Dutch Election Shows Europeans Are Learning the Brexit Lesson

 | Mar 16, 2017 | 8:00 AM EDT
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The Dutch election result did deliver a surprise, just not the one people were fearing (or expecting, depending on which side of the populist divide they were). Geert Wilders' extremist Freedom Party failed to become the strongest in Parliament, despite months of polls showing him in the lead.

Dutch Prime Minister Mark Rutte's Party for Freedom and Democracy (VVD) looks set to stay in power. With 95% of the votes counted, his party won 33 of the 150 parliamentary seats. Still, this is eight seats lower than his 2012 result. Wilders' party outperformed its 2012 result by five seats and grabbed 20.

It is by no means a decisive victory for Rutte's party, which will need to form a coalition with other parties in order to govern. However, there are two things that show the Dutch took the threat of populism seriously enough to mobilize against it. The first is that turnout was very strong, above 80% vs. 74.6% in 2012, for a 30-year high. The second is that strongly pro-European parties gained considerably.

Democrats 66, or D66, won seven seats compared with 2012, getting 19, and the Green Left party grabbed 10 seats, getting a total of 14. It looks like the higher turnout overall benefited the pro-European Union parties after Brexit showed the rest of Europe that absenteeism is no longer an option if people want to preserve the status quo.

The battle against populism is far from won, however. Wilders' party advanced enough to be a force in parliament. This means any coalition that results from what are likely to be protracted negotiations will need to be careful to take into account voters' fears about issues such as immigration and the EU.

"All in all, the Dutch Lower House may have become a bit more pro-European, but definitely more polarized on Europe," Marieke Blom, chief economist for the Netherlands at ING bank, said in a note.

Blom said the biggest question for the Netherlands now would be the type of coalition the country will get;  a rainbow coalition will be more pro-European than a center-right-Christian one, in her opinion.

For the EU, the result of the Dutch election means leaders in other countries can breathe a huge sigh of relief, for now -- and indeed, some of them did. French President Francois Hollande said Rutte won a "clear victory against extremism," while German Chancellor Angela Merkel's chief of staff, Peter Altmaier, tweeted: "The Netherlands, oh the Netherlands you are a champion!"

The Dutch have listened to the call of the Germans, colorfully illustrated in a tweet:

#blijfbijons #StayWithUs #BleibtBeiUns
Love,the Germans pic.twitter.com/82mqpK3AXT

— Sabine (@boecken13) March 13, 2017

Increasingly, the Brexit lesson seems to be that the rest of the EU members need to make the effort to go to the polls if they want to preserve the union. They started to pay attention. Investors should, too.

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