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Dutch coalition talks collapse

Jan Peter Balkenende, centre, leaves government office after talks broke down over spending cuts.
Jan Peter Balkenende, centre, leaves government office after talks broke down over spending cuts.

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AMSTERDAM, Netherlands (Reuters) -- Talks to form a centrist coalition government in the Netherlands collapsed overnight, bringing renewed political instability a year after the murder of anti-immigration politician Pim Fortuyn shook the country.

Eleven weeks of talks between the two main parties, the Christian Democrats and Labour, broke down late Thursday after they failed to agree spending cuts needed to revive the economy.

The impasse raised the possibility of fresh elections for Dutch voters who have been to the polls twice in less than a year. The Christian Democrats could also try to rebuild their partnership with the party of slain populist Fortuyn.

The Christian Democrats (CDA) and Labour (PvdA) had pledged to renew their "Grand Coalition" following their success in a general election in January. That poll saw voters turn their back on Fortuyn's party and end its meteoric rise.

Coalition mediators were expected to meet Queen Beatrix later on Friday to discuss future steps. The Queen can ask for further negotiations or call new elections. It was unclear whether caretaker Prime Minister Jan Peter Balkenende of the CDA would be asked to piece together another coalition.

"The chemistry was unsatisfactory. There was not sufficient trust to take the steps that were needed. That is the sad conclusion," Balkenende said.

"It is an enormous blow...I feel utterly betrayed," said Labour leader Wouter Bos, who had wanted more spending on areas such as health care.

The parties could not agree on a budget aimed at cutting spending by around 20 billion euros ($21.65 billion) over the four-year term of government.

Patch up possible with Fortuyn party

The CDA narrowly defeated Labour in the last election. That poll was prompted by the collapse after 87 days in office of the CDA's coalition with the free-market VVD and Fortuyn's party.

The CDA may now patch up its alliance with the Pim Fortuyn List (LPF) and VVD to form another centre-right coalition with a much reduced parliamentary majority. The LPF lost all but eight of the 26 seats it won on its election debut last May.

CDA could also form a minority government with the VVD, but would be reliant on LPF backing. Labour, VVD and small centrist party D66 could also join forces with a wafer-thin majority. But both options have been all but ruled out by the parties.

Queen Beatrix could also ask Labour and CDA to put aside their differences in a final bid to push for a deal in the interest of political stability. The Netherlands has been run for the best part of 12 months by a caretaker government after two coalitions folded in short succession after April 2002.

Dutch political stability started to crumble last April when then-Labour Prime Minister Wim Kok's cabinet resigned over the botched role of Dutch peacekeepers in the Bosnian town of Srebrenica where Muslims were massacred in 1995.

The resignation was followed by the murder of Fortuyn just days before his party stormed to second place on its election debut to gain a short-lived foothold in government.

The centre-right coalition it joined collapsed over a row between Fortuyn's heirs in cabinet. The party's failure to replace its leader and quell an internal feud cost it most of its seats in January's election.

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