EU country briefing: The Netherlands

The Netherlands [Robert Steenland]

The following article is a part of a series of brief country profiles for the EU-28 ahead of the European elections in May.

A founding member of the European project, the Netherlands has been a strong proponent of regional cooperation since the end of World War II, as shown by the then-created Benelux customs union.

Moreover, it has also been part of the Economic Monetary Union (EMU) and a Schengen area member since their establishment in 1999 and 1995, respectively.

While a smaller EU state in geographical size, it belongs to the middle-sized countries with a population of 17 million (3.8% of the EU total without the UK).

In this year’s European Parliament (EP) election, the Netherlands will vote for 26 or 29 (minus UK) Members of Parliament (MEPs) to represent its interests.

Most Dutch people appear to have a positive outlook on the EU, as 78% (fourth highest in the EU) consider EU membership to be a good thing, compared to just 5% that have opposing views on the matter.

Similar percentages reflect Dutch support for the euro, as 78% are in favour of the single currency while 18% are against. Furthermore, 75% of the Dutch population feel that they are citizens of the EU.

Despite all this, the Netherlands has seen its pro-EU course questioned at times, for instance with the rejection through national referendums of the European Constitution in 2005 and the EU-Ukraine Association Agreement in 2016.

Economy:

Following the 2012-2013 recession, the Dutch economy recovered with a 2.2% average annual real GDP growth rate between 2014 and 2018.

However, as an open, export-oriented economy, the Netherlands has fallen victim to the ongoing trade tensions caused by the erratic behaviour of US trade policy, as well as the economic fallout triggered by Brexit. As it is a major trade partner of the UK, the latter is a particularly serious threat.

A recent government awareness campaign has urged companies and citizens to prepare for the ‘‘Brexit monster’’.

Economic forecasts confirm the economy will grow more slowly,  by 1.7% in 2019 and 2020, as the external environment is unfavourable for export.

Moreover, growing household debt (second highest in the EU at around 250% of net disposable income), as well as the tight housing market pose serious downside risks to the economy.

The real GDP per capita was €40,700 in 2017, one of the highest in the EU and far above the EU28 average (€27,700). In purchasing power standards (PPS), its per capita GDP was 128% of the EU28 average in 2017.

Furthermore, at 3.8%, the Dutch unemployment rate well is below the EU28 averages of 7% (2018) and 6.3% (2020), and is forecast to drop further to 3.6% by 2020 amidst a tightening labour market.

The country’s youth unemployment is also relatively low, amounting to 7.2% in 2018, which is half the EU average of 15.6%.

Political context and direction

The Netherlands is a constitutional monarchy with a bicameral parliament. The most important political figure is the prime minister (currently Mark Rutte) who is the head of government. The head of state is the monarch (currently King Willem-Alexander), who has a ceremonial and symbolic role.

Historically, the multi-party-political system of the Netherlands allowed each individual within Dutch society to identify with a certain so-called pillar, based upon one’s religion (Protestant or Catholic) or ideology (Social-Democratic and to a lesser extent, Liberal).

These pillars included their own political parties, schools, broadcasting companies, newspapers, associations and organisations.

In 1917, however, through an event now known as the ‘‘Pacification’’, key figures of these different pillars came together and reached a compromise that would eventually result in universal suffrage, proportional representation and equal funding for religious schools.

This system would last until the mid-1960s when a wave of secularisation (nowadays, the country is mostly secular) and de-ideologisation swept through the country, causing deeply rooted religious and ideological pillars to crumble.

Consequently, political party split-offs and mergers and the establishment of new parties led to a parliament that reflected a different era.

Three Christian parties that saw their support decline merged into the new Christian-democratic CDA in 1973, through which they maintained a dominant position in Dutch politics.

Two other major political parties that traditionally have strong footholds in Dutch politics are the social-democratic labour party PvdA and the liberal-conservative VVD. Both have led or were included in governments in at least half the cases since World War II.

Politics, however, became more volatile from the 1990s onwards, due to growing support for the social-liberal D66 (created in 1966) and VVD at the expense of the CDA and PvdA.

Consequently, the first government coalitions that did not include a single Christian democratic party (1994-2002, led by Wim Kok of the PvdA) managed to navigate the social and religious complexities of same-sex marriage and euthanasia, eventually legalising both.

In 2002, the Dutch political landscape underwent a major upheaval with the establishment and rise of the nationalist party LPF, led by the late Pim Fortuyn.

His brutal assassination shortly before national parliamentary elections shocked the Netherlands and likely propelled the party to become the second largest in the country.

The LPF subsequently entered a government coalition with the VVD and CDA that would then soon fall apart, as LPF struggled with internal turmoil in the wake of losing its leader.

Soon after, in 2004, the widely acknowledged and respected multiculturalism and openness of the Netherlands was again be put to the test with the murder of the well-known film director and Islam critic Theo van Gogh.

The country also became more Eurosceptic following the failure of the EU Constitution in 2005. Subsequently, the current right-wing nationalist PVV led by Geert Wilders, a former VVD member, burst onto the scene in 2006’s parliamentary elections.

In the same elections, the Eurosceptic left-wing populist SP surprisingly ended up third. Although the SP was not included in government, this illustrated the volatility that had taken over the political stage.

Whilst CDA’s Jan-Peter Balkenende served as prime minister from 2002-2010 and presided over several unstable coalitions, he saw himself and his party lose heavily in the 2010 parliamentary election. The party has struggled ever since to regain its former dominant position.

In turn, the VVD, led by current Prime Minister Mark Rutte, became the country’s largest party. Rutte led another unstable right-wing coalition with the CDA, and supported by the PVV, which ended up third in these elections.

However, with the sudden withdrawal of the PVV in 2012, snap elections led to a more stable coalition with the PvdA. 2017’s parliamentary election saw the VVD win again despite losing support.

Moreover, the coalition partner PvdA lost three-quarters of its support and has also struggled since, effectively ending the dominance of the once powerful CDA and PvdA.

In turn, the left green party GL gained support and many smaller parties entered or increased their presence in the parliament.

The complicated coalition government formed in 2017 from the VVD, CDA, D66 and another small Christian democrat party, CU, has been relatively stable, despite occasional tensions.

Although the former political opponents became allies, the fact that there is no real electoral threshold for the elections, while a majority is needed in both the parliament and senate, is making the country increasingly difficult to govern.

The parliament now has 13 political parties, including many focused on single issues or certain interests, that have different support levels in parliament and the senate.

This year’s provincial election in March, which was also an indirect election for the Senate in May, was the first time a right-wing populist party came out on top. The outcome was a headache for the governing coalition, which will lack a majority in the Senate.

The winner, not the PVV but the new FvD led by the ideologically extreme Thierry Baudet, was created following the EU-Ukraine Association Agreement referendum in 2016, where it campaigned successfully against the agreement.

The FvD has similar positions to the PVV but has also fought hard on other issues, including how to deal with climate change. While this again favoured GL (as in 2017), the FvD’s sceptical stance on climate change and its opposition to measures that could curb people’s purchasing power gave them significant support.

FvD continues to grow in the polls and is set to win the EP elections as well, which could in turn further shake up Dutch politics. It could even jeopardise Mark Rutte’s rumoured plans to move to Brussels for a top position at the EU.

Predictions

It is hard to predict the outcome of the EP elections given the volatility of Dutch politics, especially with the rise of FvD. While FvD remains staunchly Eurosceptic like the PVV, and to a lesser extent the SP, it has recently played down its call for a ‘‘Nexit’’.

Moreover, there has been news of recent internal turmoil in the FvD between Baudet and co-founder Henk Otten, who has criticised the former for steering the party too far right. 

The PVV still pledges to exit the EU. The issue could determine support, especially given that the Brexit-related mess in the UK has led to a generally more pro-EU attitude.

The outcome will also depend on the topics that will dominate the election. The issue of climate has worked in favour of both the FvD (which is sceptical and has ruled out measures to tackle climate change) and GL, which has called for more ambitious measures.

Nonetheless, a recent projection indicates the FvD would win nearly 18% of the vote, or 5-6 MEP seats, which are expected to go to a Eurosceptic grouping.

The VVD follows with a bit more than 15% of the vote, granting it 4-5 seats for the Alliance of Liberals and Democrats for Europe (ALDE).

The GL greens are forecast to 11%, or 3-4 mandates for the Greens–European Free Alliance (Greens/EFA).

The struggling CDA and PvdA follow with under 9-10%, resulting in 2-3 MEPs each for the European People’s Party (EPP) and Progressive Alliance of Socialists and Democrats (S&D).

D66 is expected to win just 2 seats (to go to ALDE), which would be a big loss compared to 2014’s EP elections in which it finished first on a staunchly pro-EU platform.

However, its archrival, the PVV, could perform even worse and win two or perhaps just one seat, confirming that FvD, and not PVV, is now the favourite right-wing populist force.

Despite the fragmented projections, even a relative/marginal win for either a pro-EU or anti-EU party could hint – in the context of Brexit – the political direction the Netherlands could be taking next.

Fengwei David An is a graduate student in International Relations and Diplomacy at Leiden University’s Faculty of Governance and Global Affairs and the Netherlands Institute for International Relations Clingendael.

Robert Steenland works as an evaluation and research consultant in EU policies, as well as an analyst in EU politics.  He holds a double degree master in European Governance.

Ery Papalamprou works in Evaluation and Research of EU policies. She is an LSE Law graduate and a qualified lawyer, admitted in the Athens Bar Association.

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