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Dutch Elections a Win for Europe, ECB

Despite earlier indications that the euro-skeptic Socialist and Freedom Parties would clean up in today’s Dutch election, exit polls show that voters have decisively cast their votes for the more centrist, pro-Europe parties. The Dutch election, widely regarded as a referendum on the broader European project, will likely be seen as another vote in favor of continuing euro bailouts.

The polls project that the biggest winners are the center-right VVD and the center-left PvDA, who are set to increase by a third, to a combined 81 seats out of 150 in the lower house of parliament. The Socialist Party will see no gains at all, remaining at 15 seats, and the Freedom Party (which had distributed fake guilder bills at a protest against the euro) will dwindle by almost half, to only 13 seats.

As Reuters reports, the center-right VVD, led by current prime minister Mark Rutte, is treading carefully:

“There is a real choice in this election – also in Europe,” Rutte told reporters after he voted. “Will we continue with our close relationship with Germany and Finland in fighting the euro crisis or will it make a shift to a more France-oriented Europe, which I will be against.

I would like to stay on course with our coalition with the northern European countries,” he added, saying it was important for the Netherlands to come out of the crisis stronger by sticking to its policy of fiscal discipline.

The difficult work of forming a new coalition government can now begin. As the Netherlands has a parliamentary system, this may take a long time. The two big winners don’t get along well and will have a hard time constructing stable majorities with smaller parties.

But while the new Dutch government may not be as pro-euro as many would like, investors and the European Central Bank will see these results in a positive light. With the German Constitutional Court clearing the way for German participation in the euro bailout fund, the ECB is that much closer to claiming its new power.

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