The Antwerp mobility issue after the vote: Flanders acts with caution

As we expected, the people of Antwerp rejected plans for a highway on a cable-stayed bridge which would have made the ring road around Antwerp complete. About 35 percent of those who had the right to vote actually voted, and of those 59 percent were against.

It's obvious that Belgium is not China. Where as in China cities are completely transformed in a few years time, in Belgium and in many other European countries it takes years of consultations and negotiations to get the necessary approvals for building roads, railroads or harbors.

In this rich part of the world people worry about the environment, about health and about whether their city is an attractive place to live.

The Antwerp port is second only to Rotterdam in Europe and the petrochemical industry is second only to Houston, Texas. A majority of business people was in favor of the bridge called the Lange Wapper, the name of an Antwerp mythological giant. They claim logistics are of crucial importance for the region.

However, about half a million people live in the city and more than a million in the metropolitan area. The city boasts a very European style center, with part of the basic medieval structure intact (think narrow streets, enchanting squares) and with ambitious projects to turn the city parts at the river Scheldt and at the docks into fancy residential areas.

Those against the bridge were appalled by the scale of the project. They have the impression that alternative options, leading traffic away from the city center, had not been studied carefully enough.

For months and weeks experts gave arguments for and against. The BAM, a state-owned company in charge of the project, spent lavishly to promote the Lange Wapper. This backfired, as the opponents formed a grassroots-movement, turning their financial disadvantage into an advantage taking the role of the poor but caring and honest underdog.

The vote was technically speaking not a referendum, because the result was not legally binding. However, it was impossible to ignore the result and the city announced it would advice negatively on the project.

Kris Peeters' Flemish government now has to tackle the issue. Kris Peeters realizes it's a poisonous problem, and he acts cautiously, without giving a timing. Today it was announced that the Flemish Government forms a ministerial committee, "Durable Antwerp Mobility". Seven working groups will study the situation and possible solutions. One of those working groups will reorganize the BAM.

Roland Legrand

The good, the bad & the ugly - the sequel

In previous posts, we discussed the problems of the Belgian budget and the way the federal government is coping with it. Last week, prime minister Herman Van Rompuy (CD&V) made his state of the union for the years 2010 and 2011. When the preparations for it still were going on, we published a post ‘the good, the bad & the ugly’, as there was some good news, some bad and some ugly. It’s the same for the state of the union.

The Good

There is quite some good news: At least there ís a federal policy for the years to come, a thing that could not be said in July 2007 or in October 2007. And there even are some very good things in it: the government extends the temporary anti-crisis measures, e.g. a temporary lower VAT for construction work. Another good thing is that there is a trajectory to go rebalance the Belgian budget in 2015. You could find it too soon or too fast, but at least there is one. We’ve known worse.

The Bad

Some things are not so good: The government lowers the VAT for cafes and restaurants to 12%. This is an odd thing to do at this time. A study ordered by the horeca-federation (hotels, restaurants and cafes) concluded that prices in cafes will not go down by doing this, nor will they hire exceptionally more staff. The main impact of it is improving the profit margins of the owners of cafes and restaurants. Given the non-impact on prices and the very low impact on jobs, this is an odd anti-crisis-policy at a time when there is no money for it. But it seems especially vice-prime minister Didier Reynders (MR) wanted the lower VAT very badly, for electoral reasons.

The deal was that he had to find the money for it. So he made the notional interest reduction – a system that allows companies to calculate a fictional interest payment on its own capital, and make that fictional interest payment tax reducible – a little bit tighter. So in the end the big companies have to pay for the restaurants and cafes. This is odd as well, as the notional interest reduction had some benign effects. Companies raised their capital in order to profit from the system, and in doing that, they improved their capital cushions, a valuable thing when things went wrong in the financial crisis.

In 2011 there is a federal election, so there is some electoral candy in the budget. The dairy farms – traditionally CD&V-voters - get 20 million. As told, the restaurant and cafe-owners – liberal voters - get their VAT reduction. CdH-minister of Work Joëlle Milquet got a job plan of which she is very fond, but that according to unions ànd business federations is estimated to complicate and not efficient.

The ugly

The banks have to pay a contribution to the government, because de facto they benefit from a state guarantee when they would go bankrupt. This a fair system, but it isn’t the way the Belgian government has organized it. Every Belgian bank has to pay a fee according to its savings deposits. This looks like a very bad move. One of the lessons of the financial crisis was that banks need to go back to traditional banking. This means they have to finance themselves not on the interbank market but by accumulating savings. What the Belgian government is doing looks suspiciously like organizing moral hazard: the more careful you are (by getting savings money) the more you have to pay to the government. The more risk you take on the interbank market, or the more you lure your customers to complex structured products in stead of savings accounts, the less you pay to the government.

Another ugly one: GDF Suez has to pay 170 milljoen euro a year but is granted to keep three nuclear power plants for ten years longer. This will create a windfall profit of several billions of euros (the figures go from 3 to 16 billion euro). De Tijd discovered that the Belgian ambassador in Paris met some people of GDF Suez and they suggested him they want to pay 170 million a year. The Belgian ambassador e-mailed this to Brussels (De Tijd published the e-mail) and exact the same figure was written in the budget. It seems the Belgian government negotiated very badly: GDF Suez made its quasi-monopoly on the Belgian energy market even stronger, and doesn’t have to pay a lot for it. On the energy-level, it feels like living in a French colony.

The third ugly thing: there is hardly a strategy to make things better. One of the key issues of the Belgian budget is that not enough people do not work long enough. Hardly anything is done to improve this situation. It is possible: in the same week prime minister Herman Van Rompuy delivered his state of the union, the Dutch government of Jan-Peter Balkenende announced that ni 2025 people will have to work till they’re 67. No such signs in Belgium.

Bart Haeck

Banks, budget cuts and ecotaxes

Tuesday afternoon, the 14th of October, prime minister Herman Van Rompuy will give his state of the union in Belgian parliament. This weekend the federal government is still working on it, as well as on the budget for 2010 and for the election year 2011.

As the tradition goes, the political poker game between the government parties CD&V, Open VLD, MR, PS and cdH  about what the prime minister will anounce in parliament went on this weekend and will probably be played till Monday late at night. Belgian politics works this way. A budget has to be finalized in a dramatic nightly battle. Then everyone gets some hours sleep and goes to parliament.

The big framework of the budget, however, is already clear.

Budget cuts: 1.1 billion euro

The government will cut expenses. For every two civil servants who retire, only one will be replaced. (100 million euro). Another 100 million euro has to be found in the defense budget, some other 100 million euro in small budget cuts and about 800 million euro in social security.

New taxes: 1.1 billion euro

It is expected the government will raise ecological taxes on company cars and on property. Taxes on wages will not be touched.

Banks and GDF Suez: 1.1 billion euro

The banks will have to pay for the support they got from the government. GDF Suez will have to pay because it will not have to close its nuclear power plants in 2015 after all. Some more money has to be found in the fight against tax fraud, a classic budget fixer.

This effort of 3.3 billion euro has to be added to a 1.65 billion euro effort of all the regional governments and should result in a budget deficit of 6.5% of GDP in 2010 and a budget deficit of 5.5% in 2011. Budget equilibrium is scheduled for 2015.

Not fast enough? Pushing harder would hurt the economy, is the answer of the government. If Belgian needs a big Copernican revolution, it will not be this time.

Bart Haeck

To build a bridge or not to build a bridge

To build a bridge, or not to build a bridge, that is the question for the Flemish Government of Kris Peeters. Since 2000 the Flemish Government is working on plans for a highway on a cable-stayed bridge that will cost billions of euros and make the ring road around Antwerp complete. It is one of the biggest infrastructure works in Europe at this moment. But in a new twist, on October 18th, the people of Antwerp can vote in a referendum if they want to go on with the plans. It is expected they will not.

In Antwerp, the so called Oosterweelverbinding has fueled one of the most emotional political discussions in years. When the Flemish government in 1998 decided to complete the ring road of Antwerp there was little protest however. It stayed that way when the Flemish purple-green government (liberals, socialists and greens) of 1999-2004 started planning the cable-stayed bridge that is called the Lange Wapper, the name of an Antwerp mythological giant.

But then two things happened. The government company that has to build the Lange Wapper refused to communicate for years, probably because it was afraid it would violate the bidding process of the building companies that want to finance and build the bridge. At the same time, local citizens started to get worried and suggested to build a tunnel at a bigger distance from the city center.

What followed, was a tsunami of discussions. There were the worries about the rising costs of the infrastructure works. There was the outrage about a million euro contract with the communications agency that didn't communicate, there were the discussions about air pollution and city noise, there is a debate whether the bridge is necessary as an economic stimulus-project, urbanologists worry about the connection of the new bridge to the existing part of the ring road in Antwerp and there are worries whether the project can be financed the way it now is (a public private partnership, paid back with toll money)

These are very technical questions and the problem is that experts can be found for each side of each argument. And that the answers to all these questions have to be aggregated in a simple answer in a simple referendum: do you favor the bridge, or not?

For Flemish politics, the bridge has led to ubiquitous flip-flopping. The green party Groen! favored the bridge in 2000, but is now fiercely against it. Patrick Janssens, the mayor of Antwerp, famously defended the bridge by saying 'walk and don't look back', but later changed his opinion. The liberal party is still supporting the bridge, but its most important politician in the Antwerp City Council, Ludo Van Campenhout, is against it.

Within the Flemish government something extraordinary is going on. The socialist party is against the bridge, but BAM, the state company that has to coordinate the infrastructure works, is still defending its case. This had led to a public conflict between Karel Vinck, the CEO of BAM, and the socialist party. As BAM is a state company, the socialist party has representatives in the board of directors. But the situation got so out of hand that this isn't a boardroom issue anymore, but a public fight. The next battle is staged on October 18th.

Bart Haeck