AMSTERDAM, Aug 1 (Reuters) - The Netherlands, one of the
last triple-A rated euro zone countries, is heading for an
election on Sept. 12 that will be dominated by the issues of a
weak economy, the euro zone debt crisis and relations with
Once steady and predictable, Dutch politics has become more
volatile, reflecting party differences on issues ranging from
immigration and welfare to government finances and the cost of
rescuing troubled euro zone economies.
As in the past, no single party would win a majority if an
election was held now, according to the most recent opinion
polls. Most of the polls put the opposition Socialist Party in
the lead ahead of Prime Minister Mark Rutte's Liberals (VVD).
Given the fragmented political landscape, three or four
parties would be needed to form a coalition, based around a
centre-right bloc, a leftist bloc or a liberal-left pact. Even
then, most recent polls show the various combinations fall short
of a parliamentary majority.
Rutte's minority Liberal-Christian Democrat (CDA) government
resigned on April 23 after its ally, Geert Wilders' Freedom
Party (PVV), refused to agree to 14 billion euros in budget cuts
for 2013 needed to meet strict European Union limits on the
Within days, acting Finance Minister Jan Kees de Jager
mustered support from three small opposition parties - Democrats
66, Christian Union, and GreenLeft - for the caretaker
government's revised budget package.
The table below shows the number of seats in parliament won
at the last election, and the equivalent based on recent polls.
Political 2010 De Hond TNS Nipo
party election July 29 July 31
Liberal 31 31 31
Christian 21 14 15
Democrats 10 15 15
GreenLeft 10 5 4
Christian 5 7 8
5 party 77 72 73
Labour 30 17 18
Socialist 15 34 35
Freedom 24 19 17
Animal 2 3 2
Reformed 2 3 3
Others* 0 2 2
* Other parties include 50Plus, Hero Brinkman, Pirate Party
As a core euro zone member and one of the harshest critics
of those European countries, such as Greece and Portugal, that
failed to obey the rules, the Netherlands has been under
pressure to get its own finances in order.
The revised budget has allowed the Netherlands to avert an
immediate crisis. The finance minister has said the deficit,
which was forecast to hit 4.6 percent of gross domestic output
in 2013, will be brought below the EU limit of 3 percent.
It is still unclear how many of the budget measures can be
implemented before the election, or what will happen to the
steps yet to be taken when a new cabinet takes office.
The revised package of budget cuts includes an increase in
value added tax, extra taxes on fossil fuels, alcohol and
tobacco, cuts in healthcare, a two-year pay freeze for civil
servants, and a doubling of a tax on banks.
Unions and the biggest opposition parties have criticised
the deal, saying it would harm growth, and warned it would be
torn up after the election.
So if a left-leaning group such as the Socialist Party or
Labour were to form a new government, some of the 2013 budget
measures could be scrapped, casting doubt on the country's
ability to meet the EU targets.
The Netherlands Bureau for Economic Policy Analysis (CPB)
has warned the country faces soaring deficits after 2020 unless
it makes broad structural reforms such as raising the pension
age, making the labour market more flexible and cutting housing
subsidies and tax breaks - some of which are unpopular with the
main opposition parties.
The 2013 budget plan addresses some of those reforms,
including limiting tax breaks for new homeowners, raising the
retirement age gradually to 66 by 2019 and 67 by 2024 from 65
currently, higher healthcare payments by consumers, and lower
payouts for workers who are laid off.
What to watch:
- Implementation of budget cuts for 2013
- Strikes or protests over cutbacks
The Netherlands, like other euro zone countries, must also
approve the EU fiscal treaty, which will enshrine balanced
budget rules in national law. The Dutch parliament has been
critical of euro zone bailouts, but has so far supported all
Although it is one of the most fiscally conservative members
of the euro zone alongside Germany, the Netherlands has seen
political and public support for costly bailouts
In the past, the Liberal-Christian Democrat government had
to rely on opposition parties, including Labour, for a majority
on crucial euro zone votes, for example on the terms of a Greek
Majority support is by no means certain for the fiscal
treaty, particularly if the leftist parties form a new
government, while Wilders has threatened to turn the elections
into a referendum on Europe and the euro.
What to watch:
- Political and public support for euro zone bailouts
IMMIGRATION AND FOREIGN POLICY
The Dutch are deeply divided over immigration, Islam and the
country's international profile. Liberal immigration policies
have been scaled back in recent years because of fears that
immigrants, particularly Muslims, do not integrate easily into
Dutch society and struggle to find jobs.
As the government's main ally, Wilders was able to wield
considerable influence in these areas: the government agreed to
his demands for tougher immigration policies in return for his
party's support in parliament, and backed his demand for a ban
on face-covering veils worn by some Muslim women, saying the
veils flouted the Dutch way of life and culture.
But these policies have been put on hold until after the
What to watch:
- Immigration issues. Christian Democrat MPs have expressed
concern over Freedom Party-brokered policies to reduce the
influx of non-Western immigrants.
- Any unexpected friction. The government before the recent
coalition fell because of Afghan troop deployments and the one
before that over the asylum status of an anti-Islam MP, Ayaan
For political risks to watch in other countries, please
(Reporting by Sara Webb and Gilbert Kreijger; Editing by