House Passes Budget to Ease $63 Billion in U.S. Spending Cuts
Belgium's Debt Is Great Unifier as Government Talks Head Into 10th Month
There are 342 billion reasons why Belgium won’t break apart.
That figure is the size of the national debt in euros: 31,560 euros ($43,560) for every Belgian on both sides of the north-south schism that has left the linguistically fractured country without a government 262 days after national elections.
Unwilling to subsidize the economically depressed French- speaking south, the richer Dutch-speaking north is determined to grab powers from federal authorities. Looming over both is Europe’s third-highest debt load -- keeping the country in political limbo yet preventing it from unraveling.
“Belgium blowing up, to put it quaintly, I find that hard to imagine,” says Elmar Keutgen, 63, mayor of Eupen in the German-speaking east, itself a byproduct of Belgium’s patchwork history. “There are a few unifying things: There’s the king, Brussels, the national debt and the easygoing lifestyle.”
Belgium’s political class -- led by Flemish nationalist Bart De Wever, the top vote-getter in the north in the June 13 election, and Socialist Elio Di Rupo, the winner in the French region -- has been unable to break the deadlock and forge a coalition to keep Europe’s fiscal crisis from lapping over the country’s borders.
With interruptions for summer vacation, Christmas holidays and the February ski break, negotiations -- sometimes directly, sometimes through royal mediators -- have dwelled on institutional arrangements such as more regional control of health-care and unemployment insurance or the redistricting of voting precincts around Brussels, the mostly French-speaking capital and headquarters of the European Union and the North Atlantic Treaty Organization.
The eighth political troubleshooting mission broke down yesterday, when Finance Minister Didier Reynders failed to broker a constitutional accord. King Albert II gave no indication what his next move will be.
Little effort has gone into pocketbook issues like taxes, crime-fighting, filling the potholes left from winter snows or cutting the budget deficit toward the euro area’s limit of 3 percent of gross domestic product from 4.6 percent last year.
“It’s been Groundhog Day over and over again,” says Marc De Vos, a Ghent University law professor. “Part of the reason why the status quo can just continue forever for now is that externally there is not a lot of pressure. What happens if we have a real oil crisis? What happens in March or April when Europe starts really hitting the nails in terms of budget policy? If we will reform, it will take a lot of external pressure.”
An inkling of that pressure came in January, when Belgium got caught up in investors’ flight from bonds of high-debt states. Belgium’s 10-year yield rose to 139.9 basis points above the German level on Jan. 11, the highest in at least 18 years. The extra yield has since slipped back to 108 basis points -- still above the euro-era average of 80 basis points.
The 76-year-old king, on the throne since 1993, stepped close to the limits of his authority as a constitutional monarch on Feb. 2 by ordering the caretaker prime minister, Yves Leterme, to draw up a 2011 budget and make contingency plans to meet European fiscal targets in future years.
A day later, Leterme, a Flemish conservative with a French- sounding name who once confused Belgium’s national anthem with France’s Marseillaise, told VRT television that higher-than- forecast economic growth will do the job for him, ruling out the need for tax increases or spending cuts.
With growth in export-oriented Belgium tabbed by the national forecasting agency at 2 percent in 2011, some business leaders aren’t stressed by the absence of a fully empowered government.
‘Political Soap Opera’
For Bert De Graeve, chief executive officer of Flanders- based Bekaert NV, the world’s largest maker of steel cord for tires, the “political soap opera” is less of a problem than a planned March 4 union strike for higher wages.
“Let the parties continue to talk,” De Graeve says. “The more they do, the bigger the chance some will wake up to reality.”
Belgium has straddled Europe’s political, ideological and economic fault lines since Napoleon’s 1815 defeat at Waterloo, just south of Brussels. Having been then pasted together with the Netherlands and then winning its independence in 1830, the kingdom was at first dominated by a French-speaking elite. Its coal and steel industries made Belgium one of the world’s leading commercial powers on the eve of World War I.
As the sun set on the industrial era, Flanders rose to prominence. Belgium’s version of the youth revolts of the 1960s featured Flemish students booting the French out of the country’s largest university, in Dutch-speaking Leuven. Power has since flowed to the north in five constitutional revamps.
Animated by the belief that Belgium won’t be around forever, De Wever’s N-VA party is seeking to put Flanders in charge of its economic destiny. Home to companies such as Anheuser-Busch InBev NV and Europe’s second-largest port in Antwerp, Flanders generates annual economic production per person of 31,067 euros, according to 2009 figures. Blighted by industrial decay, the French-speaking south musters output per person of 22,868 euros.
The gulf mirrors the incomes and competitiveness gap at the root of Europe’s economic malady, with richer countries such as Germany and Finland balking at granting more aid to the fiscally downtrodden Greece or Ireland.
“The important thing is to secure that we don’t get that split in the European Union,” said Gunnar Hokmark, a Swedish member of the European Parliament. “The more we open up the internal market, the less we will have the problem that we see in Belgium.”
In Belgium, though, one thing is different: the federal revenue-sharing system requires the Flemish to prop up their French compatriots. Flanders forked over 5.8 billion euros, or 967 euros per Fleming, to the French region in 2005, the year of a central bank number-crunching exercise too politically sensitive to be repeated since.
At 97.2 percent of GDP, the national debt is lower only than Greece’s and Italy’s in the 17-nation euro region. Even the most ardent Flemish separatists have no plan for dividing it up. In a position paper predicting that the federal government will “evaporate,” De Wever’s party skirts the debt question.
“We don’t want to think about a Plan B -- our thinking is geared toward a unified Belgium,” says Michael Verbauwhede, a 25-year-old Brussels law student who co-sponsored a university protest against political inertia. “Look at all the European regions like the Basque country, Brittany, Scotland with their independence movements. The situation is worrisome for everyone.”
Dubbed the “French-fry revolution,” the Feb. 17 demonstrations drew 5,000 students countrywide, showcasing the wry humor that is a Belgian trademark. The revolutionaries claimed that on that day, Belgium set the world record for going the longest without a government, surpassing Iraq. The same mindset is behind a http://www.belgiq.eu/ website that displays a Google-like error message “Government Not Found.”
“Belgium’s image in the outside world right now is catastrophic,” says Laurent Louis, 31, a French-speaking member of parliament who, in a reflection of Belgium’s fragmented politics, broke with one maverick party to found his own. “It’s important to support the students’ French fry revolution -- obviously with some Belgian mussels -- just to show that this is the real Belgium.”
Le Soir, the country’s leading French-language newspaper, has a prize for whoever guesses when a government will be found. The lucky tipster will win his or her weight in waffles.
To contact the reporter on this story: James G. Neuger in Brussels at firstname.lastname@example.org
To contact the editor responsible for this story: James Hertling at email@example.com