Netherlands Department of State Background

U.S. Department of State Background Note

The Netherlands

HISTORY

The present constitution--which dates from 1848 and has been amended several times, most recently in 1983--protects individual and political freedoms, including freedom of religion. Although church and state are separate, a few historical ties remain; the royal family belongs to the Dutch Reformed Church (Protestant). Freedom of speech also is protected.

Government Structure
The country's government is based on the principles of ministerial responsibility and parliamentary government. The national government comprises three main institutions: the Monarch, the Council of Ministers, and the States General. There also are local governments.

The Monarch. The monarch is the titular head of state. The Queen's function is largely ceremonial, but she does have some influence deriving from the traditional veneration of the House of Orange, from which Dutch monarchs for more than three centuries have descended. Her influence also derives from her personal qualities as Queen and her power to appoint the "formateur," who forms the Council of Ministers following elections.

The Council of Ministers plans and implements government policy. The Monarch and the Council of Ministers together are called the Crown. Most ministers also head government ministries, although ministers-without-portfolio exist. The ministers, collectively and individually, are responsible to the States General (parliament). Unlike the British system, Dutch ministers cannot simultaneously be members of parliament.

The Council of State is a constitutionally established advisory body to the government that consists of members of the royal family and Crown-appointed members generally having political, commercial, diplomatic, or military experience. The Council of State must be consulted by the cabinet on proposed legislation before a law is submitted to the parliament. The Council of State also serves as a channel of appeal for citizens against executive branch decisions.

States General (parliament). The Dutch parliament consists of two houses, the First Chamber and the Second Chamber. Historically, Dutch governments have been based on the support of a majority in both houses of parliament. 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 state secretaries.

The Second Chamber consists of 150 members, elected directly for a 4-year term--unless the government falls prematurely--on the basis of a nationwide system of proportional representation. This system means that members represent the whole country--rather than individual districts as in the United States--and are normally elected on a party slate, not on a personal basis. There is no threshold for small-party representation. Campaigns are relatively short, lasting usually about a month, and the election budgets of each party tend to be less than $1 million. The electoral system makes a coalition government almost inevitable. The last election of the Second Chamber was in November 2006.

The First Chamber is composed of 75 members elected for 4-year terms by the 12 provincial legislatures. It cannot initiate or amend legislation, but its approval of bills passed by the Second Chamber is required before bills become law. The First Chamber generally meets only once a week, and its members usually have other full-time jobs. The current First Chamber was elected following provincial elections in May 2007.

Courts. The judiciary comprises 62 cantonal courts, 19 district courts, five courts of appeal, and a Supreme Court that has 24 justices. All judicial appointments are made by the Crown. Judges nominally are appointed for life but actually are retired at age 70.

Local Government. The first-level administrative divisions are the 12 provinces, each governed by a locally elected provincial council and a provincial executive appointed by members of the provincial council. The province is formally headed by a queen's commissioner appointed by the Crown.

Current Government. General elections were held in November 2006. On February 22, 2007, a new center-left coalition government was sworn in, composed of the center-right Christian Democrats (CDA), Social Democrats (PvdA), and left-of-center orthodox Protestant Christian Union (CU) under CDA Prime Minister Jan Peter Balkenende. Given the consensus-based nature of Dutch politics, a change of government does not usually result in any drastic change in foreign or domestic policy. Descriptions of the four main parties follow.

The Christian Democratic Appeal (CDA) was formed from the merger of the Catholic People's Party and two Protestant parties, the Anti-Revolutionary Party and the Christian-Historical Union. The merger process, begun in the early 1970s to try to stem the tide of losses suffered by religiously based parties, was completed in 1980. The CDA supports free enterprise and holds to the principle that government activity should supplement but not supplant communal action by citizens. On the political spectrum, the CDA sees its philosophy as standing between the "individualism" of the Liberals and the "statism" of the Labor Party. CDA has 41 seats in the current Second Chamber, more than any other party.

The Labor Party (PvdA), a classic European Social Democratic party, is left of center. It currently has 33 seats in the Second Chamber. Labor's program is based on greater social, political, and economic equality for all citizens, although in recent years the party has begun to debate the role of central government in that process. Although called the Labor Party, it has no formal links to the trade unions.

The Liberal (VVD) Party is "liberal" in the European, rather than American, sense of the word. It thus attaches great importance to private enterprise and the freedom of the individual in political, social, and economic affairs. The VVD is generally seen as the most conservative of the major parties. It currently has 22 seats in the Second Chamber.

The Socialist Party (SP) was founded as a grass root Marxist-Leninist movement in 1972. From the start Jan Maijnissen has been the driving force behind the party. Started at the local level, Marijnissen transformed the party into a working-class leftist alternative to the Labor Party and succeeded at being elected to parliament in 1994. At every subsequent election the party grew, and in November 2006 it obtained 25 seats, which made it the third largest party. The party is fundamentally nationalistic and opposes globalization, the European Union and Dutch participation in international peacekeeping. It also favors cutting defense spending by 40%.

Domestic Drug Policy
Despite intensified efforts by the Dutch Government to combat production of and trafficking in narcotic drugs, the Netherlands continues to be a significant transit point for drugs entering Europe (especially cocaine), an important producer and exporter of synthetic drugs, notably MDMA (Ecstasy), although MDMA production seems to be declining substantially. According to the National Police, three large seizures caused the number of ecstasy tablets seized in the U.S. that could be linked to the Netherlands to rise to 0.85 million in 2005 from 0.2 million in 2004. MDMA seizures are still down from the 1.1 million tablets seized in 2003 and 2.5 million in 2002. The successful five-year strategy (2002-2006) against production, trade, and consumption of synthetic drugs was reviewed at the end of 2006, and a new long-term plan was published in May 2007.

The Dutch Opium Act punishes possession, commercial distribution, production, import, and export of all illicit drugs. Drug use, however, is not an offense. The act distinguishes between "hard" drugs that have "unacceptable" risks (e.g., heroin, cocaine, ecstasy) and "soft" drugs (cannabis products). One of the main aims of this policy is to separate the markets for soft and hard drugs so that soft drug users are less likely to come into contact with hard drugs. The sale of a small quantity (under five grams) of soft drugs in "coffeeshops" is tolerated, albeit under strict conditions and controls. The United States continues to disagree with this aspect of Dutch drug policy. Overall, the Health Ministry coordinates drug policy, while the Ministry of Justice is responsible for law enforcement. Matters relating to local government and the police are the responsibility of the Ministry of Interior. At the municipal level, policy is coordinated in tripartite consultations among the mayor, the chief public prosecutor, and the police.

The Netherlands has a wide variety of demand-reduction and "harm"-reduction programs reaching about 80% of the country's 26,000-30,000 opiate addicts. The number of opiate addicts has stabilized over the past few years, with the average age rising to 40, and the number of overdose deaths related to opiates stabilizing at between 30 and 50 per year.

Counterterrorism/Homeland Security
The Netherlands supports the global coalition against terrorism with leadership, personnel and material, including the deployment of troops to Iraq and Afghanistan. The Prime Minister stated the U.S. and his country stand "shoulder to shoulder" in the struggle for global security. The Netherlands is a party to all 12 UN counterterrorism conventions.

In August 2004, the Act on Terrorist Crimes, implementing the 2002 European Union (EU) framework decision on combating terrorism, became effective. The Act makes recruitment for the Jihad and conspiracy with the aim of committing a serious terrorist crime separate criminal offenses. In 2006, three packages of counterterrorism legislation were adopted by Parliament, namely a bill to permit the use of intelligence information in criminal proceedings, a bill to expand the use of special investigative methods, such as phone taps, surveillance and infiltration, in investigations and prosecutions of terrorist crimes, and a bill to ban organizations on the UN or EU terror lists. In 2006, there were successful trials against two terror groups leading to major convictions. In 2004, the government created a National Counterterrorism Coordinator's Office to streamline and enhance Dutch counterterrorism efforts. The Dutch have taken a leading role, particularly in the European Union, to establish financial protocols to combat terrorism. They have also donated to the International Monetary Fund (IMF) to provide assistance to countries that lack the wherewithal to implement some of these measures immediately. They have taken steps to freeze the assets of individuals and groups included on the UN Security Council Resolution (UNSCR) 1267 Sanctions Committee's consolidated list. In March 2006, the Dutch hosted a major international terrorist financing conference.

The Netherlands is an active participant in the Container Security Initiative at Rotterdam, one of Europe's busiest ports. The Dutch have also installed radiological portal monitors at Rotterdam, in partnership with the Department of Energy's Megaport/Second Line of Defense initiative. The government also permitted U.S. CBP Immigration Liaison Officers to return to Schiphol Airport to assist with U.S.-bound passenger screening (the program is now known as the Immigration Assistance Program). In January 2005, the U.S. and Netherlands agreed to develop an International Registered Travelers program to facilitate travel between Schiphol Airport and JFK.

Principal Government Officials
Head of State--Queen Beatrix
Prime Minister--Jan Peter Balkenende
Deputy Prime Minister and Minister of Finance--Wouter Bos
Deputy Prime Minister and Minister for Youth and Family Affairs--André Rouvoet
Foreign Minister--Maxime Verhagen
Defense Minister--Eimert van Middelkoop
Ambassador to the United States--Christiaan Kröner
Ambassador to the United Nations--Frank Majoor

The Netherlands' embassy in the U.S. is at 4200 Linnean Avenue, NW, Washington, DC 20008; tel: 202-244-5300; fax: 202-362-3430.

ECONOMY

After a strong performance in the 1990s, which brought unemployment to below 3%, the Dutch economy struggled through 2002 and 2003, plagued by relatively high costs and weak domestic demand. Real GDP growth recovered to 2.0% in 2004, but fell back slightly in 2005 to 1.5% largely due to lagging corporate investment and decreased government consumption. The economy is expected to grow by 3.0% in both 2006 and 2007. Export growth slowed to an estimated 6.8% in 2005, after a 2004 rebound of 9.8%, and is expected to stay strong through 2006 and 2007.

Private consumption decreased by 1.2% in 2006, primarily due to reforms in the health care system which shifted health care spending from private to public consumption. Employment gains brought unemployment down to 5.5%, leading to projections of a 2.3% increase in private consumption for 2007. After a drop in the early 2000s, investment staged a recovery in 2005. This upward trend in investment continued into 2006 with an estimated increase of 3%. A further increase of up to 9% is projected for 2007.

In recent years, many firms in the Netherlands cited a loss of competitiveness as a major impediment to growth as unit labor costs outpaced those of their major competitors, including within the euro area. Low wage rises in 2004 and 2005 enabled firms to regain some lost ground. With many collective wage agreements signed when strong growth was not yet apparent, the 2006 growth level has not yet put upward pressure on overall wages, but wages are expected to go up in 2007 as the collective agreements come up for renegotiation. Inflation dropped to 1.2% in 2004, but increased to 1.7% in 2005. For 2006, it is again expected to drop to 1%, with projections suggesting it will return to 1.25% in 2007.

The Netherlands was one of the first EU member states to qualify for the Economic and Monetary Union (EMU). Its fiscal policy has sought to strike a balance between further reductions in public spending and lower taxes and social security contributions. After an unexpected sharp economic downturn in 2003 caused the nominal deficit to breach the 3% GDP limit set by the EMU's Growth and Stability Pact, the center-right coalition government agreed to a package of spending cuts, which helped to lower the budget deficit to 1.8% of GDP in 2004 and further to 0.3% in 2005. The government achieved a 0.6% budget surplus in 2006 and a 0.2% surplus is expected for 2007.

Government Role
Although the private sector is the cornerstone of the economy, the Netherlands has an important and vibrant public sector. The government plays a significant role through permit requirements and regulations pertaining to almost every aspect of economic activity. The government combines a rigorous and stable microeconomic policy with wide-ranging structural and regulatory reforms. The government has gradually reduced its role in the economy since the 1980s, and privatization and deregulation continue unabated.

Trade and Investment
The Netherlands, which derives more than two-thirds of GDP from merchandise and services trade, continued to have a strongly positive balance of goods and services trade for 2005 of $42.2 billion--close to 7.7% of GDP, the main contributor to a current account surplus of close to 8.8% of GDP. Since there are no significant trade or investment barriers, the Netherlands remains a receptive market for U.S. exports and an important investment partner. The Netherlands is the eighth-largest U.S. export market, as well as the fourth-largest direct investor in the United States. Dutch accumulated direct investment in the United States in 2005 was $171 billion. The United States is the largest investor in the Netherlands with direct investment of $181 billion. There are more than 1,600 U.S. companies with subsidiaries or offices in the Netherlands. The Dutch are strong proponents of free trade and the staunchest allies of the U.S. in international fora such as the World Trade Organization (WTO) and the Organization for Economic Cooperation and Development (OECD).

Sectors of the Economy
Services account for almost three quarters of the national income and are primarily in transportation, distribution, logistics, and financial areas, such as banking and insurance. Industrial activity generates about a fourth of the national product and is dominated by the metalworking, oil refining, chemical, and food processing industries. The agriculture and fisheries sector and traditional Dutch activities account for some 2% of GDP.

Although Dutch crude oil production is small, the Netherlands is a relatively large producer and distributor of natural gas. The Slochteren gas fields in Groningen Province in the north are among the world's larger producing natural gas fields. Total proven reserves of natural gas situated on the mainland currently amount to about 2 trillion cubic meters. Roughly 80% is accounted for by reserves on the mainland, the remaining 20% accounted for by relatively small deposits on the North Sea continental shelf. Current gas production is running at an annual average of around 75 billion cubic meters, roughly half of which is exported to EU member countries.

Environmental Policy
The Netherlands is a small and densely populated country. Its economy depends on industry, particularly chemicals and metal processing, intensive agriculture and horticulture, and on its infrastructure, which takes advantage of the country's geographical position at the heart of Europe's transportation network. These factors have led to major pressure on the environment.

The National Environmental Policy Plan (NMP) sets out Dutch environmental policy. Under NMP-4, published in 2001, the government seeks to cut back on all forms of pollution by 80%-90% within one generation, meaning that by 2010, the present generation should be able to pass on a clean environment to the next one.

Although the environmental quality in the Netherlands has improved significantly, some important targets, particularly with respect to nitrogen oxide and ammonia emissions, climate change, and noise reduction, will be difficult to reach.

The Dutch Government works closely with industry and nongovernmental organizations to reach environmental targets. In order to meet the Kyoto target of reducing greenhouse gas emissions by 6% in the 2008-2012 period from 1990 levels, the government reached an agreement with industry and the energy sector on emission rights trading. In May 2006, the government told parliament it had sufficient confidence the Kyoto targets would be reached provided planned additional measures are implemented.

FOREIGN RELATIONS

The Netherlands is among the world's leading aid donors, giving about 0.8% of its gross national product (about $5.6 billion in 2005) annually in development assistance, a ratio maintained as a firm policy target. The Dutch thus rank as the sixth largest donor nation in dollar terms and the fifth most generous relative to GNP. The country consistently contributes large amounts of aid through multilateral channels, especially the UN Development Program, the international financial institutions, and EU programs. A portion of Dutch aid funds also are channeled through private ("cofinancing") organizations that have almost total autonomy in choice of projects. Minister for Development Cooperation Agnes van Ardenne oversees the aid portfolio.

Dutch development strategy is anchored in the Millennium Development Goals and as such focuses on poverty reduction. The priority programmatic areas for Dutch assistance are education, the environment and water, AIDS, and reproductive health care.

In 2004, the Netherlands introduced a new, more focused development aid strategy, under which a number of smaller aid programs in wealthier developing countries were phased out. The number of countries in which the Dutch operate bilateral assistance programs was thus cut from 49 to 36, and the number of sectors in which the Dutch will be active in each country was limited to two to three. Roughly half of Dutch aid is earmarked for Africa. In addition, the Dutch introduced a new policy instrument, the Stability Fund, which pushes the bounds of traditional development assistance by funding programs and activities, such as police training, that aim to create a security environment in which development can proceed. The Stability Fund, managed jointly by the Minister for Development Cooperation and the Minister for Foreign Affairs, spent $109 million in 2005.

The Dutch are the top donor of unearmarked assistance to UN humanitarian programs. For Afghanistan, the Netherlands spent $66 million on reconstruction in 2005, of which $33 million went to the Afghan Reconstruction Trust Fund (ARTF), $10 million was spent on the elections, almost $7 million on the fight against drugs, and an additional $8 million on humanitarian relief. The Dutch contribution to the ARTF alone totaled $50.8 million in 2006. For 2007-2009, the Dutch have pledged $132 million. For Iraq, the Dutch have pledged $36 million in humanitarian and reconstruction assistance since March of 2003. In January 2006, the Netherlands signed a bilateral agreement with the Government of Iraq, canceling an amount of over $300 million in Iraqi debt, as part of an effort by the Paris Club to provide debt relief to Iraq.

In response to the Asian tsunami, the Dutch contributed $53 million in humanitarian relief and have promised $264 million over the next five years for reconstruction efforts in Indonesia and Sri Lanka. In 2006, they pledged an additional $86 million for the reconstruction of Aceh and Nias, of which $77 million to the Multi Donor Fund (MDF). The Netherlands has traditionally been a strong supporter of programs to help Palestinians in the Occupied Territories. The Balkans are another major recipient of Dutch assistance. The Dutch fund programs in Bosnia and Macedonia in the areas of education, good governance, and economic reform.

Despite their commitment to ODA, the Dutch also champion the role of trade and private enterprise for their contributions to development. In recent years, the government has devised new programs to support private sector development in developing countries.

In August 2006, the Center for Global Development, in conjunction with Foreign Policy magazine and the Carnegie Endowment for International Peace, ranked the Netherlands number two in the world for its government's policies in support of development.

International Drug-Trafficking Control
The Dutch work closely with the United States and other countries on international programs against drug trafficking and organized crime. In July 2005, the two nations signed an agreement to expand information sharing and cooperative research on demand reduction. There is close Dutch-U.S. cooperation on joint counter-narcotics operations in the Caribbean. The Netherlands actively participates in the Drug Enforcement Administration's (DEA) El Paso Intelligence Center (EPIC). The 10-year Forward Operation Locations agreement between the U.S. and the Kingdom for the establishment of forward operating locations on Aruba and Curacao became effective in October 2001. The Netherlands is a signatory to international counternarcotics agreements, a member of the UN Office on Drugs and Crime (UNODC), the UN Commission on Narcotic Drugs, the 1990 Strasbourg Convention on Money Laundering and Confiscation, and is a major contributor to international counternarcotics projects.

U.S. RELATIONS

Ambassador-- Roland E. Arnall
Deputy Chief of Mission--Michael Gallagher
Political Counselor--Andrew J. Schofer
Economic and Integration Counselor--Karen Enstrom
Global Affairs Officer--Susan P. Garro
Legal Counselor--Heather Schildge
Public Affairs Counselor--Gary P. Keith
Management Counselor--Sarah A. Solberg
Regional Security Officer--Roberto C. Bernardo
Defense Attache--Devon G. Goldsmith
Office of Defense Cooperation--Col. David Kelly
Commercial Officer--Sheryl A. Maas
Agriculture Counselor--Roger A. Wentzel
Consul General, Amsterdam--Marjorie A. Ames

The U.S. Embassy is located at Lange Voorhout 102, 2514 EJ The Hague; tel: 31-70-310-2209; fax: 31-70-361-4688. The Consulate General is at Museumplein 19, 1071 DJ Amsterdam; tel: 31-20-575-5309; fax: 31-20-575-5310.

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Consular Information Sheets, Public Announcements, and Travel Warnings. Consular Information Sheets exist for all countries and include information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Public Announcements are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Public Announcements, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778). Customer service representatives and operators for TDD/TTY are available Monday-Friday, 7:00 a.m. to 12:00 midnight, Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled "Health Information for International Travel" (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.

Revised: Sep. 2007