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Belgium’s new government: An end to waffle?

2c49a 20111203 EUP002 0 Belgium’s new government: An end to waffle?Di Rupo prepares to bow in

THE euro crisis has toppled one European government after another. But in Belgium, speculators and Eurocrats are helping to create a new government—and not a moment too soon. For a record 535-plus days since an election in June 2010, the country has had a caretaker government under Yves Leterme (who is leaving to join the OECD). Now a deal should be struck in time for the bow-tied Elio Di Rupo, leader of Belgium’s Francophone Socialist party, to join other EU leaders at next week’s summit. Mr Di Rupo will be Belgium’s first French-speaking prime minister since 1974. He is the first-ever of immigrant stock (his parents were Italian). It is “the American dream, Belgian style”, says a Flemish politician. And he will be a rare Socialist among European leaders.

The latest phase of Belgium’s language conflict (the political groups are split into Flemish- and French-speaking wings) began with the election, which saw a strong showing by the New Flemish Alliance, led by Bart De Wever, a charismatic bruiser who wants the Belgian state to dissolve within the EU. Mr Di Rupo, attached to the unity of Belgium and to the subsidies that Walloons get from Flanders, topped the poll among French-speakers. But a succession of political leaders chosen by King Albert II could not form a new government. The first hint of a deal came in July, when the Flemish Christian Democrats broke ranks with Mr De Wever. In October an accord was struck on nuclear power, and eight parties accepted a constitutional reform to transfer more powers from federal to regional level. The parties also settled a row over the Brussels-Halle-Vilvoorde electoral district fuelled by Flemish fears of encroachment by French-speakers.

After this, the negotiators (now down to six parties) got stuck on the 2012 budget. But a downgrading of Belgium’s credit-rating by Standard Poor’s from AA+ to AA on November 25th pushed them into an agreement. Spending cuts and tax rises worth about €11 billion ($15 billion) aim to bring the budget deficit down to 2.8% of GDP next year, and to balance the books in 2015. Earlier this month the European Commission had warned Belgium it might face EU sanctions for failing to meet its fiscal targets.

Even if Mr Di Rupo makes a splashy debut at the summit, problems lie ahead. The grim economic outlook may mean more belt-tightening. His EU colleagues want deeper reforms, notably to Belgium’s wage-indexation. Mr De Wever will remind Belgians that the new government lacks a majority among Flemish voters who pay the lion’s share of taxes. Flemish parties want a majority of cabinet seats. Many complain about Mr Di Rupo’s poor Dutch.

In many ways Belgium is a microcosm of the euro zone: a rich north is fed up with subsidising a profligate south. Perhaps that is cause for hope: if the markets can push Belgians into a deal, maybe they will galvanise the euro zone too.


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