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Country Commercial Guides FY 2000: Netherlands Report prepared by U.S. Embassy The Hague, released July 1999 Note*

CHAPTER III. POLITICAL ENVIRONMENT

Nature of Political Relationship with the U.S.

The Netherlands has an historically close bilateral relationship with the U.S., encompassing a full agenda of political, economic, military and social issues. The Dutch are strong proponents of free trade and staunch allies of the U.S. in international fora like the World Trade Organization (WTO), the Organization on Security and Cooperation in Europe (OSCE), the International Monetary Fund (IMF),and other multilateral organizations. The Netherlands and the U.S. also work closely together in NATO, the United Nations, and the Organization on Security and Cooperation in Europe (OSCE). The Dutch play a decisive role in European political and monetary integration. The Dutch also strongly support keeping EU markets open to Central and Eastern Europe and expanding the EU Eastward.

Major Political Issues Affecting Business Climate

A three-party coalition consisting of the left-leaning Labor Party (PvdA), the right-leaning Liberal Party (VVD) and center-left Democrats (D66), has been in power following general elections in May of 1998. The resulting government is composed of the same three parties as the preceding government, although the balance has shifted somewhat. The Government is implementing a coalition agreement aimed at fiscal consolidation, restructuring the social welfare system, and improving the business climate. Reforms are continuing with a stronger emphasis on market flexibility. Among priorities for addressing business needs are reduction of the company tax burden, and improvement of labor market flexibility. In foreign affairs and defense policy, there is strong consensus in the Netherlands in favor of continued close ties with the U.S., support for NATO, and further European integration through the EU.

Brief Synopsis of Political System, Schedule for Elections, and Orientation of Major Political Parties

The Netherlands is a constitutional monarchy with a parliamentary form of government. The Monarch (Queen Beatrix) is the titular Head of State. However, the Council of Ministers (the Cabinet) is responsible for government policy. The Ministers, collectively and individually, are responsible to the Parliament, but do not serve in Parliament.

The Dutch Parliament (also known as the "States General") consists of two houses, the First and Second Chamber. Historically, Dutch Governments have been based on the support of a majority in both houses of parliament. The First Chamber has 75 members who are elected indirectly. The First Chamber passes or rejects bills originating in the Second Chamber. The Second Chamber is by far the more important of the two houses. It alone has the right to initiate legislation and amend bills submitted by the Council of Ministers. It shares with the First Chamber the right to question ministers and junior ministers. The Second Chamber consists of 150 members, directly elected for a four-year term (unless the Government falls prematurely), on the basis of a nationwide system of proportional representation. This means that the members represent the entire country rather than individual districts as is the case in the U.S. Members are normally elected on a party slate, not on a personal basis.

Following elections in May 1998, nine political parties in the Second Chamber represent the political spectrum from left to right. Among the larger parties are Labor (PvdA) with 45 seats, the Liberal (read conservative) VVD party with 38 seats, the Christian Democrats with 29 seats and the left-of-center Democrats 66 (D66) party with 14 seats. The Labor party's traditional base has been among the labor unions and working classes, while the Christian Democrats draw on a long tradition of confessional-oriented organizations. The Liberal party is a strong advocate of free enterprise and restricted government intervention. The D66 party combines views from left and liberal streams, while advocating political reform. The smaller parties include three Protestant groups with orthodox views on ethical questions but leftist views on most other issues, as well as two leftist parties with more traditional socialist views than the labor party. Extremists on the right were voted out of parliament in the most recent Dutch elections in May 1998. These elections have resulted in gains for the two larger coalition parties PvdA and VVD and losses for the third, the D66 party. There seems to be enough common ground on economic policies among the three coalition parties to continue the government's successful socioeconomic policies for another four-year term in office.