Belgium facing political, economic limbo

14th June 2010, Comments 0 comments

Belgium faced political and economic limbo on Monday as right-wing Flemish separatist and French-speaking Socialist poll winners sized each other up going into entrenched negotiations.

With markets sniffing a deepening public finance crisis at the heart of Europe following sea-change results from Sunday's elections, observers doubted whether the clash of political, economic and linguistic ideologies could even be bridged in Brussels over the coming months.

King Albert II began the protracted process of meeting myriad party leaders from Belgium's Dutch-speaking majority in affluent Flanders and the poorer francophones of Wallonia, where parallel polls combine to produce federal Belgian results.

The king first met outgoing caretaker prime minister Yves Leterme, as the country's voters digested Flemish demands to re-draw state powers and media wondered whether the big winners on either side had anything in common.

While the biggest issue is what kind of country Belgium is to become, with the Flemish pushing for only the loosest of federal ties to be retained, the subtext and much of the fighting will revolve around how to fix state finances.

"If our country stays several months without a government, it's our credit rating that will suffer," warned Paul Soete, head of Belgium's technology employers federation Agoria.

"Renewed deadlock will have serious consequences for our standing on international markets and our bond yields risk shooting skywards to the level of a country like Spain," he underlined.

"This is an increasing concern that needs to be watched carefully," Frankfurt-based Goldman Sachs economist Erik Nielsen also said of the Flemish nationalists' breakthrough.

"Belgium's public net debt is likely to go through 100 percent of GDP within the next year or so, and (the federal state's) financing requirements are among the largest in Europe this year and next," he added.

Official results released on Monday backed up New Flemish Alliance (NVA) leader Bart de Wever's late-night victory declaration, delivered amid supporters' triumphant cries of "Long Live a Free Flanders."

Republican De Wever, 39, ultimately wants independence, and in the first instance, full fiscal control. His party won the largest number of seats, 27 in the 150-member lower Belgian federal house, as well as the largest share of the vote in Flanders -- 28.2 percent.

"Don't be afraid. Have faith in yourselves," De Wever told worried French-speaking voters, whose leaders are expected to fight long and hard for a shared welfare state to be retained.

Rivals in the Flemish north have tapped successfully into public concerns there that they are subsidising the Walloons, and business daily De Tijd warned that the leading parties "do not have much in common."

The Socialists secured 26 seats, with 36.6 percent of the vote across the other two federal regions, Wallonia and officially bilingual Brussels, well ahead of Leterme's Christian Democrats, who picked up 17 seats on 17.6 percent.

Belgium has had four governments and three prime ministers since its last general election in 2007. De Wever says he does not want the job, leaving Socialist leader Elio Di Rupo as favourite to become the first francophone premier since the 1970s.

Leterme's administration remains in charge of day-to-day affairs -- and he is expected to be still in office when Belgium assumes the six-month rotating presidency of the EU on July 1.

The European Commission said on Monday that Belgium would "stand up to the challenge" of chairing policy progress on key areas including economic and financial affairs.

© 2010 AFP

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