Geplaatst op 17 June 2011 door Bart Haeck Reacties | Reageren

Crisis in Belgium

There are not many well informed bloggers who write in English about Belgian politics, so it is worthwile mentioning the few. Our former De Tijd-colleague Rolf Falter has reactivated his blog, and I think it is worth reading:

Crisis in Belgium.

 

Bart Haeck

 

Geplaatst op 11 May 2011 door Bart Haeck Reacties | Reageren

The Last Post: Stuck in the Middle

It has been a while since I posted about Belgian politics, but then again, not that much happened. I'm intending to keep this blog low profile until something does happen.

As a temporary last post, I want to to explain why Belgium is stuck in the middle between being a central state and being two or three independent states. Why Belgium is deadlocked between the forces that tear it apart and the forces that make it stick together.

This is wat tears Belgium apart:

1. A different economic speed

Let's go back to 1960. The Walloon industry is still alive, but no longer kicking. Flanders is still a rural farm economy, but has seen the potential of its ports and young family enterprises. GDP per capita in Flanders and Wallonia is more or less the same. Unemployment in Flanders is higher, and a lot of Flemings commute and go working in Wallonia.

Now speed forward to 2011. GDP per capita in Flanders is 40% higher than in Wallonia. Unemployment in Flanders is three times lower than in Wallonia and four times lower than in Brussels. Flemish productivity is 15% higher than in Wallonia and Flanders counts for 78% of Belgian exports, Wallonia for 20% and Brussels for 2%.

For economists, Belgium isn't a country, it is three countries. Wallonia is growing, but even in the most optimistic scenario the Walloon GDP per capita in 2030 will still be 15% lower than in Flanders.

2. Political parties

There was a time when Belgium had Belgian political parties: christian-democrats, liberals and socialists. But after the split of the university of Leuven in 1968 in a Dutch speaking entity and a French speaking one, the christian-democrat party split up. In 1971 the liberal party split up as well. And in 1978, after the state reform agreed upon in the Egmont-pact failed, the socialist party split up. In the mean time, regional parties were born: Volksunie (Flemish, now N-VA) in 1954, FDF in 1964, Rassemblement Wallon in 1968 (French speaking), Vlaams Belang (Flemish) in 1978.

3. Media and culture

Flemish voters are in a majority position since 1893 and 1921, when every adult got the right to vote (and the duty to show up at the poll station). Flemish voters didn't use that majority, because even in Flanders the cultural and political elite spoke French.

This has changed. Maybe a significant date is the start of the first commercial Flemish television channel, VTM, in 1989. It marked the start of a Flemish cultural zone, with Flemish famous people who are seen on television, in the magazines and in the newspapers and who are the talk of the town in Flanders. Most French speaking people don't know these famous Flemings.

 At the same time, technology has made it very easy to watch what happens in Hollywood, or all over the world. In the sixties, Belgians had two television channels: a Dutch speaking one and a French speaking one, both run by the government. The 'cultural space' was Belgian. Now it is Flemish and Anglosaxon.

4. Electoral system

On top of the two public 'cultural spaces', the two political worlds and the two economies, there is an electoral system that favors regional parties. When you live in Wallonia, you can't vote for a Flemish politician, even if he is the top candidate to become prime minister. As a Fleming, you can't vote for French speaking politicians. (In Brussels, you can choose your language in elections).

This means that Flemish (or Walloon) politicians only bother to explain their visions on Flemish television, because they want to talk to their voters. The result is not one country, but two (or three, with bilingual Brussels) with different public opinions and political parties built on these public opinions.

 

The forces that keep Belgium together:

1. Social Security

 26% of GDP in Belgium is social security expenditure: health care, pensions, jobless fees, child allowances. Due to the different economic speed of the south and the north of the country, there is a flow of social security money from Flanders to French speaking Belgium. In Flanders, this is known as a 'transfer', in Wallonia as 'solidarity'.

It won't be easy to change the system. The socialist parties, the unions and social security organisations are powerful and see themselves as the defenders of the social security system.

2. Brussels

Brussels connects Flanders and French speaking Belgium. It is completely located in Flanders, it is historically a Flemish city and it is the capital of Flanders and Belgium. But the dominant language in Brussels politics is French.

To understand Brussels, first consider the history of the city. In 1900 Brussels was a Flemish city, that became very rapidly inhabited by French speaking people. The government organised 'language counts' to establish whether a municipality officially was French-speaking or Dutch-speaking, which caused a lot of unrest. In the sixties, the language border of Brussels was fixed.

But the border is never really accepted. French speaking politicians see the area around Brussels as a French speaking territory. That's why they don't want to split up the bilingual electoral district Brussels-Halle-Vilvoorde and restrict the bilingual area to Brussels, which would be logical if you consider there is a language border. But French speaking politicians see it the other way: they want to expand the language border, so it fits with BHV.

What happens within the borders of Brussels is not easy either, because it is connected with the 'Belgian political deal'. In Belgium, the French speaking politicians are a minority, but they are protected and are granted veto rights. Half of the ministers of the federal government have to be French speaking. In Brussels, it works the other way: Flemish politicians are in a minority, and they are protected, are granted veto rights. Half of the ministers in the Brussels government have to be Flemish.

3. National debt

Ironically, the discussions in this political crisis are mainly about two things: money and Brussels. These two make an agreement almost impossible, but they also prevent the country to split. No one wants to lose Brussels - it produces one fifth of GDP. But it's very hard to see how you can divide a national debt of 100% of GDP without starting a financial fire. Let's not forget that the financial credentials of Wallonia or Brussels are not those of Flanders. Investors will want to know who pays what. It's not easy to negotiate these things without alarming investors.

Conclusion:

So here we are, stuck in the middle. Belgium looks like a quarreling husband and wife who argue about who does all the work (economy), don't really talk to each other anymore (media) and go their own way (politics) . But they don't want to divorce because they want to keep on living in the expensive house (social security), don't want to lose the kids (Brussels) and still have to pay the mortgage (national debt).

Bart Haeck

 

 

 

Geplaatst op 7 February 2011 door Bart Haeck Reacties | Reageren

Moving in the wrong direction

Eight months after the elections things are no longer standing still. It seems they're moving in the wrong direction.

The last symptom? The two biggest French speaking parties restarted publicly saying that they want to redraw the frontiers of Brussels, enlarging the dominantly French speaking capital into Flanders. For a Flemish politician it is political suicide to even suggest this is thinkable. The public statements make it clear politicians are preparing elections, not conducting negotiations.

At the same time, the king urged the caretaker government to make a budget for the coming years. The result of this is that pressure is vanishing on negotiating parties to forge a deal. It also means that  even a bond market crisis probably wouldn't force a breakthrough either: it probably wouldn't build up pressure to make a government deal and start an era of austerity. Instead the negotiating parties would support the caretaker government to start with austerity.

Last week, the king gave Didier Reynders (resigning MR-president) the task to try a last time. He has to report to the king on February 16th. No one expects progress. It's all too much 'been there, done that, didn't work'. No one wants new elections, but it is getting harder and harder to see how they can be avoided.

Bart Haeck

 

Geplaatst op 24 January 2011 door Bart Haeck Reacties | Reageren

No government, great country

Shame

Picture by Bert Van den Broucke / © Photo News

Not a lot was changing in Belgian politics over the last few months. Markets got a bit nervous, but then rediscovered the good economic fundamentals and slowed down. People didn't care. And politicians were driving in circles, meeting the same obstacles over and over again. 'L'enfer c'est la répétition'.

This weekend however, something changed. Some 35.000 (according to the police) to 45.000 (according to the organizers) people joined a manifestation in Brussels to ask for a government. The message was clear and simple: we're fed up with this. No political party or union organized the manifestation. A number of students of the Free Brussels University (VUB) did. They gave the manifestation the name 'SHAME - No government, great country'.

There are other signals people are fed up with the political crisis. Twenty captains of industry wrote a letter to the prime minister. The French speaking actor Benoit Poelvoorde asked Belgians to let their beard grow untill there is a government. Last Friday, Belgian artists gave a concert 'not in our name' in the KVS in Brussels, opposing dogmatic nationalism.

I think last Sunday's manifestation  - amplified by the other initiatives - can change something. Politicians are scared to make a compromise, scared of giving in on what they stand for. N-VA-president Bart De Wever described this feeling in his interview with Der Spiegel a month ago: 'If I join a government, I lose the next elections.'

The message of this Sunday is: yes, of course you can lose an election if you sell out what you stand for. But you can also lose elections it if you don't do what you were elected for in the first place: governing the country. 

Bart Haeck

Geplaatst op 13 December 2010 door Bart Haeck Reacties | Reageren

Why nobody seems to care

We're six months after the elections and it seems nothing has happened. The negotiations for a new state reform seem to have evolved into trench warfare. What the French speaking politicians see as their best and final offer is not enough for the Flemish politicians. The Flemish best and final offer goes far beyond what is considered acceptable in French speaking Belgium. Every day seems to have its own variation on that theme, but basically, every one stays in the trenches.

One could ask why politicians are granted so much time. In our last post, we explained why bond investors don't panic. But equally important is the question why the Belgian population doesn't seem to care.

The answer is that the impact of what a federal government does in Belgium is not as big as in other countries. That's because it is only one of the many engines of the Belgian machine. These are the other engines, and they are still working.

- Local government: The most visible part of politics is what happens in your street or your town. The fact that Belgium doesn't have a federal government has no significant impact on this local level.

- Regions: A big part of the government is regional in Belgium. That's why there is no problem for education, culture, economic policy, work (except unemployment benefits), foreign trade, environmental policy, social housing, infrastructure, mobility policy or urban planning.

- EU: A lot of political decisions are originally enacted in the European Union. Belgian government can change the details, but not the main characteristics of the decision. In countries such as the United Kingdom this is often seen as a disadvantage and a loss of control. In Belgium nowadays the importance of the EU level of decision making is a blessing.

- Other international organisations: Since Belgium is a small country, a lot of political decisions have been delegated to international organisations where other and bigger countries have the biggest influence on the strategy. An example of this is defence. Basically it is NATO that takes care of this. Of course Belgium has to do its share, but it's not because there is no Belgian government during six months that all of a sudden there is a military problem.

- Economic policy. It goes even further than this. As a small country Belgium has adapted its future to the future of its neighbours. The economy is strongly connected with the economy of Germany, France, Netherlands and the UK. The Belgian economy is even growing rather strong for the moment, because it rides in the slipstream of the German industry.

Economic policy is built on this observation. Unions and business federations agreed in the nineties that Belgian wages cannot grow stronger than the average wage growth of the neighbouring countries. Every two years, a so called 'wage standard' is calculated, based on the British, French, German and Dutch wage evolution. Unions and business federations then start negotiating a new framework for wage growth. These discussions are going on at this very moment.

 

Of course this not the whole story.  Some issues go very wrong because there is no government to deal with them. The most urgent problem that has been mismanaged is the accommodation crisis for people who seek asylum.

But it is one of the exceptions. Most Belgians seem not to care that Belgium doesn't have a government. We have the regions, the local government, the European union, the neighbouring countries, the German industry and international institutions. It isn't a recipe for another year of standing still, but is a recipe for buying a surprisingly large amount of time.

Bart Haeck

Geplaatst op 5 November 2010 door Bart Haeck Reacties | Reageren

The Belgian Bond Miracle

Sometimes Belgians (should) have the feeling they are living on another planet.

Just take the news this week. The eurozone peripherals (Greece, Ireland, ...) are wobbling again. The Fed started QE2. The OECD warned that the time for 'normal economic policies' will not come in 2011, but in 2012 at the earliest.

Just take the tour of Belgians neighbours. Germany has an austerity program of 80 bln euro. France has one of 100 bln euro (although only 45 bln cuts), the Netherlands are planning to cut away 18 bln euro and the UK is the European austerity champion with a 110 bln GBP plan of cuts and new taxes.

And there we are. A government debt that is nearing 100% of GDP, no government in action and no austerity at all. A country on cruise control in an era of QE2 and Eurozone worries. What is the Belgian magic? Why do Belgian government bonds continue to fly under the radar of international investors?

There a couple of reasons.

1. As Nouriel Roubini pointed out, some months ago, Belgian government debt is high, but not as high as in Greece.

2. Belgium didn't have a substantial stimulus program. This would have been difficult, as the Belgian economy is small and very open. The upside of this is that there were not major stimulus costs, as in e.g. the UK.

3. As the Belgian economy is very open, it profits from the strong German economic recovery. The trade ties are strong.

4. The Belgian government is very poor, but the Belgian families are very rich. Government debt is 100% of GDP. But the deposits and the fixed interest securities that are held by families are also worth 100% of GDP. The entire net financial assets of Belgian individuals are worth 715 bln euro, or more than 200% of GDP

 5. A large part of the Belgian government debt is owned by Belgian individuals, although it is shrinking. Approximately 60% of the debt is now in foreign hands.

6. The current account is positive (unlike e.g. Greece), although it is shrinking.

 7. And as Paul Krugman pointed out last year, Belgium has proved in the 70ies that an advanced country can have a debt of 120% of GDP without provoking a financial crisis.

 

All these things are good news in way, but also bad news. It means there is not enough pressure on politicians to do what is needed: preparing for the costs of the ageing population, creating more jobs, reducing government debt, reducing high taxes on labour, and improving the education and job results of immigrants, especially in Brussels.

 

Bart Haeck

Geplaatst op 28 October 2010 door Bart Haeck Reacties | Reageren

Caretaking problems

You could call it a variation on a theme. The theme is the deadlock in negotiations for a state reform, the new variation is called royal mediator Johan Vande Lanotte. Appointed last week, the former president of the Flemish socialist party and former vice-prime-minister now has to find a way to bridge the gap between Flemish and French speaking politicians.

So far, there are not many bridges to see. We're still were we were some weeks ago, when N-VA-president Bart De Wever published a compromise text. It was the first official compromise proposal in four months, and the reactions were not good. Senior politicians of the PS called the text unacceptable. Mr De Wever called it a minimum.

Both sides made bold statements, and it will be difficult to erase these statements without losing electoral credibility. That's why Mr Vande Lanotte called his royal mandate to mediate the most difficult task in his political career.

In the meantime, the caretaker government of Yves Leterme is facing problems it can't solve because it hasn't got full political power. That's why King Albert is seeing prime minister Leterme and all the vice-prime-ministers of the caretaking government these days to check how flexible the boundaries of power of a caretaker government are. The most urgent problems are a crisis with asylum seekers (the most urgent measures are taken, but the problem is lingering on), some high level appointments in the federal administration (especially tax administration) and new supervision rules for the financial sector.

Some say it would be a good idea to turn the caretaker government into a real government that can give an answer to urgent matters. The negotiations for a state reform would then go on in the background.

I disagree with that view. It was exactly that solution that was given to the political crisis of 2007. The result was that some urgent matters were taken care for, but the government wasn't capable to start the social-economic and budget reforms that this country needs. The reason? No political party wanted to agree with big changes as long as it wasn't clear what would happen with the state reform. The result: three wasted years for state reform, budget reform and social-economic reform.

The crisis we experience now, happened because politicians finally are trying to start these reforms. It's the only way, however big the crisis may be.

Bart Haeck

 

Geplaatst op 19 October 2010 door Bart Haeck Reacties | Reageren

An MP of the seventies, an Octopus and the fear of poverty

It seems the deadlock in Belgian politics is getting worse. All the Flemish parties approve the compromise text that 'royal clarifier' (and N-VA-president) Bart De Wever made for king Albert II. De Wever said the text is his best offer and that he won't go lower. The French speaking parties are furious and reject the compromise.

The party council of the N-VA accepted the compromise, although it's a far cry from a Flemish Declaration of Independence. The compromise fits however in the so called 'Baert-doctrine' of the former Flemish nationalist party Volksunie, a political party of which the N-VA is seen as the heir.

Frans Baert was an MP for the Volksunie in the late sixties and early seventies. He said Flemish nationalists can agree with a state reform on three conditions:

1. It is a big leap forwards for a more autonomy in Flanders

2. Flanders doesn't pay an unreasonable price

3. It doesn't complicate or slow down next steps towards Flemish independence.

The other Flemish parties supported the compromise text. That comes as no surprise, as the text is an echo of the Octopus note of the Flemish government. In one of our previous blogs, we explained why this is important. The Flemish socialists (sp.a), christian-democrats (CD&V) and liberals (Open VLD) agreed with the Octopus-note some years ago. By echoing it, Mr. De Wever insures himself of  broad support and can prove he isn't the extremist the French speaking politicians accuse him to be.

This means that the compromise text is Baert-doctrine-proof and Octopus-note-proof. This matters, as it strengthens a united front between the Flemish parties.

On the other side of the language barrier, there is a united front as well. Even the French speaking liberals, who were trying to force their way in to the negotiations by sweetening a possible compromise, now rejected the compromise text of Mr. De Wever. The fear of the French speaking politicians is that Wallonia and Brussels will impoverish if they become responsible for their own income.  

It is not easy these days to be king of Belgium. The king now has a note of 'preformateur' Elio Di Rupo (PS) that shapes the contours of further negotiations. And he has a note of royal clarifier Bart De Wever that shapes the contours of further negotiations. The latter is a minimum for the N-VA-president, but unacceptable for the French speaking politicians. 

Bart Haeck

Geplaatst op 18 October 2010 door Bart Haeck Reacties | Reageren

On the brink of new elections

This time it's serious.

Yesterday, 126 days after the elections, N-VA-president Bart De Wever published a document in which he describes a compromise to solve the political crisis. It was rejected immediately by all the French speaking parties (PS, cdH, Ecolo and even the FDF, which is not negotiating.)

De Wever had warned that the compromise would hurt everyone, including his own N-VA. He kept promise. The N-VA accepted to take only small (in a Flemish national perspective)  steps towards more power for the regions. De Wever even suggested compensations for splitting up the electoral district Brussels-Halle-Vilvoorde, which is a compromise as well for a Flemish-nationalist.

But for the French speaking parties, it was too much. They fear to impoverish, if the current Belgian  way of financing the regions would change. They also don't like suggestions to put bigger parts of the Brussels region under joint 50/50 Flemish-French speaking command. Now politics in the Brussels region are dominated by the French speaking parties.

The rejection of the compromise means there is  a complete deadlock. By refusing a compromise that is already surprisingly for a die hard flemish nationalist party, the French speaking parties de facto rule out a coalition with the N-VA. But in Flanders the N-VA is the winner of the last elections and is still growing in the polls. For the other Flemish political parties it would be electoral suicide to make a coalition without the N-VA and then accept a worse compromise (seen from the Flemish side of federal politics) than the one Mr. De Wever now suggested.

Later today Mr. De Wever goes to the king to brief him officially on the results of his mandate of 'royal clarifier'. It seems everything is said already. For 126 days, there was no alternative for an agreement between the N-VA and the PS. No alternative but an ugly one: new elections. That ugly alternative is coming very near now.

Bart Haeck

 

Geplaatst op 4 October 2010 door Bart Haeck Reacties | Reageren

Reboot

113 days after the elections, the N-VA rebooted the negotiations for a state reform. N-VA-president Bart De Wever announced on Monday that continuing to talk with the socialists (PS and sp.a), christian-democrats (CD&V and cdH) and the Greens (Groen! and Ecolo) leads to nothing.

It is important to explain what this means and what it doesn't mean.

- It doesn't mean new elections. De Wever said he wants to restart the negotiations with other partners. It isn't even excluded the same partners continue, but with a broader agenda. (at least, that's what the N-VA wants)

- It doesn't have to mean a complete stand still for Belgian politics. De Wever said he is prepared to support the caretaker government in urgent matters. What's more: this support isn't even needed. The caretaker government still has a small majority in the newly elected parliament.

- It means negotiations have to restart from zero and the work of 113 days is probably lost. It's back to where it all started. Ctrl-alt-delete and restart.

Bart Haeck

 

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