NETHERLANDS:Dutch prime minister Jan-Peter Balkenende led his Christian Democrat (CDA) party to a narrow election victory yesterday, but could struggle to form a stable government.
Analysts warned of the possibility of a long period of political and economic uncertainty as negotiations on forming a coalition government begin later today.
Despite trailing in the polls when the election was called in June, the CDA recovered to win 41 out of 150 seats in the parliament. This represents a fall of three seats on the 2003 election for the CDA, but it retains its position as the biggest party.
Mr Balkenende, whose chances of remaining prime minister were considered slim at the start of the campaign, said he was very happy with the result.
"I really hope I can go on as the prime minister, but that depends on the new coalition and that is really a complicated situation at the moment."
Mr Balkenende benefited from an economic recovery this year and his reputation among voters for reliability.
The CDA campaigned on a platform of maintaining stability and security following on from its government programme of welfare reforms and tough laws on immigration.
But the electoral arithmetic, which means a coalition must control 76 seats in the parliament, will make it difficult for the CDA to form a government.
Their existing coalition partner, the Liberal Party, dropped to 22 seats, a loss of six seats, while the big winner in the election was the left-wing Socialist Party, which has stated it will not enter a coalition with the CDA.
The popularity of its leader, Jan Marijnissen, and a strong campaign, helped it to win 26 seats in parliament, a gain of 17 seats.
The Labour Party, which had 42 seats in the last parliament and was riding high in the polls in June, slumped in the election, taking just 32 seats.
Labour leader Wouter Bos said he was disappointed by the result but noted that the governing coalition had also lost many seats and would not be able to continue on its present course.
"I think the opposition as a whole achieved a victory that's going to mean that government policies are going to bend much more towards our direction of what we want for the future of this country and that's the gain of today," he said.
Jean Tille, assistant politics professor at Amsterdam University, warned that the process to form a new coalition could take some time.
"It will be very difficult to form a government. We have a very polarised country now," he said.
Some pundits are predicting a grand coalition involving the Labour Party and the CDA, similar to the current government in Germany.
But this will require difficult talks on negotiating a programme for government on issues such as tax, pensions and immigration policy.
Labour wants to slow corporate tax cuts and lift spending on childcare and job creation programmes, while the CDA has argued for further economic reforms.
The two parties also differ in their approach to immigration and the integration of Muslims, with Labour preferring a somewhat softer approach than the one taken by the CDA/Liberal coalition and its tough interior minister, Rita Verdonk.
At least one other party would also be required to join this type of grand coalition.
The far right Party for Freedom won nine seats in parliament, although analysts said immigration - an issue that has dominated Dutch politics since the murder of the anti-Islam populist Pim Fortuyn in 2002 - played only a limited role in the election.
The vote also saw the election of two parliamentarians for the Party for Animals, a party campaigning on animal rights issues.
Queen Beatrix, the head of state of The Netherlands, will appoint a mediator to conduct coalition talks after she meets the main party leaders today.