The new Dutch coalition government combines austerity politics with a ‘fair redistribution of pain’
This week, the new Dutch Government was installed, in the presence of Queen Beatrix. The two-party cabinet will consist of the conservative-liberal VVD and centre-left Labour Party (PvdA) – the two winning parties of the September 12th national parliamentary elections.
VVD-leader Mark Rutte and PvdA-leader Diederik Samsom reached a deal on forming a new coalition after 47 days of negotiations. It was one of the fastest coalition building processes in Dutch political history, the shortest coalition formation process since the 1980s.
Countries such as the Netherlands, Austria or Belgium, with no clear majoritarian parties or two-party winner-takes-all political systems, tend to have very long cabinet formation coalition negotiations. The last cabinet formation in Belgium hit a Guinness Book world record of 249 days. Normally the Dutch coalition formation process is a puzzle with many options, taking an average of three months or so to complete.
The results of the Dutch election this time were crystal clear. The evaporation of the Christian-Democratic centre party – split over its tragic cooperation with the Geert Wilders Freedom’s Party PVV – meant that the election was clearly fought along a left-right axis, with populist parties at both ends. After a highly polarised election campaign, PvdA became the big winner of the left-wing electorate, whereas VVD triumphed on the right. As an unintended result, both opponents had to fall back on each other to form a Grand Coalition. After the fierce horse race, the horses had to marry.
It can be argued that such a Grand Coalition is the best option in the context of the euro crisis and the populist shadow that has engulfed the Netherlands over the last 10 years. Since 2002, with the rise and then the murder of Pim Fortuyn, Holland has been characterised by an extremely unstable political climate and highly volatile electorate, resulting in 5 different cabinets within 10 years’ time. There is no precedent in Dutch political history.
It now appears that the Dutch electorate have moved to usher politics into a new post-populist phase, restoring the traditional parties with authority, stability and integrity. One could call this the rehabilitation of the mainstream parties. Why post-populism? Geert Wilders’ Freedom Party (PVV) campaigned on a NEXIT – a complete withdrawal of the Netherlands from the European Union – a position without any support in the Netherlands whatsoever despite the fact that many people are disillusioned with the European Project and its move towards further integration and centralisation as an ‘inevitable’ answer to the euro crisis. Both Wilders and the left-wing Socialist Party of Emile Roemer did not live up to expectations in the opinion polls.
So now a new Dutch government has been formed, comprised of VVD and PvdA ministers. Many of the PvdA-cabinet members are household-names for readers of State of the Left, having been active in the networks of Policy Network and Wiardi Beckman Stichting for years.
First, there is Wouter Bos, the former PvdA-party leader and former ‘’Third Way’’ Finance Minister. He was one of the two so-called ‘’Informateurs’’, the architects or mediators of the cabinet formation process. It was Wouter Bos who helped the new cabinet as a midwife to come alive. However, he himself will not enter the new cabinet.
Secondly, the PvdA deputy prime minister is a familiar name – Lodewijk Asscher – alderman in Amsterdam, who as Minister of Social Affairs, will be the PvdA boss in the Cabinet. Diederik Samsom, the party leader, will stay in Parliament to maintain and develop the PvdA profile and identity. Based on lessons learnt from earlier purple (blue-red, social-liberal) coalitions and from previous Junior-Partner positions within a Grand Coalition.
Other PvdA cabinet members include Jeroen Dijsselbloem (Minister of Finance), Frans Timmermans (Minister for Foreign Affairs), Jet Bussemaker (old board member of Policy Network, Minister for Education), and Lilianne Ploumen (former party chair, Minister for Development Aid and Foreign Trade).
What is there to say about the government’s programme? The new cabinet’s slogan is ‘Building Bridges.’ Building bridges between a polarised right and left. Building bridges between government and ‘social partners’ (employers and trade unions), i.e. the restoration of the Dutch Poldermodel. Building bridges in a post-populist political climate. Building bridges in a divided Eurozone/EU.
Building bridges was also the working method Mark Rutte and Diederik Samsom used to overcome their huge political differences. The magic words in the coalition talks were ‘’the grant-factor’’ and ‘’the live and let live-formula.’ The idea was not to arrive at hybrid, unworkable and unrecognisable compromises, but to make ’positive trade offs,’ granting whole packages of issues and policy proposals respectively to VVD or to PvdA. A negotiation defined by no-nonsense pragmatism.
This is not the place to summarise the government programme but some headlines help provide an idea of its direction. The new cabinet’s strategy is based on three pillars: ‘sound government finances, sharing equally, and working towards sustainable growth.’ In total, the new cabinet will make €16bn worth of cuts to make sure the government’s books balance. ‘We realise this package will hit everyone, but we also realise it is important to make our beautiful country stronger,’ Mark Rutte said. ‘We are asking everyone to make sacrifices,’ Labour leader Diederik Samsom added. ‘This agreement is the result of give and take.’ (Dutch News)
The government programme can be described as pro-austerity, pro-reform, pro-EU and pro-education. The idea is to end and overcome political and societal deadlocks by reforming the housing market, the labour market, and the health care system. Although the programme has become anti-Krugmanian/Keynesian, aiming towards a 1.5% EMU rate in 2017 by executing enormous budget cuts, a remarkable trait of the programme is its redistributional character – fairness in terms of redistribution of ‘austerity pains’. People with higher incomes will be hardest hit by the new coalition’s plans because they will have to pay more for healthcare, their children, and their homes.
‘The new cabinet is planning to raise nearly €23bn through cuts and extra taxes. Of this, extra spending will account for €7bn, leaving the net reduction in government spending at €16bn. Most of that will be earned by cuts in spending on the health service and social security. (…) Both leaders were careful to spell out that ‘everyone will have to make sacrifices’ (Dutch News).
In many respects, the renewed cooperation of VVD and PvdA seems to point at a return to the heyday of the Third Way, purple social-liberal coalitions of the 1990s (then also including social-liberal D66). This déjà vu return to the Third Way era also serves to symbolise a range of vulnerabilities and alarm bells. As an observer commented, the VVD/PvdA cabinet might be a stable coalition in an unstable Umfeld.
To what extent have we really entered a post-populist era? The populist spectre may still be out there. Note the brutally divided Dutch trade union movement. Note the unpredictable chaos and instability of the euro crisis.
How successful will this new Third Way-ish social-liberal coalition be in not repeating the obvious failures and risks of the former Grand Coalition? How will it counter a meltdown of the left-right-divide? How will it fight the trend of the squeezed middle? Will the smart combination of austerity politics and fair redistribution of austerity pain be the ‘magic bullet’? Will the fact that this time party leader Diederik Samsom remains in parliament be the sufficient guarantee to keep a strong PvdA-profile and identity even under conditions of bad socio-economic weather? Time will tell. Sooner rather than later, we will be able to judge the stability of a horse marriage across political families.
This column was first published by Policy Network