New Dutch government reopens coalition negotiations

AMSTERDAM Fri Nov 9, 2012 10:02am EST

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AMSTERDAM (Reuters) - The freshly-installed Dutch government will re-open coalition talks to address concerns about healthcare cost increases, an unpopular austerity policy, media reported Friday.

The decision to break open a coalition agreement is not likely to cause a government collapse but, coming just four days after the cabinet was sworn in, it is not an auspicious start for the politicians who had promised stability.

The development highlights the challenges facing Liberal Prime Minister Mark Rutte and his Labour coalition partners as they seek nearly 16 billion euros ($20 billion) of budget cuts that will hit the spending power of more than half of Dutch households.

The right-of-center Liberals and left-of-center Labour will re-negotiate the plan to raise healthcare premiums paid by citizens, Labour leader Diederik Samsom was quoted by national broadcaster NOS as saying.

He said the broad outlines of the government program, including fiscal targets, would remain unaffected.

Parliament had been due to debate the new government's program on Tuesday. "They'll have to be fast. They'll try to fix it before then," said Paul Bovend'Eert, professor at Radboud University. The parties are expected to negotiate through the weekend.

"When you make such a bad start it can be the beginning of all kinds of arguments," he said.

One of the most contested parts of the coalition deal was an increase in healthcare premiums that would have raised costs by hundreds of euros per month for people earning more than 70,000 euros ($89,100), a move that was unpopular with large parts of the Liberal party.

The spending cuts are needed to bring the budget deficit in line with European Union requirements. ($1 = 0.7857 euros)

(Reporting By Anthony Deutsch and Thomas Escritt; Editing by Robin Pomeroy)

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