Election 2006: New Dutch Coalition Agreed, Policy Plan Unveiled

Uneasy Alliance

After arriving at an outline deal last week, the leaders of the three parties presented their plans to their parliamentary colleagues at the start of this week. The blueprint was duly approved yesterday and today it will be unveiled to the general public. The plans have been heavily leaked already, so there are no surprises in store. The coalition is to be led by the Christian Democratic Appeal (CDA), as is the case in the outgoing government, but instead of the People's Party for Freedom and Democracy (VVD), it is joined this time by Labour (PvdA) and the small Christian Union (CU) party. A revival of the existing coalition was not an option after the VVD and former partners Democrats 66 (D66) both lost ground in the November 2006 election. It is unusual for the VVD to be out of government—in recent times it has been part of successive PvdA- and CDA-led governments. Given that the CDA and PvdA are long-time foes, the omens are surely not good for the new coalition, but one should not forget the proud Dutch tradition of political consensus. This may have become badly strained over recent years, but there are many past examples of inclusive deals struck across the political spectrum to build coalitions and implement major policy initiatives. The new blueprint is explicitly framed as a four-year plan and the leaders have sought to rebuff expectations of early elections.

The full cabinet line-up has yet to be confirmed, but it will be led by incumbent Prime Minister Jan Peter Balkenende and will include PvdA leader Wouter Bos as well as Christian Union leader André Rouvoet. It is not yet known which policy portfolios these two will take, but they will both have the additional role of deputy prime minister. Rumours link Bos to the finance post and Rouvoet to the families portfolio. The CU will provide two ministers in total. One face that will not appear in the line-up is that of current CDA Social Affairs Minister Aart Jan de Geus, who has been appointed interim secretary-general of the Organisation for Economic Co-operation and Development (OECD). He has been responsible for some important welfare structural reforms. Also leaving the government is Economic Affairs Minister Joop Wijn, who is expected to return to his old employer ABN Amro. This will actually be the fourth successive administration unveiled by Balkenende—the others were inaugurated on 22 July 2002 (CDA-VVD-List Pim Fortuyn), 27 May 2003 (CDA-VVD-D66) and 7 July 2006 (CDA-VVD). The latter change was prompted when the D66 walked out of the coalition over an immigration row and left the government in a minority awaiting elections.

The Policy Blueprint

The 50-page document to be unveiled later today shows a significant policy shift back towards the centre. The outgoing government and its predecessor were firmly tilted to the right.

• Immigration: The VVD was notable for its tough line on immigration, and this is one of the obvious policy casualties in the new blueprint. While immigrants still face a tougher regime than they did in previous years, residency visas will now be granted to over 30,000 illegal immigrants who have been in the Netherlands for over five years. The previous government was controversially trying to deport this group. Immigration has been a dominant issue in Dutch politics since the dramatic rise (and then fall) of the populist List Pim Fortuyn (LPF) in 2002/03. Its success jolted the mainstream parties into adopting a tougher line. However, it was increasingly felt by voters that the outgoing government had pushed matters too far.

• Foreign Policy: The Netherlands will continue to participate in the NATO mission in Afghanistan, where it has 2,000 troops stationed in the volatile southern province of Uruzgan, and in the development of the U.S.-led Joint Strike Fighter Jet. These are both controversial issues, but Balkenende has persuaded the PvdA to accept them.

• Social Issues: The CU has failed to convince the other two parties to adopt less liberal policies on drugs, prostitution, gay marriage and euthanasia. On all of these fronts the Netherlands has some of the most liberal policies in the world. It was feared that these questions might dog the coalition if the CU stuck to its guns. There has, however, been a concession to the party with the introduction of a mandatory cooling off period to allow women to reconsider their decision to have an abortion. There will also not be outright legalisation of marijuana, as the PvdA would like.

• The Environment: The Netherlands is already one of the more environmentally conscious countries in Europe, but the new government intends to enhance this further. Spending will be increased on environmental measures and a new “green” tax will be levied on airline tickets. Newspapers report that the government will announce a 30% reduction in greenhouse gas emissions (1990 levels) by 2020, which is tougher than the European Union's (EU) 20% target. The energy-saving target will also be doubled to 2%. Environmentalists have welcomed the ambitious targets, but warn that insufficient funds are being allocated to achieve them.

• Other Domestic Policies: The government will not eliminate rent control, and labour laws will not be changed to make dismissing employees easier. The new government will meanwhile increase spending on children's day care, healthcare, disadvantaged neighbourhoods and education. The government is not planning to proceed with the controversial privatisation of Amsterdam's Schiphol Airport, a plan that has been at the centre of a legal battle with the Amsterdam city council. Pensioners will have to contribute to the general old-age pension if they retire early. This is part of an ongoing effort to discourage early retirement, given the fiscal burden this imposes and the tightness of the labour market. Overall, the government will put an additional 1.3 billion euro (US$1.7 billion) towards boosting purchasing power.

Outlook and Implications

The policy plan does not mark a dramatic departure from that of the outgoing government, but it clearly has a more centrist emphasis on issues such as immigration, and will move more slowly on structural reform. The extra spending pledges raise some concerns that the country's exemplary fiscal discipline could be undone, but neither the CDA nor PvdA is known for being particularly profligate. If Bos is confirmed as finance minister, comparisons will be invited with his celebrated predecessor, the VVD's long-serving Gerrit Zalm. The latter won plaudits for maintaining austerity throughout the country's sharp downturn and then helping to engineer its impressive recovery with structural reforms. The VVD has been warning that the blueprint is dangerous fiscally, but this is not surprising given that it is now in opposition. All in all, the agreement of the new coalition has proceeded remarkably quickly and smoothly, enhancing the government's chances of seeing out a four-year term. It cannot be long, however, before Balkenende and Bos have their first clash.