Monday, 28 April 2014

Background: the final failure of quite a good government

When, on the 6th of December 2011 the 60-year old Elio di Rupo became the first French-speaking and the first socialist prime minister of Belgium in 38 years, another son of Italy, Mario Draghi, had only been 36 days in charge of the European Central Bank. The Eurocrisis, that had started at the end of 2009, was turning into a drama. Belgium, after 540 days without a proper government, slid into the crisiszone of Euroland. Interest rates on its 10 year-government bonds for its huge debt of 100 pct of gdp were rising to the critical level of 6 %, as had happened before to Greece, Ireland, Portugal, Spain and Italy.

Mr. Di Rupo and his rather shaky coalition of six parties took a thunderous start. Before Christmas 2011 the real pension age was raised with two years and cuts were made in unemployment benefits. Both reforms were long overdue in social systems more generous than elsewhere in Europe. It was di Rupo's own socialist party who had obstructed these for more than a decade.

What followed was more murky. In the first half of 2012 the federal government was almost permanently meeting on budget cuts. Negotiations were gruesome slow, with the prime minister patiently sitting out all disputes until all parties were too tired to continue discussions. The never-ending strife depreciated the image of the new coalition. In the end significant cuts were made, although both liberals and socialists could uphold some of their taboos: for the former it was not to raise income tax, for the latter to keep upright at least formally - if not wholly in practice -  the principle that wages in public and private sector should remain linked to the index of consumption prices. Both also - consciously or not - underestimated the symbolism of the remaining cuts, like declining unemployment benefits for the socialists or for the liberals rationally perfectly defendable tax raises on expensive company-cars, that nevertheless became bleeding wounds in the psyche of male CEO’s and better-paid professions.

The effort to rein in the budget deficit watered down in the months before the local elections of October 2012. It was soon limited to the federal administration, where retiring officials were only partially replaced and an extremely rigid spending stop was imposed on all ministries. Confidence in Belgian government bonds - with interest rates declining to less than 3 % - nevertheless was restored months before Mr. Draghi made his now historic announcement (july 2012) that the ECB would do whatever it takes to save the euro.

The new European recession that had been sparked of by the Eurocrisis also hit Belgium. The economy declined with 0,3 % in 2012 and stagnated in 2013. The budget deficit was reduced from 4.1 % in 2011 to 2.5 % in 2014, surely not a bad result in the given economic situation, but less successful than the 2.1 % the government itself had set as its target. In the end, more out of the search for compromise than due to a doctrinal choice, Belgium followed the right Keynesian (or Krugmanian) approach (also defended by the leading Belgian economist, Paul De Grauwe) that kept its economic growth alive in a deflationary environment. 

Together with Germany and Austria it was one of the three countries of Western Europe were gdp at the end of 2013 was slightly higher than at the end of 2008. The rise in unemployment and in overall government debt were among the slowest of all EU-countries. Its high tax-rates, high wages in the private sector and its still rising - albeit less than before - social spending are on the other hand symptoms that some tough socio-economic reforms still have to be made


The paradox of the government of Mr. Di Rupo was that after the biggest political crisis, fueled by nationalistic rivalries, in half a century, it was for two and a half years almost free of nationalistic tensions. One can even say that this was the Belgian government with the least internal conflicts between Flemish and Walloons since these became a major element in politics in 1918.

It did help that everybody was aware of the abyss in which the political class had been gazing for an improbable 540 days. But when the ministers and later the parliaments started to discuss the details of the largest institutional agreement in three decades, it rapidly became obvious that the media and the public opinion were no more interested in the subject. Huge changes in the constitution and a few thousand pages of new laws were discussed, voted and published in a mood of general indifference. As if the country had had it with its nationalistic rivalries.

It seemed the perfect environment to deflate Flemish nationalism that had so forcefully ballooned in the elections of 2010. This happened indeed to the Brussels French-nationalists (FDF) of Mr. Olivier Maingain, who dominated politics in the capital since 1970, but now shrinked to irrelevance after they separated from the French-speaking liberals in the autumn of 2011. But Mr. De Wever understood better an old axiom of Belgian politics: nationalism does not grow, unless it is linked to another societal discontent. So he campaigned on migration and security issues to become mayor of Antwerp in 2012, attracted scores of voters of the extreme right Vlaams Belang (good for 35 % in that city in 2006), and with 37,5 % of the votes kicked  the socialists out of the city hall they had ruled since 1921.

Now, in the campaign for the general elections of the 25th of May, De Wever is betting on economic dissatisfaction on the right of the political spectrum, promising tough cuts in wages, social security and government spending, more or less in line with the troika’s the EU send out to Southern Europe. By doing so he seems to cut deep into the electorate of Christian democrats and liberals in Flanders. And he constantly succeeds, without losing credibility, in attacking  aggressively a rival politician or party, to switch immediately again to a tone of a moderate, reasonable and consensus-seeking politician.

De Wever, although slightly boring in rhetorics, is by far the best debater in Belgian politics, and the undisputed leader of his party. With new talents in its ranks surely coming up, and an excellent organisation and discipline, the NVA would probably be growing in any circumstances. But the sudden scores of 30 % and more in Flanders – scores unseen for the largest party there since at least 30 years – may well be the result of something far bigger: a general sense of decline or at least stagnation in Flanders, the northern part of the country where the economy flourished until the beginning of the century, but has run into trouble ever since. Like in Wallony fifty years ago, when the coal and steel industry there started to decline, the first reaction on slowing growth might as well in Flanders be to seek to blame everybody except yourself. Not for the first time frustration fuels nationalism.


In the summer of 2013 the government of Mr. di Rupo seemed finally to come out of the trenches. Even Mr. Olli Rehn, the European commissioner, started to accept that Belgium was on the right path of budgetary discipline. The constitutional reform had gone through parliament, bringing new powers and budgets to the regional governments and ending a 50 year old linguistic dispute in bilingual villages around Brussels. Above all a lot of other overdue reforms were pushed through: the largest change in the justice structures in the country in almost two centuries, a common social legislation for labourers and employees (a 20-year old discussion), a new banking law, a breaking-up of the monopoly of GDF-Suez in the electricity market, the modernisation of the prison system, restrictions and better controls in migration policies. So when on the 3th of July 2013 the 79-year old king Albert II announced that he was abdicating in favour of his 53 year old son Philipp, and the whole ceremony – organised in only two weeks - took place without a single incident on the 21st of July (belga picture), this seemed to crown the success of the government of Mr. di Rupo.

Here again history could have been a warning. The biggest reform-government ever in Belgium – a left wing coalition of Christian democrats and socialists that installed the welfare state in the early sixties – is still the one with the biggest electoral defeat ever. Although mr. di Rupo and his ministers succeeded in bringing down the general crisis feeling of the end of 2011, economic recovery started probably too late and too slow at the end of 2013 to dissipate the atmosphere of discontent before the elections. It did not help that this grand coalition of no less than six parties, that had remarkably long held together in the light of past experiences, nevertheless started to fall apart when the elections came closer.

Mr. di Rupo enjoyed a personal success as finally he became popular even in Flanders, regardless of the fact that he still was not able to speak Dutch fluently. But in the end his government as a whole is likely to miss what was its main target: the reconquista of Flanders.







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