The Daily Brief: Wednesday, Mar. 15

FRAGMENTED AND FRACTIOUS: THE DUTCH ELECTION

As the Dutch head to the polls on Wednesday, one question looms large: how many seats will Geert Wilders’ right-wing populist Party for Freedom (PVV) win?

Despite a booming economy and low unemployment figures, many Dutch voters are disappointed with the current government. Besides peddling a hard-line anti-Islam, anti-immigrant agenda, Wilders has vowed to initiate referenda to leave both the Eurozone and the EU should he become prime minister.

However, even if the PVV manages to win the election, the party’s chances of forming a government are virtually nonexistent – it is unlikely to find coalition partners. However, the more votes Wilders can secure, the more difficult it will be for incumbent Prime Minister Rutte to form a new government.

Although recent polls suggest that his centre-right party may narrowly beat the populists by about 3%, the current coalition with the Social Democrats will not continue, as both parties are expected to suffer heavy losses.

This leaves Rutte in a precarious situation. If he wishes to remain prime minister, he will have to seek out new partners, who will demand a high price for their support.

A TOUR TO REASSURE: TILLERSON IN JAPAN

US Secretary of State Rex Tillerson will embark on his first visit to Asia on Wednesday, landing in Tokyo to meet with Prime Minister Shinzo Abe and Foreign Minister Fumio Kishida. North Korea’s increasingly dire missile threat will top the agenda.

Interestingly, officials preparing the trip said that they did not expect any major policy announcements to be made. So while Tillerson and Abe might discuss deployment of the THAAD missile defence system in Japan – already underway in South Korea – they won’t necessarily reach a decision.

Instead, the Secretary of State aims to lay the groundwork for the new administration’s slowly emerging Asia policy. His desire to keep a low profile has led him to break with tradition and not include any reporters in his entourage.

Tillerson will also use the visit to reaffirm the centrality of the US alliance with Japan, particularly Article 5, which compels the US to defend its ally if attacked. His tour’s next stop in Seoul will be warmly welcomed, after which he will move on to Beijing, where he will receive a rather frostier welcome.

IRRITABLE BEHEMOTH: CHINA PUNISHES SOUTH KOREA

The absence of millions of Chinese tourists will soon begin to be felt in South Korea. The China National Tourism Administration will order travel agents to stop selling tour packages to the South starting Wednesday. This is Beijing’s latest move to punish its smaller neighbour over the deployment of the American THAAD missile defence system on Korean soil.

Credit Suisse, a financial services firm, reckons the travel ban could reduce South Korea’s GDP growth by 20% this year. Almost half of the country’s tourists come from China, and their absence could cost the economy $9.6 billion in lost revenue.

Beijing has already banned K-pop concerts and cosmetics imports, and it has heavily targeted Lotte, the firm that sold land to the government for THAAD. The upcoming elections in South Korea – due to be held by May 9 – are likely to produce a president who is more sceptical of THAAD. Tensions could therefore cool later this year, but until then Seoul will be in the hot seat.

HAPPENING ELSEWHERE…

The US Federal Reserve is expected to hike interest rates for the first time since December. Unexpectedly strong jobs figures and rising investor confidence will encourage the central bank to increase the cost of borrowing in order to preempt inflation.

Conservative French presidential candidate Francois Fillon is scheduled to appear in court to answer charges that he misused public funds. In the latest polls, the centre-right politician trails both Marine Le Pen and Emmanuel Macron ahead of the April 23 vote. Wednesday’s court appearance will do him no favours.

Saudi Arabia’s monarch will visit Beijing in an attempt to strengthen security and economic ties. The oil-rich kingdom is seeking to gain favour with a rising China, which has strong relations with regional rival Iran.