The economic buoyancy of the Netherlands is offset by political impasse

The outside world has no doubt been unaware of the fact that for much of this year the Netherlands was without a proper government. After the Social Democrats quit in February over Afghanistan, Prime Minister Jan Peter Balkenende has presided over a caretaker minority government consisting of his own Christian Democratic party (CDA) and the small orthodox Christian Party. His humiliating defeat at the polls in June diminished his authority still further, and efforts continue to form a new coalition government - always very laborious in multiparty systems like Holland's.

The rise of right-wing populist Geert Wilders has greatly complicated this coalition-building process. His Freedom Party is now the third largest block in the Second Chamber of parliament, with 24 of the 150 seats. Wilders has forced the Liberal VVD and the CDA to move further right, in the hope they can recapture lost votes. This is seriously polarising the political debate and preventing a traditional coalition between the centre-left and centre-right parties. The Freedom Party is still considered unfit to govern by almost everybody, but the leaders of the CDA and VVD have nevertheless sought Wilders' support for a centre-right minority government so as to outflank the Social Democrats. It is also hoped that by involving Wilders in this way he will quickly loose his carefully cultivated image of a maverick.

Life in the Netherlands is not deeply affected by all these political machinations. Despite the many months of lame-duck government, unemployment is at 5.6% still the lowest in Europe, while the country achieved the EU's second highest growth rate during the second quarter of 2010; at 2.1% it was only just behind Germany's pace-setting 2.2%. On the list of most competitive economies of the World Economic Forum, Holland climbed with two points to eight position. Apparently, the cautious recovery of world trade and the country's geographical location are more important for the economy than a solid government.

The persistent political mess in The Hague does, however, have negative consequences for the Netherlands' diplomatic standing in Europe and the world. The refusal of the Social Democrats to keep Dutch troops deployed in Uruzgan, in central Afghanistan, and the ensuing collapse of the Balkenende government in February, has done little to endear the country to NATO or Washington. Just when President Barack Obama was calling for additional support in Afghanistan, Holland backed off, and some now fear this could even jeopardise Washington's support for Dutch attending membership of G20. Though Wilders will not take part in a next Dutch cabinet, his indirect involvement may easily lead to misunderstandings abroad.

Foreign affairs and even Europe have virtually disappeared from Holland's political debate. Preserving Atlantic cohesion is no longer a self-evident priority; domestic support for development cooperation is dwindling rapidly, and the Dutch contribution to the European Union has become almost invisible. One of the principal tasks of a new Dutch government will be to formulate clearly its central foreign policy objectives, and to reset its traditionally strong commitment to Europe and the wider international community.