LETERME TENDERS HIS RESIGNATION - KING ALBERT HAS

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 001071

SIPDIS

E.O. 12958: DECL: 07/15/2018
TAGS: PGOV PREL BE
SUBJECT: LETERME TENDERS HIS RESIGNATION - KING ALBERT HAS
NOT ACCEPTED IT AND CONSIDERS THE OPTIONS

Classified By: Classified by CDA RMEason for reasons 1.4 (b) and (d).


1. (SBU) SUMMARY: With no institutional solution in the
offing, Prime Minister Yves Leterme (CD&V - Christian
Democrat and Flemish Party) tendered his resignation to King
Albert II around 2300 hours July 14. King Albert is now
"taking the resignation under consideration," according to
the official statement from the Royal Palace. On July 14, it
became clear the majority parties would fail to reach
agreement on a comprehensive institutional deal by July 15,
as promised in the Leterme government policy statement of
last March. The New Flemish Alliance (N-VA),CD&V's ally,
was the first party to state publicly that the institutional
negotiations had failed and Leterme's last-minute offer was
simply not enough. The N-VA would not extend the July 15
deadline, even though some agreements had been reached on
financial and social reforms. King Albert continues to talk
with political and regional leaders to find the best solution
for continuing governance and the reform process. Given the
general success of the caretaker government status under
which Belgium worked from June 2007 until March 2008, another
caretaker government will not likely, in the near term,
affect current policies. END SUMMARY.


2. (SBU) Belgian Prime Minister Yves Leterme, after months
of intense negotiations for institutional reforms and more
devolution of power from the federal to the regional level,
simply gave up. He tendered his resignation to King Albert
II at 2300 hours July 14, just hours before the politically
imposed deadline of July 15. Leterme and the King conferred
for four hours afterwards without any consensus on what to do
next; the King has not accepted the resignation nor indicated
that he will do so.


3. (SBU) Politicians and political observers alike
anticipated Leterme in his scheduled speech before Parliament
July 15 would ask for more time to reach decisions on those
unresolved issues, especially the decades-old disagreement
about voting in Brussels-Halle-Vilvoorde and more devolution
of power to the regions. However, his coalition party
partners, N-VA, and even some in his own party, would not
budge from their insistence on meeting the promised deadline
for agreement. Leterme's unexpected resignation came after a
last-minute offer he made to involve directly the regional
governments in the negotiations. However, the offer failed
to obtain sufficient backing on the benches of the Flemish
regional government. His resignation left everyone
speculating about what will come next.


4. (C) During the night, the King not only talked to
Leterme until reportedly 0300 hours, but also to House
President Herman Van Rompuy (CD&V),as well as Jo Vandeurzen
(CD&V) and Didier Reynders (MR - Reform Movement),the two
vice premiers in charge of institutional affairs. The King
will resume his consultations later today. King Albert has
four options: he can refuse the resignation; he can accept
the resignation and ask Leterme to stay on as Prime Minister
until elections can be held; he can accept the resignation
and name another party leader to head an interim government;
or the King can delay making a decision and appoint someone
to explore different options (and buy time). Reynders,
though he may have future aspirations to be Prime Minister,
stated on July 15 he does not want to step in at this point.
If new elections are called, the law provides for a 40-day
pre-election period. Politicians will not call for an
election now since many Belgians are, until the end of
August, taking their summer holidays. There is speculation
the government could possibly hold elections concurrent with
the 2009 regional elections.


5. (SBU) After months of continued negotiations, there were
some agreements on financial/economic and social reforms and
a reised budget was approved. The Francophones want
immediate implementation of the recently reached
socio-economic decisions. If the talks ae to continue, a
new (or adjusted) format wil be needed for the institutional
discussions. King Albert is talking to regional minister
presidents; his calling the regional government leaders in is
an unusual step and shows Albert's commitment to finding a
viable solution to the stalemate. There has been an initial
positive response from the three regional officials.

Reactions from the Various Political Parties
--------------


6. (U) As expected, each party has its own view of the
day's developments. Leterme's party (CD&V) praised him for
his efforts, and say they will continue to support him. They
also declared that since the current format failed to produce

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results, new ways have to be explored for reaching an
institutional deal. Leterme has suggested directly involving
the regional governments in negotiations, an idea not
accepted by all. Some say it is now time for a Francophone
politician to bear responsibility for the institutional
negotiations. Leterme's party in coalition, the New Flemish
Alliance (N-VA),insisted the July 15 deadline be met, but
party leaders claim the N-VA has not put pressure on the CD&V
to put an end to the institutional discussions, forcing
Leterme to tender his resignation. They say Leterme was
right when he pointed to the limits reached by the current
"federal model," and agree regional government will need to
become involved in the talks, but they also claim the
Francophone minority has once again managed to impose its
views.


7. (U) The Open VLD stands by the Flemish institutional
demands, but say the N-VA and FDF (Francophone Democratic
Front party out of Brussels) have to tone down their
institutional demands. They also say government must attend
to the socio-economic needs of the public. The SP.A
(Flemish Socialists) say socio-economic issues should have
priority and Leterme is to blame for the institutional mess.
If Leterme fails, new general elections will be inescapable


8. (U) On the Francophone side, MR (French Liberals) under
Reynders wants socio-economic issues prioritized. They want
Leterme to carry on as prime minister and add the
institutional issues should be discussed without a set
deadline. The French Socialists (PS) under Elio Di Rupo also
say the country needs a government capable of dealing with
the alarming socio-economic situation driven by rising
inflation and food and fuel prices. His party is willing to
continue institutional discussions and they want immediate
implementation of the recently agreed socio-economic accords.
The French Christian Democrats (CDH) state their party has
always been willing to discuss institutional issues and that
the party is willing to endorse an interim government be
established for the period between now and the 2009 regional
elections. They agree socio-economic issues must be
prioritized.


9. (U) The Groen (Flemish Greens) blame Leterme, say the
people are suffering economic hardship, and call for a new
"Belgian Pact." The Ecolo (Francophone Greens) agree a new
"Belgian Pact" is needed. They say July 15 was not a
realistic deadline and fear the crisis will have a dramatic
impact on the 2009 and 2010 budgets.


10. (U) The extreme right Flemish Party Vlaams Belang
politicians say this time it is the end of the Belgian nation
state (a step they have long advocated) and they think
preparations should begin for a partition scheme. Lijst
Dedecker, another extreme right Flemish party, calls for
elections now. The FDF states Leterme is to blame and the
CD&V and N-VA have to clearly state what their ultimate
institutional goals are. Institutional discussions have to
be held at the federal level and the rights of the
Francophones living in and outside Brussels must be respected.

Background
--------------


11. (U) After winning the June 10, 2007 general elections,
with 800,000 personal preference votes, Flemish Christian
Democratic CD&V) leader Yves Leterme was the man chosen to
form a new government. From the outset, he and his Flemish
Nationalist allies from the N-VA stated they would form a
government that would set in motion a comprehensive
institutional reform plan and in the process, solve the
decades-old electoral redistricting
dilemma of Brussels-Halle-Vilvoorde. With the Socialists
having lost votes on both sides of the linguistic border, the
natural choice was a Christian Democratic-Liberal coalition.
However, from day one of the government formation
discussions the Francophone Liberals (MR) and Christian
Democrats (CDH) made it clear they had no interest in
institutional matters, fearing that any accord might end the
tax transfers from Flanders currently supporting the
Wallonian welfare state.


12. (U) During the six months of painstaking negotiations
from the June elections until December 2007, a Belgian record
for government formation, Leterme failed to make any progress
as even his own party refused to make concessions to ease his
task. In the end, Leterme had no other choice but to ask the
King to relieve him of his government formation mission.
The King turned to outgoing Prime Minister Guy Verhofstadt,
an Open VLD Flemish Liberal, to bring reconciliation and hope

BRUSSELS 00001071 003 OF 003


during the Christmas season. Verhofstadt put together an
interim government of Christian Democrats, Liberals, and the
Francophone Socialists (PS). This interim government set up
a committee of wise men composed of leaders from the
Christian Democratic, Liberal, Socialist and Green parties.
They reached agreement on a first batch of competencies which
would be devolved to the regional governments. Once this
agreement was signed, Verhofstadt handed over the helm to
Leterme who was sworn in March 20, 2008 as head of an
asymmetric cabinet composed of the two Christian Democratic
parties, the two liberal parties, and the Francophone
Socialists (PS). The Flemish Socialists (SP.A) and the two
Green parties declined an offer to join.


13. (U) The policy statement of the new government focused
on socio-economic matters and contained a written promise
that on July 15, 2008, the Prime Minister would make a
statement on a second batch of competencies which would be
devolved to the regions. When Leterme became Premier, the
pundits were already placing bets on his chances of success.
It took most of this time to reach an agreement on a format
for the talks, and once this agreement reached,
Brussels-Halle-Vilvoorde once again emerged as a stumbling
block of daunting proportions. Leterme's own party and the
N-VA kept repeating there could be no agreement without a
solution for Brussels-Halle-Vilvoorde, but the Francophone
parties, rather than showing any willingness to meet Flemish
demands, started to press for enlargement of the Brussels
capital region, meaning that Flanders would have to cede
territory in order to make redistricting more acceptable for
the Francophone parties. As it became impossible to sort out
Brussels-Halle-Vilvoorde, it no longer made sense to continue
discussions on devolving competencies to the regions and the
ensuing financial aspects.


14. (U) Having unsuccessfully spent an entire year trying
to coax the Francophone parties into an institutional deal,
many in the CD&V feel it is now the turn of other parties and
other political leaders to try their luck. However, that
switch would simply allow these institutional matters to
fester until after the scheduled June 2009 regional
elections. Consequently, the possibility of general
elections before 2011 should no longer be discarded and some
think the timing should coincide with that of the regional
elections.

COMMENT
--------------


15. (C) Leterme became PM after a record number of days
without a government. If his resignation is accepted, his
116 days will be a record for the shortest term as PM.
Leterme's resignation caught everyone by surprise. Defense
Minister De Crem and Foreign Minister De Gucht dined July 14
with Ambassador Fox and they were completely in the dark
until De Gucht received a phone call late that evening. The
Belgian Government under Leterme has made numerous
commitments to work with the USG, for example, on the
military side, sending F-16s to Afghanistan and staffing an
Operational Mentoring and Liaison Team (OMLT) there. If
there is a caretaker government, it will likely honor
previously agreed to commitments. There are also agreements
on economic and social reform and a revised and balanced
federal budget. Given the general success of the caretaker
government status under which Belgium worked from June 2007
until March 2008, another caretaker government now should
not, in the near term, affect current policies. The
ministers will likely remain at their posts until new
elections are called and an immediate political crisis should
be avoided, no matter who leads the interim government. END
COMMENT.

EASON
.