Netherlands (06/00)

For the most current version of this Note, see Background Notes A-Z.


Kingdom of the Netherlands

Area: 41,526 sq. km. (16,485 sq. mi.).
Cities: Capital--Amsterdam (pop. 1.1 million). Other cities--The Hague, seat of government (.7 million); Rotterdam, the world's largest port (1.1 million); Utrecht (554,000).
Terrain: Coastal lowland.
Climate: Northern maritime.

Population: 15.7 million.
Nationality: Noun--Dutchmen and Dutchwomen. Adjective--Dutch.
Ethnic groups: Predominantly Dutch; largest minority communities are Moroccans, Turks, Surinamese.
Religions: Roman Catholic, Protestant, Muslim, other.
Language: Dutch.
Education: Years compulsory--10. Attendance--nearly 100%. Literacy--99%.
Health: Infant mortality rate--4.8/1,000. Life expectancy--78 yrs.
Work force (6.7 million): Services--73%; industry--23%; government--7%; agriculture--4%.

Type: Parliamentary democracy under a constitutional monarch.
Constitution: 1814 and 1848.
Branches: Executive--monarch (chief of state), prime minister (head of government), cabinet. Legislative--bicameral parliament (First and Second Chambers). Judicial--Supreme Court.
Subdivisions: 12 provinces.
Political parties: Christian Democratic Appeal (CDA), Labor Party (PvdA), Liberal Party (VVD), Democrats '66 (D'66), other minor parties.
Suffrage: Universal at 18.

Flag: flag of netherlands

GDP (2000 est.): $406.0 billion
GDP real growth rate (2000): 4.3%.
GDP per capita (2000 est.): $25,695.
Natural resources: Natural gas, petroleum, fertile soil.
Agriculture (3.5% of GDP): Products--dairy, poultry, meat, flower bulbs, cut flowers, vegetables and fruits, sugarbeets, potatoes, wheat, barley.
Industry (26.8% of GDP): Types--agroindustries, steel and aluminum, metal and engineering products, electric machinery and equipment, bulk chemicals, natural gas, petroleum products, transport equipment, microelectronics.
Trade (1999): Exports--$196 billion (f.o.b): mineral fuels, chemicals, machinery and transport equipment, processed food and tobacco, agricultural products. Imports--$186 billion (c.i.f): mineral fuels and crude petroleum, machinery, transportation equipment, consumer goods, foodstuffs. Major trading partners--EU, Germany, Belgium, Luxembourg, France, U.K., U.S.

The Dutch are primarily of Germanic stock with some Gallo-Celtic mixture. Their small homeland frequently has been threatened with destruction by the North Sea and has often been invaded by the great European powers.

Julius Caesar found the region which is now the Netherlands inhabited by Germanic tribes in the first century B.C. The western portion was inhabited by the Batavians and became part of a Roman province; the eastern portion was inhabited by the Frisians. Between the fourth and eighth centuries A.D., most of both portions were conquered by the Franks. The area later passed into the hands of the House of Burgundy and the Austrian Habsburgs. Falling under harsh Spanish rule in the 16th century, the Dutch revolted in 1558 under the leadership of Willem of Orange. By virtue of the Union of Utrecht in 1579, the seven northern Dutch provinces became the Republic of the United Netherlands.

During the 17th century, considered its "golden era," the Netherlands became a great sea and colonial power. Among other achievements, this period saw the emergence of some of painting's "Old Masters," including Rembrandt and Hals, whose works--along with those of later artists such as Mondriaan and Van Gogh--are today on display in museums throughout the Netherlands.

The country's importance declined, however, with the gradual loss of Dutch technological superiority and after wars with Spain, France, and England in the 18th century. The Dutch United Provinces supported the Americans in the Revolutionary War. In 1795, French troops ousted Willem V of Orange, the Stadhouder under the Dutch Republic and head of the House of Orange.

Following Napoleon's defeat in 1813, the Netherlands and Belgium became the "Kingdom of the United Netherlands" under King Willem I, son of Willem V of Orange. The Belgians withdrew from the union in 1830 to form their own kingdom. King Willem II was largely responsible for the liberalizing revision of the constitution in 1848.

The Netherlands prospered during the long reign of Willem III (1849-90). At the time of his death, his daughter Wilhelmina was 10 years old. Her mother, Queen Emma, reigned as regent until 1898, when Wilhelmina reached the age of 18 and became the monarch.

The Netherlands proclaimed neutrality at the start of both world wars. Although it escaped occupation in World War I, German troops overran the country in May 1940. Queen Wilhelmina fled to London and established a government-in-exile. Shortly after the Netherlands was liberated in May 1945, the Queen returned. Crown Princess Juliana acceded to the throne in 1948 upon her mother's abdication. In April 1980, Queen Juliana abdicated in favor of her daughter, now Queen Beatrix. Crown Prince Willem Alexander was born in 1967.

Elements of the Netherlands' once far-flung empire were granted either full independence or nearly complete autonomy after World War II. Indonesia formally gained its independence in 1949, and Suriname became independent in 1975. The five islands of the Netherlands Antilles (Curacao, Bonaire, Saba, St. Eustatius, and a part of St. Maarten) and Aruba are integral parts of the Netherlands realm but enjoy a large degree of autonomy.

The present constitution--which dates from 1848 and has been amended several times--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 been chosen; the personal qualities of the 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 which 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 usually last 6 weeks, and the election budgets of each party tend to be less than $500,000. The electoral system makes a coalition government almost inevitable. The last election of the Second Chamber was in May 1998.

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 March 1999.

Courts. The judiciary comprises 62 cantonal courts, 19 district courts, five courts of appeal, and a Supreme Court which 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.

The current government, formed in August 1998, is a three-way "Purple Coalition" of the Labor (PvdA), Liberal (VVD), and Democrats '66 (D'66) parties headed by Prime Minister Kok of the PvdA. The coalition parties hold 97 of the 150 seats in the Second Chamber of parliament. The main opposition parties are the Christian Democrats with 29 seats and the Greens with 13 seats. Given the consensus-based nature of Dutch Government, elections do not result in any drastic change in foreign or domestic policy. Descriptions of the four main parties follow.

The Labor Party, a European social democratic party, is left of center. Labor has 45 seats in the current Second Chamber, which makes it the largest party. 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 Christian Democratic Appeal 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. The CDA won 29 seats in the 1998 parliamentary elections, which was a significant drop from 1994. For the first time in 76 years, the CDA was excluded from government.

The Liberal 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. The VVD was the junior partner in two governing coalitions with the CDA from 1982-89, and is now in the three-way coalition with 38 seats in the Second Chamber.

Democrats 66, the largest of the "small" parties in the Dutch parliament, has grown in size and influence. The electoral fortunes of D'66 have fluctuated widely since the party's founding in 1966. The 14 seats it currently holds reflect the party's average showing over the last 20 years. D'66 is a center-left party, generally portrayed as between the CDA and PvdA, with its strongest support among young, urban, professional voters. It professes a pro-European platform of ethnic and religious toleration.

Domestic Drug Policy
Despite the high priority given by the Dutch Government to fighting narcotics trafficking, the Netherlands continues to be an important transit point for drugs entering Europe, a major producer and exporter of amphetamines and synthetic drugs, and an important consumer of most illicit drugs. The exportation of the synthetic drug ecstasy to the U.S. during 1999 reached epidemic proportions. The Netherlands' special synthetic drug unit, set up in 1997 to coordinate the fight against designer drugs, appears to be successful. The Dutch Government has stepped up border controls and intensified cooperation with neighboring countries.

All drugs are illegal in the Netherlands. The Dutch Opium Act, however, distinguishes between "hard" drugs, having "unacceptable" risks (heroin, cocaine, etc.) and "soft" drugs (cannabis). 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 (no more than 5 grams per person) of soft drugs in "coffee shops" is tolerated, albeit under strict criteria and increasing government control. The United States continues to disagree with this aspect of Dutch drug policy. Although drug abuse, as opposed to trafficking, is seen primarily as a public health issue, responsibility for drug policy is shared by both the Ministries of Health, Welfare, and Sports, and Justice.

The Netherlands spends more than $150 million on facilities for addicts, of which about 50% goes to drug addicts. The Netherlands has extensive demand reduction programs, reaching about 90% of the country's 25,000 to 28,000 hard drug users. The number of hard-drug addicts has stabilized in the past few years and their average age has risen to 38. The number of drug-related deaths in the country remains the lowest in Europe.

Principal Government Officials
Head of State--Queen Beatrix
Prime Minister--Willem Kok
Deputy Prime Minister and Minister of Economic Affairs--Annemarie Jorritsma-Lebbink
Ambassador to the U.S.--Joris M. Vos
Ambassador to the UN--Peter van Walsum

The Netherlands' embassy in the U.S. is at 4200 Wisconsin Ave., NW, Washington, DC 20016; tel: 202-244-5300; fax: 202-362-3430.

The Dutch economy is going into its sixth year of expansion, combining strong GDP growth with sharply falling unemployment and modest inflation. A tight labor market and firming inflation add to the danger of overheating of the economy. Only mildly affected by the crisis in emerging markets and a subsequent slowdown in the euro area, the Dutch economy expanded by 3.6% in 1999. Economic growth in 1999 was driven predominantly by investment and consumer spending, buoyed by sizable income gains resulting from a boom in asset prices. With job growth largely outpacing an expansion of the labor force, unemployment in 1999 fell to less than 3% of the labor force, a level last seen in the early 1970s. Consumer price inflation remained modest as the effects of higher crude oil prices and depreciation of the euro lifted the CPI in 1999 to 2.2%.

Strong 4.2% GDP growth in the first quarter of 2000 supports expectations of sustained growth also in 2000 and beyond. Sailing on the waves of strong world trade growth, the Dutch economy is predicted to expand by 4.3% in 2000 and to show 4% real growth in 2001. A tight labor market will lead unemployment to fall to a low of 2%. Consumer price inflation, on the other hand, is expected to firm to 2.6% in 2000, and to 3.4% in 2001. Labor market conditions and price developments have led the OECD to send out warnings for overheating of the economy. Dutch fiscal policy, aimed at striking a balance between reduction of public spending and cutting taxes, seems successful. For the first time since 1973, the central government budget ran a surplus (0.5% of GDP) in 1999. The stock of public debt fell in step from well over 67% in 1998 to 63.7% of GDP. The budget is forecast to run a surplus also in 2000 and 2001, while the stock of public debt will fall to 53.7% of GDP in 2001.

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 the 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. Public spending, including social security transfer payments, has fallen to 46% of GDP. 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 trade, had strongly positive balance of payments for 1999 estimated at $17.5 billion -- 4% of GDP, the main contributor to a current account surplus of close to 6% 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 third-largest direct investor in the United States, behind the United Kingdom and Japan. Dutch accumulated direct investment in the United States in 1998 was $97 billion. The United States is the largest investor in the Netherlands with direct investment of $79 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 OECD.

Sectors of the Economy
Services account for more than half of the national income and are primarily in transportation, distribution, and logistics, and in financial areas, such as banking and insurance. Industrial activity, including mining, generates about 20% of the national product and is dominated by the metalworking, oil refining, chemical, and food-processing industries. Construction amounts to about 6% of GDP. Agriculture and fishing, although visible and traditional Dutch activities, account for just 4%.

Although Dutch crude oil production is insignificant, the Netherlands ranks among the largest producers and distributors of natural gas. The Slochteren gasfields in Groningen Province are among the world's largest-producing natural gas fields. At present, total proven natural gas reserves--on the mainland and on the North Sea continental shelf--amount to close to 2 trillion cubic meters, of which about 80% is accounted for by reserves on the mainland. Current gas production is running at an annual average of about 80 billion cubic meters, roughly half of which is exported to EU member countries. General government revenues from natural gas totaled about $1.2 billion in 2000.

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. The first version was published in 1989, followed by second and third versions in 1993 and 1998, respectively. NMP-4, laying out government environmental policy over the next few years, will be published at the end of 2000. Under the NMP, 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 not be realized within the timeframe set in the NMPs. The main reason for this is the close relation between economic growth and its negative effects on the environment. The NMP-3, therefore, proposes drastic measures in order to be able to meet the targets.

The Dutch Government works closely with industry and NGOs on implementation of environmental policy. To be able to reach environmental targets, the government has signed agreements with the private sector and other relevant organizations.

The Netherlands abandoned its traditional policy of neutrality after World War II. The Dutch have since become engaged participants in international affairs. Dutch foreign policy is geared to promoting a variety of goals: transatlanticism; European integration; Third World development; and respect for international law, human rights, and democracy. The Dutch Government conducted a review of foreign policy main themes, organization, and funding in 1995. The document "The Foreign Policy of the Netherlands: A Review" outlined the new direction of Dutch foreign policy. The Netherlands prioritizes enhancing European integration, maintaining relations with neighboring states, ensuring European security and stability (mainly through the mechanism of NATO and emphasizing the important role the United States plays in the security of Europe), and participating in conflict management and peacekeeping missions. The foreign policy review also resulted in the reorganization of the Ministry of Foreign Affairs. Through the creation of regional departments, the Ministry coordinates tasks previously divided among the international cooperation, foreign affairs, and economic affairs sections.

As a relatively small country, the Netherlands generally pursues its foreign policy interests within the framework of multilateral organizations. The Netherlands is an active and responsible participant in the United Nations system as well as other multilateral organizations such as the Organization for Security and Cooperation in Europe, Organization for Economic Cooperation and Development (OECD), World Trade Organization (WTO), and International Monetary Fund. A centuries-old tradition of legal scholarship has made the Netherlands the home of the International Court of Justice; the Iran Claims Tribunal; the Yugoslavia and Rwanda War Crime Tribunals; the European police organization, Europol; and the Organization for the Prevention of Chemical Weapons.

Dutch security policy is based primarily on membership in NATO, which the Netherlands joined in 1949. The Dutch also pursue defense cooperation within Europe, both multilaterally--in the context of the Western European Union -- and bilaterally, as in the German-Netherlands Corps. In recent years, the Dutch have become significant contributors to UN peacekeeping efforts around the world as well as to the Stabililzation Force in Bosnia and Herzegovina (SFOR) in Bosnia.

The Dutch have been strong advocates of European integration, and most aspects of their foreign, economic, and trade policies are coordinated through the European Union (EU). The Netherlands' postwar customs union with Belgium and Luxembourg (the Benelux group) paved the way for the formation of the European Community (precursor to the EU), of which the Netherlands was a founding member. Likewise, the Benelux abolition of internal border controls was a model for the wider Schengen Accord, which today has 10 European signatories--including the Netherlands--pledged to common visa policies and free movement of people across common borders.

The Dutch stood at the cradle of the 1992 Maastricht Treaty and have been the architects of the Treaty of Amsterdam concluded in 1998. The Dutch thus have been playing an important role in European political and monetary integration. A Dutchman currently heads the European Central Bank, and the Dutch will continue to play an important role in further economic and monetary integration in the EU.

Foreign Aid
The Netherlands is among the world's leading aid donors, giving about 1% of its gross national product in development assistance. The country consistently contributes large amounts of aid through multilateral channels, especially the UN Development Program, the international financial institutions, and EU programs. A large portion of Dutch aid funds also are channeled through private ("co-financing") organizations that have almost total autonomy in choice of projects.

In 1998, Dutch development assistance--as defined by the OECD--was about $3 billion. The policy priorities of Dutch aid for 1998 are basic social facilities, reproductive health care, the environment, and aid to least developed countries. Dutch aid also is targeted on emergency aid, programs for the private sector, and international education.

The Netherlands is a member of the European Bank for Reconstruction and Development, which recently initiated economic reforms in central Europe. The Dutch strongly support the Middle East Peace Process and in 1998 earmarked $29 million in contributions to international donor-coordinated activities for the occupied territories and also for projects in which they worked directly with Palestinian authorities. These projects included improving environmental conditions and support for multilateral programs in cooperation with local non-governmental organizations. In 1998, the Dutch provided significant amounts of aid to the former Yugoslavia and Africa. The Dutch also provided significant amounts of relief aid to victims of Hurricane Mitch in Central America.

International Drug-Trafficking Control
The Dutch also work closely with the U.S. and other countries on international programs against drug trafficking and organized crime. The Dutch-U.S. cooperation on joint anti-drug operations in the Caribbean is excellent, including an agreement establishing Forward Operating Locations on the Dutch Kingdom islands of Aruba and Curacao. The Netherlands is a signatory to international counter-narcotics agreements, a member of the UN International Drug Control Program, the UN Commission on Narcotic Drugs, and is a leading contributor to international counter-narcotics projects.

The United States' partnership with the Netherlands is its oldest continuous relationship and dates back to the American Revolution. The excellent bilateral relations are based on close historical and cultural ties and a common dedication to individual freedom and human rights. An outward-looking nation, the Netherlands shares with the U.S. a commitment to an open market and free trade. The U.S. attaches great value to its strong economic and commercial ties with the Dutch. The Netherlands is the United States' eighth-largest export market. The U.S. currently runs an annual trade surplus with the Netherlands of more than $11 billion. The Netherlands is the third-largest direct investor in the U.S. ($85 billion in 1997). The U.S. is the largest direct foreign investor in the Netherlands ($65 billion in 1997).

The United States and the Netherlands often have similar positions on issues and work together bilaterally and through the UN and other multilateral organizations on matters concerning NATO. The Dutch have worked with the U.S. in the Uruguay Round, at the WTO, in the OECD, and within the EU to advance the main U.S. goal of a more open, honest, and market-led global economy. The Dutch play a decisive role in European political and monetary integration. The Dutch also strongly support keeping EU markets open to CEE and expanding the EU eastward, both of which are major U.S. goals.

The Dutch were among the first to join the GLOBE Project, initiated by Vice President Gore, under which schools around the world cooperate in collecting environmental data and entering it into a computer network for use by scientists and other researchers. The Clinton Administration works closely with the Dutch on climate change, biodiversity issues, global deforestation, the sustainable development of rainforests, ozone layer depletion, and trade and environment issues. The Netherlands will host and chair the Climate Change Conference (COP-6) in November 2000.

Principal U.S. Embassy Officials
Ambassador--Clifford M. Sobel
Deputy Chief of Mission--Reed J. Fendrick
Political Counselor--Mary Daly
Economic Counselor--Mark A. Tokola
Global Counselor--Philip S. Kosnett
Commercial Counselor--J. Laurence Eisenberg
Administrative Counselor--Robert C. Wood
Regional Security Officer--Rebecca Dockery
Agriculture Counselor--Philip A. Letarte
Public Affairs Counselor (USIS)--Angier Peavy
Consul General, Amsterdam--Arnold H. Campbell

The U.S. Embassy is located at Lange Voorhout 102, 2514 EJ The Hague; tel: 31-70-310-9209; fax: 31-70-361-4688. The Consulate General is at Museumplein 13, 1071 DJ Amsterdam; tel: 31-20-5755-309; fax: 31-20-5755-310.