The Dutch Elections mark the starting shot for a new European Union

Maximilian Wirth // 20 March 2017


The European Union can breathe a sigh of relief. Geert Wilders, a right-wing populist who wants to take the Netherlands out of the Union, has fallen far behind the current Prime Minister Mark Rutte in Wednesday’s Dutch elections. However, Europhiles should not celebrate their victory too soon nor pretend that restructuring the EU has been rendered unnecessary. Wilders was never likely to become prime minister in the first place because none of the other large parties wanted to form a government with him. In a country with more than 10 parties represented in parliament, Wilders was de facto already excluded from actual political power.


Nevertheless, Dutch politics has undeniably felt Wilders’s impact. Mark Rutte, the Dutch Prime Minister since 2010, had to change his rhetoric and policy promises over the course of his campaign. The People’s Party for Freedom and Democracy (VVD) had always been somewhat sceptical of the EU based on their free market perspective, but the push to win back voters from Wilders only accelerated this tendency. Even if Nexit (Netherlands-exit) is not in the near future, the consensus for more integration with the EU has diminished.


Further, the Netherlands were never of significant concern for the survival of the EU. Rather, the Dutch elections were an important litmus test for the growth of strong anti-EU forces. The real challenges of the United Kingdom, France, and Germany are still to come. Britain will officially start its exit negotiations by the end of this month, allowing two years for the country to leave the European Union. When the heads of state come together in Rome on 25 March, the 60th anniversary of the Treaty of Rome and the genesis of the Union, Theresa May will probably remain at home.


France may soon follow the UK’s example if Marine Le Pen wins the April presidential election as the far-right candidate; Le Pen’s success could indicate the next major European country to leave the EU. Therefore, the potential for Frexit warrants more concern than the previous potential for Nexit.


Finally, German Chancellor Angela Merkel, is under attack from the right for her immigration policies and her strong support of the Euro as common currency. With her re-election in danger this September, Merkel may be tempted to loosen her backing for the Euro, maybe even for the EU as a whole.


As such, of three significant EU Member States, one has already left, another might soon follow, and the third will at least be less committed to the course than it currently is.


The EU will have to reinvent itself to stop its final breakdown, an inconvenient truth that has also reached top level politicians in Brussels itself. Jean-Claude Juncker, the president of the European Commission, released a White Paper this month, describing five different scenarios for the future of the remaining 27 Member States. These scenarios widely differ, ranging from a significantly integrated EU to an essentially free trade area with minimal political cooperation—the return to nationalism on the one side of the spectrum and a centralized United States of Europe on the other.


However, the White Paper also offers a middle-ground based on a return to federalism and the various options for speeds of integration. To do so, lower-level institutions such as national parliaments would have to reclaim powers currently retained by Brussels. Further, such decentralisation would require the prioritisation of reducing the EU’s overwhelming regulatory body and shifting that authority back to individual Member States.


Given the fact that the richest member state is ten times higher in per capita income than the poorest Member State, this pro-federalism approach seems most sensible. Such vast economic and social differences are conducive to constant tensions between the Member States under a unified regulatory system. Open Europe, a think tank based in Brussels, has estimated that domestic regulations would be more than two times more cost effective than EU laws.


But on other issues, a centralized approach can be valuable. For example, international trade negotiations or scrapping protectionist subsidies could still fall within the competencies of the EU. As an international disaster, the refugee crisis requires cooperation across countries. Thus, a common strategy for border security and transfers to share the unequally distributed burden on the different member states seem appropriate. However, the general unification of policies with the goal of decreasing competition between different EU members should finally be regarded as a failed measure of the past. The old continent has reached a crossroad at which it must decide whether it will revert to nationalism and centralization or it will allow for more federalism, and the Dutch election may be hope for marking the beginning of this discussion.


EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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