Tuesday, 28 August 2007

The EU brought Belgium on the edge of the abyss

Belgium currently faces a very serious existential crisis. Some even dare to speak of the possibility of a complete crackdown of the homeland of both, the European Union and NATO. The crisis arose out of the government coalition talks following the June 10th Belgian general election. According to the Belgian Constitution, the two largest linguistic groups, i.e. the Dutch-speaking Flemings (ca. 60% of the population) and the French-speaking Walloons (ca. 40% of the population), the third being the Germanophones (less than 1% of the population), are to be equally represented in the Belgian government. Since the Flemish centre-right cartel list of Christian democrats and Flemish nationalists (member of the European People’s Party) polled 18.51% and the Walloon Reformist Movement (member of the European Liberals, Democrats and Reformists), an electoral alliance of liberals, liberal conservatives and Belgian unity advocates, polled 12.52%, both becoming by far the largest factions in their linguistic groups, they were doomed to form a government coalition together.

Because both parties did not yet dispose of a parliamentary majority together, they brought the Flemish Liberal-Democratic Party (ELDR, polled 11.83%) and the Walloon Humanist Democrats (EPP, polled 6.06%) around the negotiation table in order to form a centre-right government coalition, consisting of liberals, Christian democrats, Flemish nationalists and Belgian unionists, with Yves Leterme, party leader of the Flemish Christian democrats and former head of the Flemish regional government, as new Belgian prime minister, replacing the Flemish liberal Guy Verhofstadt. In spite of these four parties not having polled over 50% of the Belgian vote, combined they only represent 48.92% of the Belgian electorate, this coalition in the making would have 81 out of 150 seats in the Belgian Chamber of Representatives, or a parliamentary majority of 54%. This is due to the unbalanced Belgian electoral system and the huge overrepresentation of the Walloon minority in the federal parliament.

But the formation talks were overshadowed by what the Walloon law professor and notorious Belgian unionist François Delpérée called ‘a perfume of crisis’. The Flemish parties not only demanded more power being transferred from the Belgian federation to the regional level, but also big fiscal and social reforms, while the Walloons wanted to maintain the current Belgian artificial construct, or even strengthen it further by reducing the autonomy of the regional entities, and to counter every Flemish proposition of in-depth economic reform. Both sides were also under very heavy pressure from their linguistic groups. On the one hand, the Flemish opposition is dominated by the far-right Vlaams Belang party (17 seats) and the liberal-fortuynist List Dedecker (5 seats), who are both advocates of very drastic fiscal conservative measures and full Flemish independence from Belgium, while on the other hand, the Walloon opposition consists of the far-left Socialist Party (20 seats) and the far-right National Front (1 seat), who both stand for Belgian national unity and a very strong welfare state system.

With all this taken in consideration, everybody knew right from the start that these talks were going to be difficult, but no one expected them to fail. Difficult government negotiations are not rare in Belgium. In fact, they happen all the time. So the Belgian people is getting used to this quadrennial circus. Last week nevertheless, the unexpected happened. Even the intervention of the Belgian King could not sort out the problem, and after two and a half months of wasting time with useless negotiations, Yves Leterme, the leader of the talks, resigned from his formation duty. The Walloon position on economic reform, as well as their veto on every part, no matter how small, of institutional and constitutional matter, forced Mr. Leterme to return his mandate to the King. The Walloon ‘non’ made the formation of a decent workable government impossible.

But what made this formation so different from all other previous attempts? Very often, the negotiations started in an atmosphere of mutual discontent, and very often both linguistic groups disagreed with each other on many crucial parts of the proposed reforms, but this bi-polar situation never led to a similar crisis as Belgium is facing today. In the Belgian media, a multitude of possible reasons have been summed up by a wide range of journalists, analysts, politicians and technocrats, going from a severely polarized nationalist debate, over the tiredness of the Flemish people to give in on the Walloon demands, to the alleged weakness and lack of competence of Yves Leterme himself. As usual, the truth will undoubtedly lie in the middle of these three possible reasons, but in spite of that, the idea of secession and full Flemish independence as seeming the only possible solution out of the crisis, is gaining strength in Flanders. The ‘secession bill’ introduced by Vlaams Belang in the Flemish regional parliament is an important signal to Wallonia and the world for the awakening of extreme nationalism inside the Flemish society where such radicalism used to be rather rare.

But there was one more element no one dared to invoke, until recently, when Geert Noels, a notorious Belgian economist and journalist, and Louis Tobback, Belgian Minister of State and current socialist mayor of Leuven, both commented on the Belgian political crisis. According to them, the European Central Bank was to blame for this aberration in the Belgian government formation talks.

In a country, any country, with its own monetary system, despite how sound it may be, the value of the currency will decrease every time a crisis within the government occurs. The main element determining the value of a currency is the political, and monetary, stability of the country that issues the money. If Britain, for instance, would face a similar crisis, the situation of the British Pound on the international markets will undoubtedly deter, and since every fluctuation in monetary value has an enormous impact on the economy of the country itself (inflation, for-ex, international trade, price settings, etc), the repercussions of such a crisis may simply be too hard to bear for the political leaders withholding their radical position vis-à-vis each other. In the case of Britain, no party involved in the coalition talks would simply dare to risk a monetary collapse, and the impact on the economy, and will hence be more eager to find a political compromise.

But Belgium is no longer in charge of its own monetary policy. The Belgian politicians no longer have to fear the monetary impact of their decisions, since the European Central Bank is nowadays responsible for controlling the inflation rate and the value of the European Monetary Union’s single currency, the Euro, in which Belgium, as Europhile as we are, takes part. The analyses of Louis Tobback in the television show ‘TerZake’ and Geert Noels in the business magazine ‘Trends’ were very clear. According to them, if such a crisis as Belgium is facing today, would have occurred in the nineties, the Belgian monetary system would have simply collapsed. The Belgian franc would have suffered tremendous losses in value, especially in such a vibrant and ever-changing marketplace as the one whereon foreign currencies are traded.

Thanks to the Euro zone, the European Monetary Union (EMU) and the European Central Bank (ECB), the Belgian government can easily go in decay without having to bear the monetary consequences of such a crisis. This kind of political irresponsibility has been made possible by the European Union and its satellite institutions. So, thank you, Brussels, for bringing even more unaccountability to the Belgian federal regime. Thank you, Strasbourg, for allowing this senseless Belgian circus to continue its performance without int
erruption or ending. And of course, last but not least, thank you, Frankfort, for having dug Belgium’s grave.

By Vincent De Roeck

Vincent De Roeck is editor of Libertarian.be, political secretary of the LVSV organization, secretary of the Ludwig von Mises Institute Europe Youth Club and president of Nova Libertas.