Identifier
Created
Classification
Origin
07BRUSSELS3021
2007-09-28 13:54:00
CONFIDENTIAL//NOFORN
Embassy Brussels
Cable title:  

"THIS IS NOT A CRISIS" -- PREMATURE PREDICTIONS OF

Tags:  PGOV ECON BE 
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VZCZCXRO1143
PP RUEHAG RUEHROV
DE RUEHBS #3021/01 2711354
ZNY CCCCC ZZH
P 281354Z SEP 07
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC PRIORITY 6463
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 003021 

SIPDIS

SIPDIS
NOFORN

E.O. 12958: DECL: 09/27/2012
TAGS: PGOV ECON BE
SUBJECT: "THIS IS NOT A CRISIS" -- PREMATURE PREDICTIONS OF
BELGIUM'S DEMISE


Classified By: DCM Wayne Bush, Reasons 1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 003021

SIPDIS

SIPDIS
NOFORN

E.O. 12958: DECL: 09/27/2012
TAGS: PGOV ECON BE
SUBJECT: "THIS IS NOT A CRISIS" -- PREMATURE PREDICTIONS OF
BELGIUM'S DEMISE


Classified By: DCM Wayne Bush, Reasons 1.4 (b) and (d)


1. (SBU) Summary: Belgium recently passed an important
milestone -- 100 days under a caretaker administration
while the politicians try to form a government that can
command a majority in parliament. This situation has
precipitated an unwelcome (for the Belgians at least)
deluge of speculation in the international and local
media about the country's future. For reasons having
to do with economics, culture, and politics, fears of
Belgium's imminent demise are just plain wrong. Although
the potential coalition partners resumed direct contacts
on September 26, the current wrangle could well be prolonged
and, rhetorically at least, ugly, as the political
class struggles to fashion the next government's
policies and final shape. As the formation process
unfolds, the caretaker government appears ready to
interpret its mandate in an increasingly expansive
manner. End summary

--------------
How the current problem got started
--------------


2. (U) Belgium's June 9 general election marked a
clear shift in voter sentiment. While the Flemish
and francophone Christian Democrats picked up seats,
the two socialist parties lost heavily. The Flemish
Liberal party of current Prime Minister Verhofstadt
held its own, while the francophone Liberals led
by Finance Minister Reynders gained strength.
The move toward the right created a strong expectation
that formation of the next government would go smoothly,
not least because the orange (i.e. Christian Democrats)
and blue (Liberal) parties appeared to agree on all
policy issues save the question of "institutional
reform," a Belgo-speak phrase meaning a shift of
responsibility for most social policy from the
federal to the regional level. Although the
institutional reform question appeared likely to
spark verbal fireworks, political observers here
expected the politicians to cobble together yet another
Belgian compromise, one that offered something to the Flemish
and francophones.


3. (SBU) What a difference a few months makes.

As September ends, senior political leaders like
Verhofstadt, Senate President De Decker, and
Flemish Minister-President Peeters have told us bluntly
not to expect much progress before the end of the year.
Yves Leterme, the former Minister-President of Flanders
and current CD&V (Flemish Christian Democrat) leader has
returned his mandate to form a government and King Albert II
is about to take a second stab at selecting a "scout"
who might divine the outlines of a possible deal.
The current scout is veteran CD&V politician Herman
Van Rompuy, who serves now as Speaker of Parliament.


4. (SBU) Press accounts and embassy contacts agree that
the differences between the francophone and Flemish
Christian Democratic and Liberal parties participating
in the coalition formation process are simply
too great to permit rapid movement toward an actual
government. Making matters worse are the tangle of
personal dislikes and jealousies that complicate
personal relations between the leaders trying to form a
government. If this were not bad enough, there also
is the unmistakable distrust francophones have for
Yves Leterme, the Flemish Christian Democrat who
would be prime minister.


5. (C) Leterme's electoral triumph in June was
based entirely on Flemish votes. In Belgium's
singular political system, there are no national
political parties and thus no reasons for politicians
to pay much attention to the views of people on
the other side of the language divide. This fact
of electoral life is particularly evident in the
CD&V (Flemish Christian Democrats),who shed most
of their experienced leaders during eight years
of opposition. Leterme and his colleagues
have few personal links to leaders on the
francophone side. Absent such connections,
francophone leaders consider CD&V's alliance with
the Flemish nationalists of the N-VA (New Flemish
Alliance) as a sign of Leterme's extreme Flemish
loyalties and not a matter of practical politics.
To francophones, Leterme is little better
than a closet separatist whose series of
entertaining gaffes (like stumbling over
the French wording of Belgium's national

BRUSSELS 00003021 002 OF 003


anthem) are signs of malevolent intent, and not
political ineptitude.

--------------
How political realities on both sides of
the language border are shaping the dispute
--------------


6. (SBU) The coalition talks have foundered on
certain constitutional and political realities
having nothing to do with Leterme's personality.
First, however badly the Flemish parties might want
to effect change in the constitution, the absence
of francophone support means they simply lack the
two-thirds majority required for doing so. Similarly,
the Flemish cannot unilaterally ram through a solution
for the vexing problem created by a court order requiring
the redistricting of the Brussels-Halle-Vilvoorde
electoral district. Unless and until the potential
coalition partners come up with solutions for these two
issues, they will not begin to talk about other social,
economic, or foreign policy questions.


7. (SBU) Francophone resistance to institutional
change reflects several important realities, the
most important of which involves money. The francophones
fear that Flemish proposals to transfer responsibility
for setting unemployment compensation, health care
benefits, and welfare eligibility policies at the
regional level will leave the French speakers at a
distinct disadvantage. Given the smaller tax base
of the Walloon region, there is no way the region
would be able maintain benefits at their current high
level even with the extra support the European Union
provides to the region each year. The francophone
Christian Democrats and Liberals also think any concession
on institutional reform will make for bad politics.
With the francophone Socialists hurting badly as the
result of numerous corruption scandals, movement on
reform will shift the present narrative from left
wing corruption to right wing sell out. The third
major factor is philosophical. Too great a transfer
of power to the regions could, according to
people like francophone socialist leader Di Rupo,
lead to the progressive enfeeblement of the state,
and hence to its eventual dissolution.


8. (C) The Flemish demand for reforms is only partially about
efficient government. A broad group of people in Flanders
believe the dire economic situation in the French-speaking
part
of the country poses a serious threat to their own
prosperity.
Every news article highlighting a Socialist party scandal in
the
Walloon region convinces Flemings of the need to loosen their
ties with that part of Belgium. Reports about the long-term
unemployed enjoying 1,000 euro/month compensation or going on
vacation to Malaga have a similar effect. The small but
vocal
minority clamoring for a full "divorce" from the francophones
share this concern, to which they add a toxic mixture of
racism and xenophobia.

-------------- --------------
Why this does not add up to an existential crisis
-------------- --------------


9. (C) Our soundings with a broad spectrum of leaders lead to
two
conclusions. First, the outlines of a deal already exist.
On
social policy issues, it will involve haggling about certain
nationally mandated minimums, both in terms of fiscal
measures
and actual policies. The Flemish will offer dollops of cash
to the francophones to sweeten whatever deal seems feasible.
Even on constitutional reform matters, a sizeable minority in
the French-speaking part of the country recognizes the need
for a more rational and less expensive duplication of
government
functions. Second, the political class will continue to
indulge
the type of chest thumping about the failings of one group or
another. This could go on till Christmas, or even early in
the following year. After that point, the parties eager to
form a government will want to get their hands on the federal
budget, something they now are denied. (Note: The four big
party leaders met for the first time in a month on September
26, and reportedly will continue to discuss the way forward
over the coming days. Current indications are that they are

BRUSSELS 00003021 003 OF 003


still at the "talks about talks" stage. End note)


10. (C) One way to hasten a solution will be to involve the
two
socialist parties. Although the Flemish socialists have said
they wished to remain in the opposition, their francophone
counterparts appear willing to join the next government.
Doing so would bring enough votes to secure a two-thirds
majority, enough to bring about constitutional change.
This remains a relatively remote possibility since Di
Rupo has made clear that his party's votes will not
come for free. The center and right parties are for
now loathe to pay Di Rupo's expected high price.

--------------
What it means for the U.S.
--------------


11. (C) In the short-term, Belgium's political impasse has
little impact on American interests. Caretaker Prime
Minister
Verhofstadt is determined to expand the definition of such a
government's responsibilities. He is particularly free to do
so on the foreign policy issues of greatest concern to the
U.S.
A crisis that stretched deep into the new year could cause
more
serious difficulties for the U.S. The constitutional
requirement
not to increase the previous year's budget and strict
restrictions
on monthly expenditure will complicate spending for military
modernization, and limit the government's flexibility to
undertake new operations, including in places where Belgian
troops already are active such as Lebanon and Afghanistan.


12. (SBU) For now, Belgium can afford this crisis. It is in
the
euro zone and thus does not need to worry that its currency
will
tank based on fears, unfounded or not, of a prolonged
government
crisis. Belgium is one of if not the wealthiest country per
capita in the EU. Belgians can afford the many layers of
administration required to run federal, regional, community
and local governments that divide powers over international
trade, export controls, energy and other issues. At the end
of the day, as one Belgian Senate staffer observed: "We
Belgians
are more concerned about what we are having for supper and
which beer (or wine for the francophones) to have with it."
Fox
.