Dutch Face Months of Coalition Talks; Wilders Third

Dutch leaders face months of talks to form a government after election results showed Mark Rutte’s Liberals one seat ahead of the Labor Party. Geert Wilders’s anti-immigrant Freedom Party surged to third place.

The Liberal Party took 31 seats, up from 22 in the last parliament, Dutch television reported today with almost all the vote counted. Labor had 30 seats, down from 33. Wilders more than doubled his representation to 24 lawmakers. Prime Minister Jan Peter Balkenende quit as Christian Democrat leader after his party’s support was cut in half.

“We should be happy if we have a coalition Cabinet by October or November,” said Andre Krouwel, who teaches political science at VU University in Amsterdam. He said he expects Labor and the Liberals to try to work together “as the nucleus” of a government, along with the D66 and Green Left parties, which would have 81 of the 150 seats in parliament in The Hague.

The leader of the biggest party gets the first shot at forming a government. Queen Beatrix will consult her advisers, including the speakers of both houses of parliament, tonight on the next steps. Rutte would be his party’s first prime minister.

“It appears as if for the first time in our history that the VVD has become the largest party in the Netherlands,” Rutte told his supporters early today, referring to the party’s initials in Dutch. He called the VVD performance “fantastic.”

Wilders Offer

The Freedom Party increased its seats from 9 in the last parliament. Wilders said today he may drop his opposition to raising the retirement age to 67 from 65. That would remove one obstacle to a coalition with the Liberals and the Christian Democrats, the only parties who haven’t ruled out teaming up with Wilders. The three groups would have the smallest possible majority, with 76 seats.

“We would love to govern,” Wilders said last night in The Hague, where he was given a tickertape welcome by supporters. “I don’t think other parties can ignore us.”

He called it a “glorious day,” saying “more safety, less crime, less immigration and less Islam is what the Netherlands has chosen.”

Wilders, 46, is being prosecuted for comments in his 2008 film “Fitna,” in which he calls on Muslims to rip out “hate- preaching” verses from the Koran. In his speech yesterday, he thanked his wife, who is Hungarian, for supporting him.

Unemployment Benefits

Krouwel said he doubts talks will result in a Rutte-Wilders alliance, citing the Freedom Party’s opposition to Liberal plans to restrict the payment of unemployment benefits to one year instead of three.

“If you become your party’s first prime minister, you want to execute your policy, and Rutte can’t do that with the Freedom Party,” said Krouwel. “The Liberals will seriously negotiate with Wilders for a while, but not too seriously to make him say yes to a coalition.”

A government involving the Christian Democrats, Liberals and a previous anti-immigrant party, the Lijst Pim Fortuyn, named for its leader murdered two months before a 2002 election, collapsed after 87 days. The third of Balkenende’s four governments fell apart over immigration policy in 2006.

Personnel Manager

Rutte, who’s unmarried, studied history at Leiden University and graduated in 1992. He worked as a personnel manager at Unilever before he became deputy minister for social affairs and employment in 2002 in Balkenende’s first government. He was later deputy minister for education until he took over the party leadership in parliament in 2006.

After talks with the party leaders tomorrow, Queen Beatrix will name at least one “informateur,” usually a former minister from the biggest party, to investigate possible coalitions. The informateur will report back to the queen and she will then name a “formateur,” usually the prospective prime minister, to form a government. The process can take several weeks. Final election results will be published June 15.

“In these difficult circumstances we will be conscious of our responsibility and ensure our country moves ahead,” said Job Cohen, 62, Labor’s leader and the former mayor of Amsterdam.

The government is scheduled to present next year’s budget on Sept. 21 and Rutte said during the campaign he wanted a new Cabinet in place by July 1.

‘Hilarious Expectation’

That’s a “hilarious expectation, considering the Dutch history of taking months for a new government to be established,” analyst Sep van de Voort from SNS Securities NV in Amsterdam said in a note to investors.

It’s taken an average of almost three months to form a coalition since World War II. The longest was 208 days in 1977. By contrast, it took U.K. Prime Minister David Cameron five days to agree on a coalition between his Conservatives and the Liberal Democrats after elections last month.

The Liberals and Labor would have to overcome differences on their programs to rule together. Cohen has set out plans to cut spending by 10 billion euros ($12 billion). His party aims to narrow the deficit to 1.8 percent of gross domestic product by 2015. Rutte wants to reduce expenditure by 20 billion euros and seeks to balance the budget in five years.

Cohen also wants to phase out a tax break on home-mortgage payments, a step opposed by both the Liberals and Christian Democrats.

The government last week raised its forecast for the 2010 budget deficit to 6.6 percent of GDP, the biggest shortfall in 15 years, from 6.3 percent. That’s less than the 8 percent deficit the French government is expecting, though more than the 5.5 percent Germany is predicting.

ABN Amro

Falling natural-gas revenue and aid to keep ABN Amro Bank NV and other banks afloat have added to the shortfall in the euro region’s fifth-largest economy. The government forecasts debt will rise to 66 percent of GDP this year.

Even so, Moody’s Investors Service gives Dutch state debt its top AAA rating, citing the government’s healthy balance sheet and an “exceptionally high level of economic competitiveness, productivity, and economic resilience” in a Feb. 12 report.

“Purchasing power is most likely going to decrease, no matter what coalition is ultimately agreed upon,” Mark Pieter de Boer, an analyst at Royal Bank of Scotland Group Plc in Amsterdam, said in a note to investors.

To contact the reporters on this story: Jurjen van de Pol in Amsterdam at jvandepol@bloomberg.net

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