Belgium's Flemish Nationalists Ditch Coalition Talks 113 Days After Ballot

Belgium’s Flemish nationalists pulled out of talks to form a government, deepening the country’s political stalemate 113 days after deadlocked elections.

Bart De Wever’s N-VA party, the top vote-getter in the June 13 election, said it won’t restart seven-party coalition talks because French-speaking parties refuse to hand more control over personal income tax to the regions.

“We are not going to fall back into the old disease of agreeing to a bad coalition agreement for the sake of it,” De Wever told reporters in Brussels today. “The exercise needs to be restarted from scratch.”

The pullout by the Flemish nationalists, who haven’t ruled out a breakup of Belgium, puts a stable government further out of reach after an initial bid to cobble together a coalition ran aground on Sept. 3.

Belgian bonds dropped after the announcement amid concern that political instability would complicate the management of Belgium’s debt, which at 96.7 percent of gross domestic product is the third-highest in Europe.

Investors now demand an extra 85 basis points to hold Belgian as opposed to 10-year German bonds, up from 81 basis points on Oct. 1, and the extra yield, a measure of the risk of investing in Belgium, compares with 418 basis points for Ireland and 183 basis points for Spain.

Linguistic Divide

De Wever’s party won 27 parliamentary seats in Flanders, the richer Dutch-speaking north of Belgium. It used the electoral surge to try to force through a rewrite of the constitution to give more power to Flanders and cut transfer payments to the poorer French-speaking south.

De Wever didn’t call for new elections. He said he will support the caretaker government led by Yves Leterme on any “urgent” matters requiring parliamentary approval.

The first attempt to corral the Dutch- and French-speaking parties into a governing coalition was led by Elio Di Rupo of the French-speaking socialists, winners of 26 seats in parliament.

The breakdown of that effort triggered recriminations on both sides of the linguistic divide. Laurette Onkelinx, a French-speaking Socialist, told La Derniere Heure that “it’s time to prepare for the end of Belgium.”

French-speaking parties are willing to devolve half of overall money-raising powers to the regions, said Jean-Claude Marcourt, the French-speaking co-chair of a working group examining the technical details.

“Let’s all sit down at the table, there are enough elements enabling us to reach an agreement,” Marcourt said on RTBF radio today.

Flanders has progressively gained more authority in five constitutional revamps over four decades, as its growing wealth surpassed the older industries that concentrated power in the French region for more than a century after Belgium’s founding in 1830.

Some 14 percent of Belgians want to split the country up, according to a La Libre Belgique poll published Sept. 7. The majority, 57 percent, called for the quick formation of a government and 12 percent wanted new elections.

To contact the reporters on this story: John Martens in Brussels at jmartens1@bloomberg.net; James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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