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New Dutch Government Plans 18 Billion Euros of Cuts

Liberals and Christian Democrats in the Netherlands vowed to cut spending by 18 billion euros ($25 billion) by 2015 and ban full-face Islamic veils in their program for the first minority government since World War II.

“We’re going to reorganize the government finances,” Mark Rutte, 43, the Liberal Party leader who will become prime minister in the government backed by Geert Wilders’s anti-Islam Freedom Party, told reporters in The Hague today. “We want to give back the Netherlands to the hard-working citizen.”

Austerity measures are the key topic on the government’s agenda. The Netherlands, the fifth-largest economy in the euro region, must narrow its budget deficit to 3 percent of gross domestic product by 2013 from almost 6 percent this year to meet European Union rules. The latest plans will cut the shortfall to 0.7 percent by 2015, according to the government planning agency, known as the CPB.

The coalition plans to lower spending on development aid by 1 billion euros a year and aims to cut its contribution to the EU by the same amount. The defense budget will be cut by 600 million euros, civil servants’ salaries will be frozen and several ministries will be merged.

More Police

Rutte’s government, which will have as its slogan “Freedom and Responsibility,” also intends to build more highways, increase the speed limit on them and hire 2,500 new police officers. To satisfy the Freedom Party, it will ban the wearing of full-face veils in public.

Lawmakers from the Christian Democrats will await the outcome of a special party convention Oct. 2 before they take a final decision to approve the coalition. Rutte’s and Wilders’s parties agreed to the program yesterday.

It’s taken three attempts to form the coalition following the inconclusive June 9 election. A previous round of talks between the three parties collapsed Sept. 3 after senior Christian Democrats opposed cooperation with the Freedom Party.

The government will have 52 seats in the lower house of parliament and rely on the 24 Freedom Party lawmakers to give it the smallest possible majority in the 150-seat chamber.

The yield premium investors demand to hold Dutch 10-year bonds instead of benchmark German bunds has narrowed to 23.1 basis points from 29.6 basis points on election day.

Wilders’s party more than doubled its representation in parliament in the election, while the Christian Democrats, who were led into the vote by Balkenende, lost half of their support. Rutte’s party is the largest in the new parliament.

‘Fitna’ Charges

The Freedom Party is in favor of a ban on new mosques, less development aid and a reduction of European Union influence in the Netherlands. Wilders, 47, receives police protection around the clock and faces trial next week on charges of inciting hatred in his 2008 film “Fitna,” in which he calls on Muslims to rip out “hate-preaching” verses from the Koran.

“From now on, the Netherlands will become safe,” Wilders told reporters in The Hague today. “We will reduce the number of immigrants and people seeking asylum,” Wilders said, adding there will also be a ban on the burqa.

Although the Freedom Party leader won’t be a part of the government, Wilders’s involvement may hurt Dutch diplomatic and business interests abroad. “Fitna” sparked protests in majority-Muslim countries including Indonesia and Pakistan and led to calls to boycott Dutch products in Malaysia and Iran.

Denmark, Britain

The agreement in the Netherlands mirrors the way Denmark has been governed since 2001. A minority coalition of Liberals and Conservatives in Denmark relies on the support of the anti-immigrant Danish People’s Party to get legislation through parliament.

The time it’s taken to form a government in The Hague contrasts with the U.K., where it took Conservative leader David Cameron and the Liberal Democrats’ Nick Clegg just five days after May 6 elections to agree on a program for the country’s first coalition since World War II.

While the Dutch Liberals and Christian Democrats will count on the Freedom Party for their majority in the lower house of parliament, Wilders’s party has no seats in the upper house, an institution it is seeking to abolish, according to its program.

The Liberals and Christian Democrats currently have 35 of the 75 seats in the upper chamber, falling short of the majority needed to approve legislation.

The Freedom Party will thus have to run in March provincial elections to ensure it gains representation in provincial councils, which will elect members of the upper house in May.

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