AMBASSADOR'S MEETING WITH PM'S KEY RIVAL FLEMISH

C O N F I D E N T I A L BRUSSELS 004049

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/06/2016
TAGS: PGOV PREL ECON BE
SUBJECT: AMBASSADOR'S MEETING WITH PM'S KEY RIVAL FLEMISH
MINISTER PRESIDENT YVES LETERME


Classified By: POLCOUNS TED ANDREWS. REASONS 1.4 (B) AND (D).


1. (C) SUMMARY: Belgium's politics were thrown into a cocked
hat this week when Yves Leterme, Minister-President of
Belgium's Flanders region and by many accounts the heir
apparent to be Prime Minister next year, withdrew his
alliance with a controversial right-wing nationalist, thus
losing as many as five or six points in his political base.
The action, combined with an apparent deal between Prime
Minister Verhofstadt to mitigate the closure of a Volkswagen
plant, replacing it perhaps with an Audi production line,
bolstered the heretofore lagging chances of the Prime
Minister's Liberal (VLD) party. END SUMMARY.

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Political Climate and 2007 Federal Elections
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2. (C) On December 1, Ambassador Korologos met with Yves
Leterme, Minister-President of Flanders and the most powerful
Flemish politician in Belgium apart from Prime Minister
Verhofstadt. Leterme heads the Flemish Christian Democratic
party (CD&V),which aligned itself with the small, moderate
nationalist New Flemish Alliance (NV.A) and became the
largest political force in Flanders after the 2004 regional
elections. He leads a Flemish regional government composed
of Christian Democrats, Socialists, Liberals, and NV.A.
Leterme commented on 2007 Belgian federal elections,
including his decision November 30 to split with NV.A, and
Belgian institutional reform. Ambassador asked about current
labor issues in Flanders, urged close coordination on export
control matters, a regional competence, and updated Leterme
on his future plans. Participants included notetaker Sharon
Bowman and Geert Muylle, Leterme's Diplomatic Adviser.


3. (C) Leterme was forthcoming (and uncharacteristically
pessimistic) when discussing his chances in next year's
federal elections. Widely thought of as a likely candidate
for Prime Minister next year, Leterme thought he had ruined
his chances for that office because of his decision, the day
before, to withdraw from his alliance with NV.A due to its
unilateral decision to accept controversial, right-wing
nationalist Senator Jean-Marie Dedecker as a member. Leterme
said Dedecker, who recently left the Flemish Liberal party by
mutual agreement, "defended positions and programs that are
in total contradiction with my own convictions." The problem
now, Leterme regretted, is "I won't be Prime Minister!" He
said the partnership with NV.A had broadened his political
base and created a popular alliance that was favored by 32%
of the populace. Leterme thought his party would lose about
five to six percentage of the voter base now, but he wanted
to "believe in his program." He said he was "in doubt" as to
whether to compete in the federal election next year; he will
decide perhaps in February or March whether to run. When
queried whether he thought he might get a boost in votes due
to his standing with his principles in departing ways with
NV.A, he admitted the media had been good to him so far, but
"a week is a long time in politics."


4. (C) Leterme thought the francophone Socialists would
still play a major role in the elections, despite burgeoning
party corruption scandals. He believed, however, the
Socialists' legal problems would increase over the coming
months due to the scandals ("justice must be done"). He said
the right-wing, anti-immigration Vlaams Belang (VB) party,
which failed to make major gains in the larger cities in
October local elections, was "in stagnation." Leterme opined
that was another reason it was a pity the CD&V-NV.A alliance
fell apart -- some VB voters would have supported the CD&V
and moderate nationalist NV.A to "make their vote count."

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Institutional Reform/Labor Issues
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5. (C) Leterme commented on the controversy surrounding
expanded regional competencies. The debate over federal
versus regional competencies was already in full swing, well
in advance of the formal institutional reform discussions
planned for after federal elections next year. Leterme's
party has generally called for more competencies, such as
taxation and social security oversight, for the regions.
Leterme said the federal government would still have lots of
power, but could foresee the regions gaining more power: "it
depends on who wins the elections." He said Belgian
francophones were not ready for reforms, and "the French want
more money and the Flemish more power." Leterme wants a
pragmatic approach, where "responsible federalism" could be
realized through a reform of institutions and competencies.


6. (C) On the controversy surrounding Volkswagen's decision
to stop assembling the Golf in Brussels and lay off thousands
of workers, Leterme said it was uncertain whether

Volkswagen's leadership could be convinced to maintain some
level of activity in Belgium until the plant in Forest could
assemble a new Audi model in 2009. He said PM Verhofstadt
was trying to find a way to keep workers' jobs until then.
Verhofstadt has said the decision to cut jobs in Belgium and
not in Germany (where assembly of the Golf will now occur in
the Wolfsburg plant) was unfair and reflected a decision by
VW to avoid making sensitive job cuts at home. (Comment:
Belgian hourly labor costs are nearly as high as those in
Germany, and the francophone-socialist dominated trade union
of the Forest plant has been obstinate in refusing any
concessions that make the Belgian factory a more attractive
assembly point.)


7. (C) Ambassador urged close coordination on export control
matters. Leterme indicated the Flemish government would
issue a report this week or next on Flanders'
nonproliferation icensing decisions.

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ossible Visit to U.S.
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8. (U) Leterme expressed regret when Ambassador informed him
of his departure next year and expressed appreciation for his
efforts in Belgium. He offered his continued assistance and
indicated he looked forward to working with the incoming
ambassador. He doubted he would travel to the United States
before the elections. He said he did not want to be out of
Belgium for any prolonged period with elections coming up; he
planned to make short trips to the Congo, Davos, and Qatar.


KOROLOGOS
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