IV. POLITICAL ENVIRONMENT


Nature of Bilateral Relationship with the United States

The Netherlands has a historically close bilateral relationship
with the United States, encompassing a full agenda of political,
economic, military and social issues.  The Netherlands and the
United States work closely together in NATO, the United Nations,
the GATT, the Conference on Security and Cooperation in Europe,
the OECD and other international fora.

Major Political Issues Affecting Business Climate

The Netherlands recently held national elections, resulting in a
new parliament.  Coalition negotiations have been concluded
resulting in a three-party coalition led by the left-leaning
labor party (Pvda) together with the right-leaning liberal party
(VVD) and center-left Democrats '66 (D66).  It is the first time
since early this century that the Christian Democrats or their
predecessor confessional parties are not in the government.

The business climate in the Netherlands is likely to improve
under the new government in view of a coalition agreement
requiring 9 billion guilders (one dollar equals 1.76 guilders) of
employer tax relief to stimulate emploment.  Efforts to address
the heavy social welfare burden and rigidities in the employment
system, which have limited business flexibility in responding to
changing economic conditions, are high on the agenda of the new
government.

Because party differences within the Netherlands are not
dramatic, only modest changes in policy are expected from the new
coalition.  The sizeable budget deficit has led all parties to
call for significant budget cuts, particularly in disability and
pension benefits.  Avenues are also being explored for keeping
health care costs in line.  In foreign affairs and defense
policy, there is a strong consensus in favor of continued close
ties with the United States through NATO, and further European
integration through the EU.

Brief Synopsis of Political System, Schedule for Elections, and
Orientation of Major Political Parties

The Netherlands is a constitutional monarchy with a parliamentary
form of government.  The Monarch (Queen Beatrix) is the titular
Head of State, however, the Council of Ministers (the Cabinet
plus representatives of the Netherlands Antilles) is responsible
for government policy.  The Ministers, collectively and
individually, are responsible to the Parliament, but do not serve
in Parliament.

The Dutch Parliament (also known as the "States General")
consists of two houses:  the First and Second Chambers.  The
Second Chamber is the more influential of the two chambers.  It
consists of 150 members elected on party slates for four-year
terms under a system of proportional representation.  As a
result, members represent the whole country rather than
individual districts as in the United States.  The difficulty of
winning an absolute majority under this system has given rise to
a tradition of coalition government.

The First Chamber, composed of 75 members, is elected by
provincial legislatures for four-year terms.  While it can
neither initiate nor amend legislation, it must approve all
legislation passed by the Second Chamber before it becomes law.

Following elections in May 1994, twelve political parties are
represented in the Second Chamber.  The Labor Party (Pvda) is the
largest party with 37 seats, followed by the Christian Democrats
(CDA) with 34, the Liberals (VVD) with 31, and D66 with 24.  The
Labor Party's traditional base has been among the labor unions
and working-class, while the Christian Democrats draw upon a long
tradition of confessional-oriented politics in the Netherlands.
The Liberal Party is a strong advocate of free enterprise and
minimal government intervention.  D66 combines views from both
the left and liberal streams.  Extreme parties of the right and
left exist, but have little support or influence.