Bart, Elio and Tina

What goes up, must go down. In our last post we explained how the negotiators on a new state reform achieved some progress. A few days later, the talks were once again stuck in dead end. Preformateur Elio Di Rupo offered his resignation to king Albert, who refused it.

The king asked the unions and the business federations for advice. This move is seen as necessary not because they have the magic it takes to forge a deal, but because it allows the negotiators to cool down and reboot. It is a way of buying time.

The standstill is due to a conflict on more money for Brussels. The French speaking parties want a yearly sum of 500 million euro for the Brussels region. It is seen as a necessary part of a compromise on BHV. The Flemish parties CD&V and N-VA are prepared to give the money, but not as a blank cheque or as a possible reward for poor management. In his first television interview since the start of the negotiations, Mr De Wever said he wants guarantees for financial responsibility.

So now what? Two things are clear.

1. No one wants early elections. The politicians don't want it, the voters don't want it and probably investors in Belgian government bonds even less.
2. A cabinet without the PS of Elio Di Rupo or without the N-VA of Bart De Wever is not an option. Even some other presidents of political parties publicly agree with this: every party is disposable in a cabinet deal, but not the PS nor the N-VA.

The conclusion is a four letter word: TINA. There is no alternative. Crisis or not, Bart De Wever and Elio Di Rupo have to soldier on.

Bart Haeck

Follow the money

Two months after the election, there is some progress. Two agreements have now been made. The first one was mentioned in our previous post: there is a list of policies that can devolve to the regions.

And now there is a vague agreement to change the 'finance law' that calculates the federal donations to the regions and the stream of money that flows between the federal government and the regions.

The new stream should make regions more responsible for their income, maintain solidarity between richer and poorer regions and solve the financial problems of the federal state. Combining these principles and translating them in hard figures has to happen in the coming weeks and months and will be far from easy. The devil will be in the details.

How was it done in the past? Well, one of the aides of former prime minister Jean-Luc Dehaene testified in our newspaper some days ago how politicians in 1988 managed to agree on a law for the money flows, the law that is still used and now has to change. It isn't always a pretty picture.

The aide - called the Toshiba boy because he constructed an economic model for the money flows on his portable Toshiba computer - explained that he printed 5.000 to 10.000 pages of economic models in the six weeks of the negotiations. There were no graphs, just tables with figures.

Only Dehaene, who led the negotiations, could see a two page summary of each economic model with some graphs that showed the long term evolution of what was proposed and the impact on the federal budget. If everyone had seen that summary, the 'Toshiba boy' explains, an agreement would have been impossible.

Some negotiators asked a copy of his economic model, which was refused. Asked if he thought every negotiator fully understood the full impact of the thousands pages of figures before them, the aide said: not everyone.

When Dehaene first heard about the economic model, another aide warned him: this will be extremely complex. Dehaene reportedly answered: 'That's a very good thing.'

The good news for this week? There is some progress: the negotiators have agreed to change the flow of money between governments in Belgium. It is something that has to change, because it doesn't stimulate governments to act responsible and work hard for economic growth. But we're not there yet. The devil will be in the details. And there isn't much comfort in how things were done in the past.

And now there is white smoke on the finance law, what's next? Brussels and the nasty problem of the electoral district Brussels-Halle-Vilvoorde. Saving the best for last.

Bart Haeck

 

Slowly slowly

Slowly slowly the negotiations for a state reform and a new Belgian government are advancing. The two men in charge, PS-president Elio Di Rupo en N-VA-president Bart De Wever, are now talking for more than two months with five other political parties. Now and then there is a crisis, followed by some progress, followed by a new crisis and some more progress.

At the table are the Flemish nationalists of N-VA, the French speaking and Flemish socialists of PS and sp.a, the French speaking and Flemish christian-democrats of cdH and CD&V and the French speaking and Flemish greens of Ecolo and Groen!.

What has been agreed?

The negotiators have more or less reached an agreement on some policies that can devolve from the federal government to the regions and communities. They are worth 4% of the Belgian GDP and contain children allowances, a part of the labor market, a part of the Justice department (e.g. the punishment/re-education of underage criminals, some tax reductions, a part of the health care (where to build hospitals and the quality control), and some smaller stuff.

What has not been agreed?

There is a big row on the budget aspects of these policies. The Flemish parties want to rewrite the law that calculates the federal donations to the regions. They want to make sure that a region with a successful policy (e.g. labor market) receives more money. The French speaking politicians fear that this means they will lose money.

There is a big row about Brussels. No one is happy with the way things go in Brussels. The French speaking politicians think this is due to federal underfunding. But more federal money means more Flemish money (Flemish people pay a bit more of 50% of all Belgian tax revenues.) The Flemish politicians want to cut the political power of the 19 French speaking mayors of the Brussels municipalities.

Of course, there is no solution yet on the bilingual electoral district Brussels-Halle-Vilvoorde.

And if all these problems can be solved, and a state reform can be agreed upon, then the austerity work has to start. The next government will have to 'find' 25 billion euro. For a country with a GDP of 350 billion euro, this is not a walk in the park.

There is a lot of work to do. And it's happening, albeit very slowly slowly.

Bart Haeck