Daily Management Review

Why Geert Wilders is a danger to Europe


03/15/2017


Today the Netherlands is having parliamentary elections, the result of which can affect politics and economy of the whole of Europe. One of the leaders of the pre-election polls is Partij voor de Vrijheid (PVV) of the scandalous right-wing politician Geert Wilders. According to preliminary estimates, PVV can get about 27% of the vote in the elections. To seize the majority, Wilders will need to form a coalition with other parties (presumably, three), yet so far the probability of this is not high.



Peter van der Sluijs
Peter van der Sluijs
However, popularity of the Freedom Party raises fears of analysts, both from political and economical points of view.

"If they get an unexpectedly large percentage of votes, this could give rise to a populist tsunami in Europe, the first victim of which will be France," says economist Leon Cornelissen.

Therefore, results of the elections in the Netherlands are now considered extremely important for determining the Pan-European trend.

Trade union of Netherlands says that dock workers in the port of Rotterdam will vote for Gert Wilders and his immigration restriction not because they are racists, but because they are afraid for their jobs threatened by robots and migrants. Besides, there are many supporters of Brexit: "Maybe we should do the same as the British did, because globalization is harmful."

Finance Minister Jeroen Dijsselbloem admits that, despite positive predictions, "many of our voters have really experienced hard times." A survey conducted by Ipsos in May 2016 showed that 46% of the population of the country, which had once been ecstatic about the EU, favor a referendum on withdrawal from the union.

Nevertheless, Dutch ports, such as Rotterdam, may suffer the most due to rejection of globalization. Over the past 20 years, volume of profitable re-export (for example, getting computers manufactured in China and sending them to Germany) has quadrupled.

Therefore, withdrawal of Britain from the European Union and protectionist policy of the United States under leadership of Donald Trump threaten the Netherlands more than other countries. The European Commission's report on the country's prospects says that risks associated with Brexit are the "Achilles heel" of the Netherlands, although overall condition of the country is assessed positively. Rating agencies have placed the Netherlands (along with Belgium, Ireland and Malta) in a high-risk group in connection with results of the referendum in the UK. At a conventionally net cost, Great Britain is the second largest export market in the Netherlands after Germany.

About 80% of flowers and 70% of plants imported by Great Britain come from the Netherlands. Manufacturers of this product will suffer particularly badly if, as a result of negotiations between the UK and EU countries, trade barriers are introduced.

Representatives of other Dutch enterprises voiced similar concerns at a parliamentary hearing last month. The fishing lobby emphasized that the industry needs access to British waters: 60% of Dutch fish are caught there.

Export of agricultural products and food to the UK last year was € 8.9 billion ($ 9.8 billion). According to farmers, they already suffer from a weakening pound sterling, which makes their products 20% more expensive. They fear that the EU's agricultural policy will become more subsidized when Britain withdraws from the EU.

According to the Netherlands Bureau for Economic Policy Analysis (CPB), hard Brexit, according to which trade with the UK will be governed only by WTO rules, could cost the Dutch economy 1.2-2% of GDP by 2030.

Britain is not the only problem. Exports to the US, and, therefore threat of US tariffs, are also disproportionately important for the Dutch as 3.4% of GDP 300 thousand jobs in the country depend on this.

Historically, economic well-being of the Netherlands was ensured by free trade with overseas countries. In many respects Holland remains the most open economy in the world, and exports of goods and services account for a third of Dutch GDP.

In general, the Dutch economy is fairly stable now. GDP growth in 2016 numbered 2.1% - this figure is higher than that of many EU members, including Germany (1.9%). Unemployment fell to 5.3%, and now share of the working population is even higher than before the crisis of 2007-2008.

In addition, the Netherlands is one of the three European countries (along with Germany and Luxembourg), which have the highest credit ratings of all three leading rating agencies (Fitch, Moody's and Standard & Poor's). Recovery of the housing market and growth of wages consequently increased household expenditures. Public finances are also reliable: the budget is likely to be balanced this year, and public debt may fall below 60% of GDP.

Chief Economist at ING Marieke Blom considers this state of affairs possible precisely due to tough government reforms held in the last few years, especially raising the retirement age to 67 (from 2021) and reforming financing of the health care system. However, the years of reform, recession and forced asceticism of the population led to a surge in popularity of protest parties, such as socialists and PVV, the Economist said.

"Populists divide the society into opposing groups: thoroughly corrupt elite, and "faultless" people with a supposedly unanimous opinion. Trump uses both clichés. In this case, often pre-election promises are given without regard for medium-term consequences and possible losses", Der Spiegel writes.

source: spiegel.de, independent.co.uk, economist.com






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