00% 0,00% 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 199...

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 Figure 3: Dutch government expenditures relative to GDP (Source: CBS)

2

See figure 3 Appendix

16Color of the government It is widely found in the panel data analyses that democratic countries spend less on the military than non-democracies. Autocratic states are more likely to rely on the military to retain their grip on power and unjustifiable and inefficient levels of military expenditures are maintained in pursuance of the interests of an elite rather than the country as a whole (Maizels et al, 1986). During the sample period there is no variation in the political system of the Netherlands but coalitions change at least every four year. The influence of left wing parties is tested on military expenditures because of the association with conscientious objectors and pacifist movements like War Resisters International. There is no support for an electoral defense spending cycle in the US post war era implicating military expenditures is probably not used on a systematic basis by the president or congress as a differentiated macroeconomic policy instrument for the purpose of winning elections (Zuk et al, 1986). Two different variables measuring the influence of left wing parties are proposed. The first variable is a number related to the color of the government. The average score of the coalition parties reflects the position on the political spectrum (left wing -1, center 0 and right wing +1). However, the average score does not reflect representation of each party within the coalition. The second criterion is for this reason more sophisticated: the number of seats of left wing parties in the coalition divided by the total amount of seats of the coalition.

³

Statistical theory prescribes that if a relationship shows itself strongly it should be even more apparent using a finer classification (De Long et al, 1993). This variable will be preferred in my analysis. The effect of the color of the government on military expenditures is negative and significant at the 90% confidence interval. The negative effect of left wing parties on military expenditures could be translated into a Niskanen type bureau supply model where decision makers act to maximize budget size. What they consider the optimal level of defense capability reflects circumstances in time (Niskanen, 1971). The mutable political power of left wing parties is one of these determinants. Perception of internal and external threats and defining economic constraints are both linked to the political parties in power.

3

See table 1 Appendix

17Arms race between East and West "We make war so that we may live in peace", Aristotle (384 – 322 B.C.). One would therefore expect the demand for military spending to be influenced by the strategic environment and foreign policy objectives. The importance of strategic variables like security and threat perceptions are investigated, just as the authority of the US as leader of the free world. The EU was awarded the Nobel Peace Prize in 2012 because of its contribution for over six decades to the advancement of peace and reconciliation, democracy and human rights in Europe. This act induced great controversy since the Nobel Committee did not distinguish between external and internal conflicts. In the academic literature is noted that the end of the Cold War effectively terminated superpower proxy wars in the developing world (Batchelor et al, 1998). Civil war is since then far more common than international conflict. The outbreak of internal conflicts is determined by opportunities and objective grievances (Collier et al, 2004). Three sources for financing rebellion are considered: extortion of natural resources, donations from diasporas and subventions from hostile governments. Another dimension of opportunity is weak government capability. There are four objective measures of grievance: ethnic or religious hatred, political repression, political exclusion and economic inequality. In the Netherlands opportunities and grievances are absent (SIPRI, 2014). Because no internal threats are faced this aspect is excluded from the analysis. With respect to external threats the Security Web is an important concept. This defines neighbors and other countries that can affect a nation's security. Rosh (1988) uses the average military burden of the Security Web. Nevertheless, in case of two unequal rivals the absolute level of military expenditures is a better measure. India for example spends about twice as much on defense as Pakistan in absolute terms but the mirror image occurs for Pakistan in relative terms. To counter the higher absolute level of threat, Pakistan devotes a higher proportion of its resources (Dunne et al, 2001). This applies to my thesis since the comparison between Russia and the Netherland is unequal as well. In the conceptual framework of the Security Web three nested variables are constructed. The military expenditures of neighbors are extended to regional powers and finally super powers are included. Since Belgium, France, Germany and the United Kingdom are NATO members only Russia as super power is relevant. 18The Soviets undertook in the beginning of the early sixties a rapid expansion of military capabilities. This situation continued through the seventies, so that by the end of that decade the gravity of the military threat posed by the Soviet Union began to impress the American people and their leaders (Looney et al, 1990). The arms race with the US could not be sustained due to poor economic development. As noted before, military power reflects in some measure economic power. The counterpart of NATO was the Warschaupact with the Soviet Union as most important member. The unremitting arms race between East and West seems strikingly not to affect Dutch military expenditures since Russian military expenditures are insignificant. This is an indication for free riding behavior of the Netherlands with the NATO alliance. The end of the Cold War has been a clear change in the strategic environment (Dunne et al,