RaboResearch - Economic Research

Is a stable Dutch coalition still viable now that the Greens are out?

Economic Comment

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  • Coalition negotiations between VVD, CDA, D66 and Greens have failed
  • CU will most likely be back at the negotiating table instead of the Greens
  • Odds of a minority cabinet have increased somewhat

What a difference a week makes

As mentioned in our recent political update, last week the Greens (GL) were back ‘pre-negotiating’ with the political ‘engine block’ consisting of the Liberals (VVD), Christian Democrats (CDA) and Liberal Democrats (D66) about a new Dutch cabinet after earlier formation discussions did not work out. Last night, however, the issue of migration proved a fatal stumbling block. The Greens did not agree to a Turkey-style migration deal with North African countries, but instead wanted to admit refugees directly to the Netherlands. This was unpalatable especially for VVD and CDA, who still have Geert Wilders’ Freedom Party (PVV) breathing down their necks. At the same time, it is good to note that even if this hurdle had been cleared, discussions about climate policy and income inequality could still have tripped up the negotiators.  Differences between the engine block and the Greens on these issues were also substantial.

The odds of a minority cabinet have now increased somewhat, given that there is currently only one serious option for a majority cabinet remaining (VVD/CDA/D66 and Christian Union).  D66 rejected that option two weeks ago (after which the Greens came back into the picture again). They may come around this time. Still, this option would only have a one-seat majority in both houses, which could prove precarious.

If the Christian Union cannot be enlisted, a minority cabinet consisting of VVD, CDA and D66 may actually be effective. It could form la carte majority coalitions with left-wing parties on climate issues and with right-wing parties on migration issues. This would require agile leadership, but current PM Mark Rutte has shown in previous years that is able to form makeshift coalitions on a variety of issues.

What about new elections? We still deem such a scenario unlikely. It is not in the interest of any party, save for the PVV and Forum for Democracy (FvD), who have 22 seats (15%) in the lower house combined, to call for new elections now. We expect the engine block of VVD, CDA and D66 to make it work, either with the Christian Union, in some other constellation or as a minority cabinet.

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