The Netherlands is located at the delta of four major rivers in northwest Europe. The few hills in the eastern and southern part of the country fall into a flat coastal area, bordered by the North Sea to the north and west. This is protected by a giant infrastructure of dunes, dikes, and canals, as 27% of the coast is below sea level. The Netherlands became one of the world's first confederative republics after Spain recognized its independence in 1648. Its highly successful economy has a long trading tradition, and Rotterdam is the world's largest port.

The Dutch see their country as the most tolerant in Europe, and it has a long history of welcoming refugees seeking religious and political asylum. In the 20th century, immigrants from former colonies settled in the Netherlands and became fully accepted as citizens. They came first from Indonesia and then from the Suriname and the Netherlands Antilles. The small Turkish community, however, does not enjoy full citizenship.

The tradition of tolerance is reflected in liberal attitudes to sexuality. In 2001 same-sex marriages were legalized, giving gay couples full equality, including the right of adoption (after three years of marriage).

The state does not try to impose a particular morality on its citizens. Drug taking is seen as a matter of personal choice, and in 2001 the Netherlands became the first country in the world to legalize euthanasia, albeit under strict conditions.

Women enjoy equal rights and hold 37% of seats in the Second Chamber of the States-General, but are not well represented in the boardroom.

Strengths

Highly skilled, educated, multilingual workforce. Sophisticated infrastructure. Many blue-chip multinationals, including Philips and Shell. Strong consensus between employers and employees. Low inflation and unemployment. Tradition of high-tech innovation, including development of music cassette and CD.

Weaknesses

Costly welfare system, resulting in high taxes and social insurance premiums; one-third of national income spent on social security. High labor costs.

Profile

Trade has been central to the success of the economy since the 16th century. Most goods travel through Rotterdam, the world's biggest port. As well as high-tech industries such as electronics, telecommunications and chemicals, there is a successful agricultural sector. Dependence on trade makes the economy vulnerable to world economic fluctuations; thus high growth rates in 1997–2000 were followed by a marked downturn in 2001.

The Netherlands is a constitutional monarchy. Legislative power is vested in parliament, and the monarch has only nominal power.

Profile

Dutch politics are characterized by a high degree of consensus. Since the early 1980s, governments have employed the "polder model," which focuses on job creation, pay moderation, economic deregulation, and generous social protection.

The CDA has traditionally led two-party coalition governments, either with the left-of-center PvdA or with the right-wing VVD. However, after the 1994 election it was the PvdA under Wim Kok which led the government, in coalition with the VVD, and the left-liberal D66.

Reelected in 1998, this administration resigned in April 2002 after a report criticized Dutch troops serving with the UN in Bosnia in 1995 for failing to stop the Srebrenica massacre. In 2002 the emergence of the ultra-nationalist Pim Fortuyn challenged current policy on immigration and integration. Fortuyn's influence, articulating a sense of widespread public alienation from a complacent political establishment, was expected to be lasting, despite his assassination only days before the May election. The strong sympathy vote boosted a swing to the right, resulting in victory for the CDA, under Jan Peter Balkenende, and second place for the LPF.

Main Political Issues

The future of social welfare

Despite cutbacks in the 1980s, the Dutch still had one of Europe's most generous welfare systems. Most political parties accepted that levels of welfare could not be maintained indefinitely. The debate thus focuses on how much and in which areas cuts should be made.

Refugees and asylum-seekers

Responding to rising numbers of people seeking political asylum in the Netherlands, asylum laws have been tightened since 1994. Immigrants accounted for 9% of the national population in 2001, but for 40% (30% non-European) in Rotterdam, where Fortuyn's party won 35% of the vote in the March 2002 local elections. Fortuyn opposed multiculturalism and advocated amending the constitutional ban on discrimination.

Political and monetary integration within the EU have strong popular support. In 1995, internal border controls were lifted under the Schengen Convention and in 2002 the Netherlands fully adopted the euro. Traditionally the Netherlands favored EU enlargement, but the CDA government expressed reservations when it came to power in May 2002. The International Court of Justice, the International Criminal Tribunal for the former Yugoslavia, and the International Criminal Court all sit in The Hague.

The Dutch military has undergone major restructuring since the end of the Cold War with the aim of making it a rapidly deployable, more flexible military force as befits a NATO member state. Compulsory military service was abolished in 1996 and personnel cut by 44%, with the number of army divisions reduced from three to two. In 1995, a joint Dutch–German army corps numbering 28,000 was inaugurated. The Netherlands sent troops to the international peacekeeping effort in Bosnia; they were later crticized for failing to prevent the massacre at Srebrenica in 1995. The Netherlands also has a large defense industry, which specializes in submarines, weapons systems, and aircraft.

There are large natural gas reserves in the north. There is some oil production from offshore drilling in the North Sea.

There is a strong environmental tradition, a legacy in part of living in one of the most densely populated states in the world. NGOs such as Greenpeace are well supported and the Green Left party is well represented in parliament.

The Dutch recycle domestic trash, have a good record on energy efficiency, and have developed innovative projects in housing and local transportation. An eco-tax on energy users was introduced in 1996 – the first of its kind in the West – though big businesses are exempt.

Serious flooding of the rivers Maas and Waal (an arm of the Rhine) in 1993 and 1995 raised concern about the state of the country's flood defenses and the use of flood plains for development.

Rotterdam, the key transshipment port for northern Europe, is also the world's largest. Schiphol airport is one of the air transport hubs of Europe. A high-speed passenger rail line is due to link Amsterdam and Rotterdam with Brussels and Paris in 2003, and a high-speed freight line from Rotterdam to Germany should be completed in 2004.

Health care is largely funded by the state, though around 25% of funding comes from private sources. High spending ensures that the care that is offered is among the best in the world, but it is threatened by a rapidly aging population. The Netherlands was the first country to legalize abortion, but has the lowest rate of terminations in the world. Major health problems are similar to those in the rest of western Europe. Incidence of AIDS is higher than in Sweden or the UK but lower than in Switzerland, France, or Spain.

Corporate funding plays an important part in university research.

Public, municipally run schools attract 35% of pupils, and private (mostly denominational) schools are attended by 65%. Both types are fully funded by the state.

The Netherlands treats the use of hard drugs more as a medical and social than a criminal issue. Other member states of Europe's Schengen Convention, particularly France, fear that this makes Dutch ports a soft point of entry for narcotics. Possessing cannabis for personal use has been decriminalized – stopping short of actual legalization.

The Netherlands is, per capita, one of the richest countries in the world. Oil executives, stock market traders, and businessmen are among the wealthiest sector of the population. A progressive taxation system and extensive social welfare mean that wealth is quite evenly distributed. A small elite have considerable inherited wealth, but extravagant displays of affluence are rare.

Class does not play a big part in Dutch society. Most citizens would consider themselves middle class. Immigrant communities are the exception; they often live on the edges of towns in deprived areas. The poorest of all are the illegal immigrants.

Tourism is a major business in the Netherlands. Visitors go mainly to Amsterdam, although cities such as Groningen and Maastricht are growing in popularity. Amsterdam caters for a diverse tourism market. Its world-famous museums include the Rijksmuseum, with its collection of Vermeers and Rembrandts, while its network of canals is popular. Amsterdam is also renowned for its liberal attitude to sex; its red-light district draws millions every year. In the past decade, the city has become a center for the European gay community, with celebrations on 30 April (Queen's Day – the monarch's official birthday) and in August (Amsterdam Pride). A thriving club scene and liberal drug laws draw enthusiasts from neighboring countries. In spring and summer, the tulip fields and North Sea beaches attract large numbers of visitors.

Suppression of Protestantism by the ruling Spanish Habsburgs led to the revolt of the Netherlands and the declaration of independence of the northern provinces as a republic in 1581, recognized by Spain in 1648.

• 1813 Dutch oust French after 18 years of French rule and choose to become a constitutional monarchy.
• 1815 United Kingdom of Netherlands formed to include Belgium and Luxembourg.
• 1839 Recognition of 1830 secession of Catholic southern provinces as Belgium.
• 1848 New constitution – ministers to be accountable to parliament.
• 1897–1901 Wide-ranging social legislation enacted. Development of strong trade unions.
• 1898 Wilhelmina succeeds to throne, ending Luxembourg union, where male hereditary Salic Law is in force.
• 1914–1918 Dutch neutrality respected in World War I.
• 1922 Women fully enfranchised.
• 1940 Dutch assert neutrality in World War II, but Germany invades. Fierce resistance.
• 1942 Japan invades Dutch East Indies.
• 1944–1945 "Winter of starvation" in German-occupied western provinces.
• 1945 Liberation. International Court of Justice set up in The Hague.
• 1946–1958 PvdA leads center-left coalitions. Marshall Aid from USA speeds reconstruction.
• 1948 Juliana becomes queen.
• 1949 Joins NATO. Most of East Indies colonies gain independence as Indonesia.
• 1957 Founder member of EEC.
• 1960 Economic union with Belgium and Luxembourg comes into effect.
• 1973 PvdA wins power after 15 years spent mainly in opposition. Center-left coalition until 1977.
• 1980 CDA alliance of the "confessional" parties forms a single party. Beatrix becomes queen.
• 1982–1994 CDA-led coalitions under Ruud Lubbers.
• 1990 20-year National Environment Policy (NEP) introduced.
• 1992 Licensed brothels legalized.
• 1994 Elections. Wim Kok of PvdA heads coalition with VVD and D66.
• 2001 Euthanasia and gay marriage legalized.
• 2002 January, euro fully adopted. April, PvdA-led government resigns after report criticizes Dutch military role in Bosnia in 1995. May, ultra-nationalist leader Pim Fortuyn assassinated. Elections: coaltion led by Jan Peter Balkenende of CDA.