• Political uncertainty in Belgium could make it the next Greece

    Belgian EU commissioner Karel De Gucht has warned that his country could be in line to suffer a Greek-and-Italian-type loss of market confidence if it does not quickly form a new government.

     

    “Italy and Greece have been saved for now because they will have a new government. It may very well be that the financial markets look around and say: ‘Who’s next?’ And then I think that Belgium is one of the possible victims,” he said on national TV on Sunday (13 November).

    Belgium has struggled to form a coalition government for the past 517 days – a world record – amid still-growing differences between its francophone south and Dutch-speaking north.

    At the same time, it has the EU’s third largest debt-to-GDP ratio after Greece and Italy: almost 100 percent.

    Belgium was on Thursday reprimanded by EU economic affairs commissioner Olli Rehn over the fact it still has not provided the European Commission with a national budget for 2012.

    “Belgium needs to step up, and full 2012 budgets should be available by mid-December,” he told reporters in Brussels.

    Government negotiators had earlier on Monday tried to put forward a new budget plan to cut spending by €11 billion and to fall in line with EU deficit ceiling rules.

    But disputes over policy details put off the move to a later date.

    Acting climate minister Paul Magnette, of the french-speaking Walloon Socialist Party (PS) said that the so-called six-pack of EU rules on joint economic governance agreed to in September is nothing more than “a source of inspiration.”

    Acting foreign minister Steven Vanackere, of the Dutch-speaking christian democrats, called the comment “irresponsible” and said the socialists are not behaving “as a party that is going to have to provide the [next] prime minister,” referring to Socialist leader Elio di Rupo.

    “The stance of the European Commission is as such that these rules have to implemented. And if a country does not, the commission will impose a sanction of 0.1 percent of GDP,” De Gucht added.

    For his part, acting prime minister Yves Leterme promised that his team will draw up its own budget proposals by early December, shortly before he leaves the post to work for the OECD tink-tank in Paris.

    “If the coalition negotiations keep dragging on, we’ll have to look at ways how we can implement reforms of the labour market and pension system ourselves,” he told the Dutch language daily De Standaard.

    Source: EUobserver, OEIC staff