VZCZCXRO6169
OO RUEHIK RUEHPOD RUEHYG
DE RUEHTC #0633/01 2071309
ZNR UUUUU ZZH
O 251309Z JUL 08
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1784
INFO RUEHZG/NATO EU COLLECTIVE
RUEHAT/AMCONSUL AMSTERDAM 3993

UNCLAS SECTION 01 OF 02 THE HAGUE 000633 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV NL
SUBJECT: Dutch Coalition Government Holds Steady (For Now) 
 
THE HAGUE 00000633  001.2 OF 002 
 
 
¶1. Summary: The three coalition parties of Balkenende IV look back 
at a turbulent year but the difficulties they faced have helped 
cement stronger relations.  This enabled them to resolve major 
disputes and make some ground-breaking decisions.  After the summer 
recess, however, they will face tough issues in light of growing 
economic adversity.  The coalition's biggest problem remains its 
inability to sell its policies to the voters.  Meanwhile, it is 
blessed with a fragmented opposition.  For now, the government's 
premature fall is unlikely.  End summary. 
 
¶2. It has been a stirring first full parliamentary year for the 
fourth coalition government of Prime Minister Jan Peter Balkenende: 
Geert Wilders' anti-Islamic rhetoric and 'Fitna' movie captivated 
the debate for months and roused fierce emotions; populist Rita 
Verdonk's new movement stirred up the political right; and the icon 
of the political left, Socialist Party (SP) leader Jan Marijnissen 
announced his withdrawal.  Meanwhile, the government coalition of 
Christian Democrats (CDA), Labor (PvdA) and the orthodox Protestant 
Christian Union (CU) that started as a marriage of convenience among 
reluctant and incongruous partners worked hard to demonstrate the 
government was in good hands.  Initially, the coalition fumbled, 
becoming paralyzed for months last autumn over a fundamental dispute 
between CDA and PvdA over the desirability of easing the rules for 
employee dismissal in the work place.  A cabinet crisis was only 
averted by setting up a committee of experts to advise the cabinet 
on ways to increase labor participation in the dismissal decision. 
 
 
¶3. Following this crisis, the three coalition parties realized they 
needed time to get used to dealing with each other.  They 
consciously invested in improving relations through regular 
consultations and talking out disputes.  In recent months, 
coordination has improved and the parties now even allow each other 
the limelight to claim political successes.  None of the three 
parties wants the cabinet to fall prematurely - each has a vested 
interest in making the coalition succeed.  CDA wants to give CDA 
leader and Prime Minister Balkenende the opportunity to serve a full 
term (something he has been unable to accomplish in his previous 
three governments).  PvdA's poll numbers are at historically low 
levels, and it risks losing half its parliamentary seats if an 
election were held at this time.  The Christian Union is taking part 
in a government for the first time and wants to demonstrate it can 
govern. 
 
¶4. Their improved cooperation has undoubtedly helped them sort out 
two major disputes (the screening of embryos and the dismissal law) 
as well as make difficult decisions to avoid billions of euros of 
overruns on the childcare and healthcare budgets.  They also took a 
ground-breaking decision on the introduction of a kilometer levy to 
replace road taxes, agreed to the next step in the JSF project, and 
ratified the Lisbon Treaty without difficulty. 
 
Opposition Ineffective 
---------------------- 
 
¶5. With the coalition occupying the broad political center, the 
opposition is concentrated on the left and right fringes.  The 
strongest party on the left is the Socialist Party (SP), which 
currently has 25 of the 150 seats in parliament, but its popularity 
has to a significant degree been linked to that of its charismatic 
leader, Jan Marijnissen.  He recently announced his departure for 
health reasons, and it is uncertain how well the party will continue 
to score under his successor, Agnes Kant.  The liberal-left 
Democrats 66 (D66) party has made a remarkable recovery in recent 
months thanks to its appealing leader, Alexander Pechtold, but it 
has a history of roller-coaster support among the public.  It 
remains to be seen whether the current high scores in election polls 
will be converted into actual seats in the next elections.  The 
other two parties on the left, Greenleft and the Animals Party, are 
holding their own but no more than that. 
 
¶6. On the right, the Liberal (VVD) party is facing competition from 
two former VVD members who started their own movements.  No 
politician has received as much publicity in the past year as Geert 
Wilders, but this is not translating in a significant growth of his 
supporters, which gave him nine seats in the last elections.  Rita 
Verdonk, another media darling, scores well in polls, but her impact 
in parliament is zero, her movement only exists on paper, and she 
has no platform and few funds.  The big unknown is how she will hold 
out until an actual election campaign. 
 
¶7. Each of the opposition parties pursues its own agenda with little 
coordination with other out-of-power parties.  They have not 
coalesced into an effective voice to challenge government policies. 
The history of Dutch coalition governments, however, is that 
governments rarely fall because of the opposition, but implode 
because of internal problems.  As long as the three coalition 
parties hold together, Balkenende IV will continue, but it has 
difficult issues to face. 
 
Future challenges ahead 
----------------------- 
 
THE HAGUE 00000633  002.2 OF 002 
 
 
 
¶8. So far, the Dutch economy has continued to perform relatively 
well, certainly in comparison in neighboring countries. 
Nonetheless, Balkenende recently warned that the Netherlands should 
brace itself for less favorable economic tidings and referred to the 
specter of rising inflation and economic stagnation.  Rising energy 
and food prices are eroding people's purchasing power, especially 
affecting pensioners.  When the government returns from recess in 
the second half of August, finding ways to preserve that purchasing 
power will be a tough nut to crack when decisions are made on the 
2009 budget (due to be announced to parliament September 16).  A 
looming flash point is the question of a VAT increase.  PvdA is 
inclined to put off the planned increase from 19 to 20 percent in 
2009 to maintain purchasing power and not to push up inflation.  The 
increase is linked, however, to the plan to reduce unemployment 
benefit premiums to make labor cheaper and consumption more 
expensive, which CDA finds of paramount importance.  Other potential 
conflicts are procurement of JSF/replacement of aging F-16s, 
implementation of the kilometer levy and introduction of a national 
chip card for public transportation. 
 
Cabinet faces major image problem 
--------------------------------- 
 
¶9. The coalition government's biggest problem is its inability to 
generate public support for its policies (it consistently receives 
bad press).  Polls indicated the current government is the least 
popular in decades.  It is well aware some of its measures, such as 
new and higher taxes in support of the environment, are unpopular. 
They are deemed necessary, however, to foster the government's 
long-term goal of strengthening the economy and advancing more 
sustainability. 
 
¶10. "If the election were held today" polls in the past months 
invariably predict major losses for the CDA and the PvdA. Prospects 
are not so dim for the small CU party, but it is savoring this 
opportunity to participate in the government.  These are incentives 
for the coalition to stick together and hope for better times.  As 
Balkenende observed not incorrectly, his previous governments were 
at times similarly unpopular but the final judgment always comes on 
Election Day and so far the electorate has always given him its vote 
of confidence.  "Everyone is ready to give his opinion while we are 
rebuilding.  Give us time to finish our job," he exclaimed.  At this 
point, Balkenende IV looks like it has some more time to finish its 
job. 
 
Gallagher