A new kid in town

 

 This Saturday Belgium will have a new government, 139 days after the last elections.  That is only a quarter of the length it took last time, in 2010 and 2011. The new centre-right coalition is promising budget cuts and socio-economic reforms. And it will have the youngest prime minister in Belgian history.

 Twenty six hours of uninterrupted negotiations were needed, before on Tuesday the 7^th the story broke, perfectly timed a few minutes before the evening news: four political parties – two liberal ones (MR and VLD), plus the Flemish nationalists (NVA) and the Flemish Christian democrats(CDV) - had reached an agreement to start a new federal government. The two co-formateurs, Kris Peeters and Charles Michel, came out of Parliament House to announce it, and made immediately clear that the latter, the 38-year old president of the French-speaking liberals of MR, would become the next prime minister.

The agreement was mainly about cuts and reforms. Contrary to what the previous government – with the socialists – promised to the ever-watching European Commission, Belgium will not reduce its annual budget deficit to zero in 2016, but two years later. The remarkable thing is that it was first the hard-line Flemish nationalists who proposed the move, and the other parties who picked it up. It is not sure the EU will agree, although overthere the discussion about right and wrong in economic policies is in full swing.

The decision has been taken, it is said, to create room for even more urgent reforms: the lowering of social charges paid by employers on wages (going on average from 33 % to 25 %), a tax shift away from charges on labour for a total value of about 1% of gdp, and a one-time general wage freeze next year diminishing salary charges with another amount nearing 0.7 % of gdp. One charge for employers is going slightly upwards: an extra month salary for employees who remain sick for more than one month. This last measure should reduce costs in the sickness insurance.

An unexpected breakthrough was achieved regarding retirement. The age is now fixed at 66 years from 2025 onwards and on 67 years from 2030. Almost all limits on working after retirement – and while keeping your pension – will be lifted. Further budget cuts will be made in the sickness insurance, but no more in unemployment.

The biggest budget cuts have to be obtained by not replacing two out of three of the vast number of officials who retire in the coming years. Some new taxes will be introduced, like a slight raise of the tax on stock market transactions, a further raise of taxes on diesel fuel, and a spectacular novelty: charges on fortunes that are transferred through companies towards countries that are labelled ‘fiscal paradises’. It is already called the Cayman-tax.

It is an ambitious programme for the first genuine centre-right government in Belgium in more than 25 years. Much will depend on the persons mr. Michel and his colleagues will choose as minister. And of course of the positioning of his own party as the only French-speaking one on board, representing only 20 out of the 63 French-speaking deputies in the federal parliament.

 

Clueless or not?

 

 ‘This week we want to land’. That was both ‘co-formateurs’ of a new Belgian government, Mr. Charles Michel and Mr. Kris Peeters, announced on Monday. But it remains unclear if they have, after weeks of hesitations, finally found the key to solve all personal issues, caused by an uprising inside Peeters’ party at the beginning of this month.

 Negotiations for an unprecedented coalition of Flemish nationalists, French- and Flemish liberals and Flemish Christian democrats were well under way, so it seemed, in the first weeks after they had resumed in the middle of August. But then came Jean-Claude Juncker, the designated new leader of the European Commission (at the right of the picture).

 Juncker not only pressed Belgium to appoint a candidate for his commission, he also asked explicitly for a woman, to whom he promised a big portfolio. That woman could only be Marianne Thyssen (left on the picture), since 21 years a Christian democratic MEP, and the only woman on the Belgian shortlist. But this collided with the intention of Charles Michel, co-formateur and president of the MR, the French-speaking liberals, to send Didier Reynders to the Commission.

Reynders has for fifteen years been a deputy prime minister of Belgium, but also a longtime rival of Charles Michel, and before that of his father Louis Michel (who went to the Commission between 2004 and 2009 after an election defeat and Reynders taking over the MR). So Michel said: either the Flemish Christian democrats, who are only the third largest party in the new coalition, obtain the prime minister – Kris Peeters – or the EU-commissioner, but not both.

 On September the 1^st inside the party bureau of the Flemish Christian Democrats (CDV) , a spontaneaous coalition was formed to support Thyssen, between the European lobby of the party (who is somehow orphan since its key figures in the EU Wilfried Martens and Jean-Luc Dehaene died recently, and because Herman Van Rompuy will retire in december), the Christian trade union, who dislikes the coalition that is to be formed, and maybe even the party president Wouter Beke in whom many see a potential successor for Peeters.

With that unexpected choice of the CDV, it needed a night long mediation by Bart De Wever, the leader of the Flemish nationalists, who does not want to be prime ministers (which also would be difficult to defend against Francophone opinion for the MR) to keep the negotiations on track. Indeed, suddenly Kris Peeters saw his chances to become prime minister destroyed, Didier Reynders saw his way to the Commission closed (and reacted somewhat bitterly), and Charles Michel was confronted with the perspective of having to share power in Belgium with Reynders.

 At 9 am on Thursday the 4^th of September after twenty hours of non-stop negotiations Michel and Peeters announced that Thyssen would become Commissioner and the next prime minister would be ‘a liberal’. The vagueness of the latter announcement showed that further compromises still had to be worked out.

 Since then the negotiations have stalled. For the last fortnight before Monday there was not even a plenary session of all negotiating teams. For all observers it was clear that the key to unlock the stagnation laid inside the MR. Charles Michel is the obvious candidate to become prime minister, but he wants to be freed from Reynders in his backyard. The latter has already let it know that he wants to succeed Michel as party president. Of course every international topjob for Reynders – who is 56 - could solve the rivalry, but these are not so readily available.

 Other elements have destabilised the negotiations too. The future of the second formateur, Kris Peeters, is all but clear. His party has in the past few weeks put forward some strong demands for new taxes emanating from the Christian trade union. It hopes to find allies inside the MR against the more right wing oriented Flemish nationalists and liberals.

 So the optimism that the two co-formateurs showed on Monday, with all negotiators agains around one table since Sunday afternoon, was met with scepticism. Would Michel take the risk to go for prime ministership and confront Reynders in a vote on his presidency some weeks later? Is there a solution for Kris Peeters? Only in that case, it seems, the final decisions on thorny issues like the pension age, wage restraint and cutting the budget deficit – decisions that have been carefully prepared by experts and need only an ultimate arbitration – will finally be made.