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Is The Netherlands nex(i)t?

Economic Report

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  • On March 15th 2017, the lower house (Tweede Kamer) of the bicameral parliament of the Netherlands will be elected
  • Recent polls show that at least four parties are necessary to form a governing coalition in the lower house
  • Political fragmentation in the upper house requires additional political cooperation
  • A populist surge calling for a withdrawal from the European Union (EU) is checked by the coalition system in the Netherlands and balanced by the upper house
  • A consultative referendum could be called by a majority in parliament but would be non-binding
  • An actual withdrawal from the EU is only possible with a majority in both the lower and upper house. This is highly unlikely

On March 15th of 2017 Dutch voters will elect a new lower house of parliament. In the wake of the Brexit referendum in Britain and the presidential elections in the US, an often heard question is whether the Netherlands could be the next developed country to experience a populist upheaval. Specifically: what risks are there of a ‘Nexit’, a withdrawal of the Netherlands from the European Union (EU) and/or euro after the coming elections? To answer this question, we will review the current Dutch political landscape in this document, discuss likely election results, possible routes to a Nexit and the probability thereof.

How does the Dutch political system work?

The Netherlands has a bicameral legislature, consisting of the Tweede Kamer (lower house) with 150 seats, and the Eerste Kamer (upper house) with 75 seats. Each is elected separately from the other, and at different times. The March 15th, 2017 elections concern the lower house. Members are elected directly, for a four-year term, through a system of proportional representation on a national basis.

The upper house is not up for election until two years later, on May 27th, 2019. Its members are also elected for a four-year term, but on indirectly on the basis of proportional representation at the provincial elections. The election results for the lower house determine the formation of the government. The lower house scrutinizes the work of the government and can propose or amend legislation; the upper house can only accept or reject legislation.

What does the current political landscape look like?

Dutch politics are highly fragmented. This is partly due to the absence of a formal electoral threshold. The number of votes per seat depend on the election turnout. In the last elections, 66,000 votes sufficed for a seat in the lower house. As a result, no less than eleven different parties were elected to the lower house in the 2012 elections. 

Additionally, members can split off from their party and become independent members of parliament, which in the current cycle has led to the formation of six additional parliamentary groups. Because of such defections, the current governing coalition led by prime minister Mark Rutte and consisting of the Liberal Party (VVD) and Social Democrats (PvdA) has recently lost its majority in the lower house. Their coalition now has only half of the 150 seats (see figure 1).

Furthermore, because the elections of the upper and lower house take place at different times, a majority coalition in the lower house does not necessarily have a majority in the upper house as well. In fact, the current governing coalition has only 28 percent of seats in the upper house. In order to get its policy agenda passed, it had to compromise and make deals with other parties in the upper house.

Which parties are Eurosceptic?

Amidst discussions on immigration, Brexit, fear of terrorism and the Dutch vote against the association treaty with the Ukraine, membership of the EU is likely to become an important topic during the elections. But whereas the composition of the Dutch lower and upper houses is fragmented, the stance on EU membership is decidedly less polarized among political parties. Save for the Freedom Party (PVV), there are no parties in favour of a Nexit. The only political parties currently supporting a referendum on the EU are the Socialist Party (SP) and the Elderly Party (50PLUS). Although, according to them, the question should not be on leaving the EU, but merely on the ever increasing power of ‘Brussels’ (see figure 2).

Figure 1: Current allocation of seats in the Dutch upper house and lower house
Figure 1: Current allocation of seats in the Dutch upper house and lower houseSource: Rabobank
Figure 2: How do parties view the EU?
Figure 2: How do parties view the EU?Source: Rabobank

What outcome is expected for the elections?

The latest polls for the upcoming elections show even further fragmentation in Dutch politics. Whichever party to come out of the upcoming elections the largest, a new governing coalition will most likely need to consist of at least four political parties to get a majority in the lower house, possibly even five if it also wants a majority in the upper house.

Figure 3: Freedom Party is doing well in the most recent polls
Figure 3: Freedom Party is doing well in the most recent pollsNote: Polls are unweighted average from the week of the 21st of November
Source: Polling agencies, Rabobank

Looking at figure 3, it also becomes clear that the current governing coalition of Liberal Party and Social Democrats is unlikely to return to power after the March elections, unless their coalition is joined by additional political parties. But a Eurosceptic coalition seems just as unlikely. Table 1 shows several thematic coalitions that would broadly agree on major issues. A Eurosceptic ‘protest’ coalition consisting of the Freedom Party, the Socialist Party and the Elderly Party would currently not garner enough seats to reach a majority in the lower house.

Table 1: Coalition formation will prove to be difficult
Table 1: Coalition formation will prove to be difficultNote: Polls are unweighted average from the week of the 21st of November; Christian Democrats and Liberal Democrats are at the centre of the political spectrum and could be part of both a centre-right and centre-left coalition
Source: Polling Agencies, Rabobank

Of course, opinion polls have a margin of error, as was made abundantly clear during the Brexit referendum in Britain and the presidential elections in the United States. Opinion polls in the Netherlands certainly aren’t always right on the money either. For example, in the months running up to the previous lower house elections in 2012, opinion polls overestimated the number of votes on both the Freedom Party and the Socialist Party. It is also interesting to note that while Geert Wilders’ Freedom Party currently leads the opinion polls, pollsters give his party fewer seats in recent polls than in their polls at the beginning of this year. 

Could a Eurosceptic surge take over Dutch politics?

Several factors could contribute to a further rise of Eurosceptic parties in the Netherlands, including the lingering result of the Dutch vote against the association treaty with the Ukraine. Equally important is that the leader of the Freedom Party Geert Wilders is currently on trial for inciting discrimination and hatred of Moroccans in 2014. This case has already attracted plenty of media attention. The verdict on December 9th, whatever it will be, will most likely add to Wilders’ popularity.

It is important to point out that in the 90 years since universal suffrage in the Netherlands, no political party has ever reached an absolute majority in the Dutch lower house (see figure 4). So even in the Freedom Party retains its lead in the polls and gathers the most votes in the upcoming elections, it is certain that it would need to seek support from other political parties to gather a majority coalition in lower house.

Figure 4: Never a majority
Figure 4: Never a majoritySource: Kiesraad, Rabobank

For Geert Wilders’ Freedom Party, this might prove to be an especially big obstacle, as most other political parties, including the Socialist Party, have said they refuse to work with him. Not just because of the 2014 incident for which he is currently on trial, but also because in 2012 his Freedom Party proved to be an unreliable political partner when it unexpectedly dropped its support of the then governing minority coalition, leading to new elections.

The formation process for a new governing coalition could therefore result in protracted negotiations. This is not uncommon in Dutch politics. While the incumbent governing coalition took just 54 days to form, it took the previous coalition 125 days. In case a majority coalition cannot be formed, three possibilities remain. The first and most straightforward is re-elections. The second is a minority coalition, where the majority opposition will support legislative proposals by the minority coalition in an on the go and à la carte manner. In that case, given the other parties’ stance on EU membership, a Nexit certainly will not be on the menu.

Lastly, without being able to form a coalition, Geert Wilders might also choose to remain in the opposition. This is not unheard of in Dutch politics: in 1971, 1977 and 1982 the Social Democrats garnered the most votes in the elections yet ended up in the opposition.  

What could a Eurosceptic lower house do?

While gathering a majority vote in the lower house should already be a high barrier for any election winner, a complicating additional factor for Eurosceptic parties is gathering a majority in the upper house. The past years have made clear that a lack of a simultaneous majority in both houses of parliament can significantly cripple policy making. But the Freedom Party and Socialist Party each have only 9 out of 75 seats in the upper house, while the Elderly Party has 2. And the next elections for the upper house won’t take place until 2019.

To have a viable Eurosceptic governing coalition with a simultaneous majority in both houses of parliament, the Freedom Party would thus need to partner up with up to five other political parties. This seems virtually impossible. As previously described such a stalemate could lead to re-elections, Geert Wilders to remain in opposition or his party deciding to govern without majority in the upper house. In each outcome it seems impossible for a Eurosceptic surge in the lower house to withdraw the Netherlands from the European Union as it would need majority support in both houses of parliament for such a decision.

Furthermore, should a serious political debate on ‘Nexit’ start, it will most likely also kick start a legal discussion on the exact interpretation of the Dutch constitution in the case of withdrawing from the European Union. Article 91(3) of the Dutch constitution states that not a regular majority, but a two-thirds majority in both the lower and upper house is required if a treaty is to be ratified (or withdrawn from) that conflicts with the constitution. While this article did not apply to ratifying the current Treaty on European Union, landmark decisions of the European Court of Justice in 1963 and 1964 established that EU law has primacy over that of its member states, including their national constitutions. By joining the European Union those states have essentially joined a new legal order and have voluntarily given up part of their national sovereignty. And in order to withdraw from such an encompassing international law order, a regular majority in parliament might not be enough.

But what about a referendum?

There are two types of referendums possible in the Netherlands, both of which are non-binding.

One is an advisory referendum, the other a consultative referendum. An advisory referendum can be started by anyone entitled to vote, but needs at least 300,000 signatures to back a final petition for the referendum. This relatively new possibility can only be held in response to new legislation; up to four weeks after a bill is passed. It can therefore not be used to question EU membership. A large Nexit vote could pressure non-Eurosceptic parties to support withdrawal from the EU, but again: such a referendum can be called only by a majority in both houses of parliament, something that seems highly unlikely in the coming years.

Figure 5: Would your country better face the future if it was outside of the European Union?
Figure 5: Would your country better face the future if it was outside of the European Union?Source: Eurobarometer, Rabobank

If a referendum does take place, a Nexit would probably not get a majority. Opinion polls among Dutch voters taken right around the time of the Brexit referendum do not show a majority support for a withdrawal from the EU. This is not to say Dutch voters are satisfied with the EU as it is. Migration and plans for possible expansion of the European Union fuel discontent. However, the Dutch electorate is very much aware of the economic benefits the EU provides to their open economy. When asked to agree or disagree with the statement that their country could better face the future if it was outside of the European Union, only 18 percent of Dutch respondents agreed. This was the lowest in the European Union, where the average was 33 percent. In the United Kingdom, 45 percent of respondents agreed with the statement that their country would be better off outside of the EU (see figure 5).

Concluding remarks

The political system in the Netherlands is relatively stable. It is somewhat resilient against Eurosceptic sentiment in the sense that there is a culture of forming coalitions in which partaking political parties always have to compromise, but also because it is not a given that a majority coalition in the lower house of parliament also has a majority in the upper house. Compared to the United Kingdom, for example, there are therefore two additional barriers in Dutch politics that a Eurosceptic movement will need to overcome, which in the current fragmented political landscape seems extremely unlikely. In addition, the Dutch population seems pragmatic and less negative toward EU membership than for example the British.

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