Dutch vote could affect how EU tackles debt crisis

The free-market Liberal party and the center-left Labor party, running neck in neck in Dutch polls, could end up forming a centrist coalition and leave extremist parties out of government.

Dutch voters on Wednesday were picking a new parliament in a test of support for stringent austerity measures which are set to influence the way the European Union tackles the debt crisis.

The export-dependent Netherlands is a founding member of the EU and has long been a staunch supporter of the bloc's open market. But many Dutch voters have begun questioning their role in the now 27-nation EU since the debt crisis erupted in 2009, feeling that their wealthy nation is paying too high a price to help bail out countries like Greece and Portugal.

Even so, the two parties now leading the polls remain committed to Europe, though they differ on how to tackle its crisis.

"We are all in the same boat. There is no way we can turn our back on the EU," said Lodewijk van Groeningen at a polling station close to parliament, before he sped off on his bike.

As the Dutch voted, European Commission President Manuel Barroso was appealing for greater EU unity.

"We cannot continue trying to solve European problems just with national solutions," he said in his annual State of the Union address to Parliament in Strasbourg, France.

"A deep and genuine economic and monetary union ... means ultimately that the present European Union must evolve," he added. "And let's not be afraid of the words. We will need to move toward a federation of nation states."

Meanwhile, domestic spending cuts are increasingly unpopular as the Dutch economy has barely recovered from a recession last year.

Wednesday's election has boiled down to a tight race between the free-market Liberal (VVD) party of Prime Minister Mark Rutte and the center-left Labor Party led by Diederik Samsom, with smaller parties trailing.

The Dutch proportional representation system guarantees a coalition government and whichever party wins the most in the 150-seat House of Representatives will take the lead in choosing the parties that make up the next ruling coalition.

Despite their differences on Europe, Mr. Rutte and Mr. Samsom could win enough seats to wind up in the same coalition government, together with one more centrist party.

While critical of a strict austerity-only solution to the debt crisis, Labor backed Rutte at crucial moments to approve bailout funds and endorse European-level solutions to prevent the debt crisis from spinning out of control.

"The latest polls suggest that three parties could govern without having to depend on any extremist party," said Piotr Kaczynski of the Center for European Policy Studies.

Rutte is a close ally of German Chancellor Angela Merkel and supports her austerity agenda for reining in the debt crisis. Samsom is closer to French President François Hollande, who favors government spending to spur economic growth.