The eight political parties that have been negotiating a new government in Belgium, seem now bound to succeed. They are about to conclude a package deal about many of the institutional questions that have been pending for the last decade. Towards the end of the week, after about 480 days of negotiations, they still have to tackle all the other issues, including budget cuts for next year for a total amount of at least 7 billion euro’s.
The eight parties (socialists, liberals, Christian democrats and greens of both sides of the country) reached another deal last night. They accepted a scenario to split up the justice district of Brussels-Halle-Vilvoorde, by far the largest of the country and the only really bilingual. The deal was in some sense a consequence of the earlier agreement, reached on September the 15th, to split up the electoral district with the same name. But it took again a few nights before the highly symbolic knots in the question were cut into pieces.
A week ago another hard institutional nut was cracked: a new Finance Law that would devolve some extra fiscal autonomy toward the regional authorities. The principles to do this were agreed, and the agreement was facilitated by the fact that the negotiators did not take the necessary budget cuts into account yet. Hence it was possible for all participants to say they had won.
It has to be said that the exact wording of all the institutional agreements reached since the middle of September is yet not been made public. This has certainly also hampered attempts of the opposition – mainly the Flemish nationalists of N-VA, who remain the largest party in parliament – to voice their criticism.
Mr. Elio di Rupo, the 60-year old formateur who is now very likely to become the next prime minister, hopes to finish the last details of the global institutional agreement within a few days. The outlines of the sixth gradual reform of the Belgian institutional architecture since 1970 will then be clear. But then he still has to negotiate all the other subjects. It will surely not take another 500 days, but might need a few weeks.
More rapidly than that Mr. di Rupo will be obliged to negotiate a new budget for 2012. Normally it should be presented to parliament next week and to the European Council on the 17th of this month. In spring Belgium promised the European authorities that it would target a year-on deficit for all authorities of 2,8 % of gdp next year. That would necessitate at least 7 if not 10 billion euro’s in budget cuts. That is 2 to 3 % of gdp.
Since Belgium has become, with Dexia-bank, the last few days the centre of what seems to be a rapidly growing new banking crisis, it’s spread (between it’s government bonds and the German ones) has been rising the last days, thus raising the cost of servicing the global public debt of the country, still at a level of slightly less than 100 % of gdp. The heaven of a new government might be coming within reach, but there may still be a lot of blood, sweat and tears in the waiting before Belgium reaches that stage.