Speaker: Dr. Idesbald Goddeeris is an assistant Professor at the Katholieke Universiteit Leuven, Belgium, where he teaches courses on European and colonial history. He is also a senior member of the Leuven Centre for Global Governance Studies and coordinator of its Leuven India Focus.

Dr. Idesbald Goddeeris, Coordinator of Leuven India Focus Chair of the Leuven Centre for Global Governance Studies in Belgium, addressed an informed audience at IDSA on the subject of the massive political crisis that Belgium has been facing for the last three years and the deep political and financial implications for not just the stability of Belgium but also for the entire European Union. Ms. Smita Purushottam of IDSA chaired the session. Dr. Goddeeris initiated the talk by focusing primarily on the historical background of the current state of affairs in his country. He also emphasized the significance of Belgium from the geographical point of view. Belgium is at the heart of Europe and Brussels is the capital of not just the European Union but also of its chief security apparatus: the NATO. Thus, while Greece and Ireland may still be considered as peripheral in Europe, the sheer centrality of Belgium makes it one of the principal countries that shape the policy decisions of the European Union. Financial and political difficulties of Belgium are bound to have repercussions for the rest of the continent.

Historical Background

There are predominantly two communities in Belgium -the French speaking Walloons and the Dutch speaking Flemings. Belgium is an artificial state of 10.5 million inhabitants. It is joked that the things which bind the citizens of Belgium together are the ‘King, Beer and Soccer’. However the country has survived a century and half since it was put together in 1830-31 by the international powers as a political compromise. It consists of 6 million Dutch-speakers in Flanders, its northern half bordering the Netherlands, 3 million French-speakers in Wallonia, its southern half bordering France, and 1 million people in its capital Brussels, which is also the capital of the European Union. Brussels was a Dutch speaking town, until the middle of the last century, when the deliberate “frenchification” policy of the Belgian authorities succeeded in turning it into a predominantly French-speaking city.

In the early 20th century, when the country gradually began to democratize, the political establishment feared that the Flemings would become the rulers of the state. Hence, Belgium was federalized giving Wallonia a constitutionally guaranteed veto over all major decisions and a guaranteed share of half the seats in government and major administrations. The conservative, free-market oriented Flemings had been complaining for decades that they were forced to subsidize the allegedly “Socialist” south, while no improvement of the economic situation of the Walloons has been visible, which has been weighed down by the legacy of coal and steel industries. On the contrary, Wallonia has become a stagnant region in Europe with hardly any economic growth. Though Wallonia has 33% of Belgium’s population, it has 46% of its unemployed and it accounts for only 24% of Belgian GDP and 13% of its exports. 20% of the Walloons are unemployed and 40% work for the government.

There is an enduring period of communitarian tension and political instability which is rooted in the differing opinions on state reform, and in the continuing existence of the controversial electoral district of Brussels-Halle-Vilvoorde (BHV). Parties from the Dutch-speaking Flanders are in general strongly in favour for devolution of powers to the regions and the splitting of the unconstitutional BHV district, while the French-speaking Wallonia in general insists on retaining the status quo.

Every attempt to liberalize the Belgian economy and to reform the generous Belgian welfare system has been vetoed by the Walloon Socialists. This has led to increasing Flemish frustration, resulting in the growth of the Flemish-secessionist movement. It is extremely difficult and unpopular for the political establishment of Flanders to foot the ever increasing social and health care bills.

Recent Events

The collapse of Belgian Prime Minister Yves Leterme’s five-month-old government risks paralyzing politics at a time when vital economic decisions need to be made and an agenda set for Europe. Belgium’s bickering political leaders have failed to restart seven-party negotiations to form a government, prolonging the deadlock for more than 207 days and thus breaking a European government formation record, previously held by Netherlands.

Some of the major problems and issues that will need to be tackled on a priority basis are:
a) Rising unemployment.
b) Pension issue.
c) Budgetary deficit which is close to 5% of the GDP.
d) Wage negotiations between employers and the state which can be complex and long drawn in the absence of a political mandate and can subsequently lead to social instability and impede growth.
e) Bearish run of the stock exchange.
f) Rising interest rates.
g) Investor confidence which is at an all time low.

Till date, speculators analyzing debt markets have focused their attention on Greece and other southern euro-zone members, but the political crisis could push Belgium, Europe’s third most indebted country after Greece and Italy, onto their radar screens.

The questions put forward by the audience revolved around the immigration issues faced by Belgium and the public perception of the citizenship act of the country which has often riled the intellectuals. The nature of European reaction needed to tackle the prevailing crisis, the rise and emergence of China, European Union as a modern entity capable of meeting the needs and aspirations of its citizens and the future of the Euro as a common currency were also discussed. There was a debate on the success of the European integration project with different views proposed by the speaker and German experts present in the audience.

Ms. Purushottam thanked Dr. Goddeeris on behalf of the experts present and IDSA for his presentation and observed that it was imperative for India to deepen its understanding of developments within the European Union and its member countries and vice versa, in order to better understand the future direction of the global events. It was a pity that neither India nor Europe felt a need to better understand each other’s strategic thinking and greater exchange of experts and students was required for this purpose. She also praised the effort of Dr. Jakub Zajarczkowsky of the Centre for Contemporary India Research and Studies of the Institute of International Relations, University of Warsaw in facilitating the meeting with Professor Goddeeris.

Report prepared by Rajorshi Roy, Research Assistant, Eurasia Cluster, IDSA.