Economic fears as Belgium beats European record

8th January 2011, Comments 0 comments

Belgium took the record for Europe's longest political crisis on Saturday as it hit 209 days without a government, amid mounting concern among business chiefs over the effects on its economy.

As the divided country surpassed previous record-holder the Netherlands, where politicians haggled 208 days before striking a deal in 1977, Belgium's top business leaders raised alarm bells about the crisis in newspaper Le Soir.

Billionaire investor Albert Frere, a leading shareholder in energy groups Total and GDF Suez, said he was "appalled by this chaotic situation which could have long-lasting effects on the Belgian economy."

"The markets will be merciless if the country does not emerge promptly from this unprecedented hell," he said.

Belgian politicians have been deadlocked over the formation of a new government for nearly seven months and the political crisis deepened Thursday when a mediator appointed by the king threw in the towel in exasperation.

Johan Vande Lanotte tendered his resignation to Albert II a day after the country's powerful Flemish separatists refused to discuss a plan to give the country's Dutch- and French-speaking regions more power.

The plan was offered to seven political parties as a basis for setting up a coalition government after June 13 elections failed to produce an outright winner.

Should Belgium fail to get a new government by March 30 it would beat Iraq's world record of 289 days in 2009.

Albert on Monday will announce whether he will accept Vande Lanotte's resignation or not. He could decide to name a new go-between or widen the list of parties involved in the negotiations.

While a caretaker cabinet is keeping the state running, fears are mounting of looming economic strife.

With debt hovering just below 100 percent of GDP, ratings agencies and the nation's central bank have warned of a potential threat from financial markets if feuding politicians fail to strike a deal soon.

"It is now that we must... choose definitive solutions," Luc De Bruyckere, the head of the Flemish industries association, said in Le Soir.

"If we do not do it ourselves, we will in the end be forced to by international market pressures," he said.

Others however warned against forming a new government too quickly.

"Belgium has a government that manages day-to-day affairs in an efficient manner," said Herman Daems, the chairman of the board at BNP Paribas Fortis.

"It would be better to take a bit more time to reach a good agreement rather than to favour a crisis government," which would send "a bad signal to the markets," Daems said.

© 2011 AFP

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