until then, it’s the Dutch temperament that’s worth following.

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