By James G. Neuger
Dec. 23 (Bloomberg) -- King Albert II of Belgium named a former premier to begin consultations on forming a new government after Prime Minister Yves Leterme was toppled by the financial crisis.
Wilfried Martens, who served as the country’s prime minister from 1979-1981 and again from 1981-1992, was assigned by the monarch to take soundings from political leaders and report back “quickly” with recommendations, according to a statement late yesterday.
“We’re in a very difficult situation,” said Xavier Mabille, head of Crisp, a Brussels research institute. “This government crisis comes at a very bad time. We’re in late December and we have no budget for the new year.”
Belgium has endured 18 months of unstable governments since elections in June 2007, as tensions between the richer Dutch- speaking north and poorer French-speaking south put the survival of the federal state in doubt. It took Leterme nine months to form a cabinet. He’d tendered his resignation once already this year.
The king yesterday accepted Leterme’s resignation over the government’s role in the breakup of Fortis, once Belgium’s largest financial services firm. He ordered Leterme to remain a caretaker as talks over a new government begin.
While four other European countries -- Austria, Lithuania, Slovenia and Romania -- have elected new leaders since the banking crisis erupted in mid-September with the demise of Lehman Brothers Holdings Inc., the Belgian government is the first to collapse without a vote.
Ruled Himself Out
Leterme, 48, who once joked that French-speaking Belgians are unable to learn Dutch and confused Belgium’s national anthem with France’s, on Dec. 21 ruled himself out as the leader of a reshuffled cabinet.
Leterme yesterday held his weekly audience with Albert, the largely ceremonial monarch now thrust into the limelight as a political fixer. The palace didn’t disclose the king’s other contacts. One option is to appoint a six-month government and hold early national elections in June at the same time as planned regional elections.
“There is so much tension, there is so much distrust, there is so much cynicism,” said Carl Devos, a professor of political science at Ghent University. “We need to have a government as fast as possible.”
Front-runners tipped by the Belgian media to form an interim government include Jean-Luc Dehaene, 68, prime minister from 1992 to 1999, and Herman Van Rompuy, 61, speaker of the lower house of parliament. Both hail from Leterme’s party.
Fortis Assets
The next government’s first order of business will be to quell the controversy over the sale of Fortis assets to France’s BNP Paribas SA, brokered by Leterme and Finance Minister Didier Reynders on Oct. 5.
Fortis became a casualty of the financial turmoil after pouring 24.2 billion euros ($34 billion) into the acquisition of ABN Amro Holding NV assets last year just as the U.S. subprime- mortgage market collapsed and lending dried up.
Most Fortis assets ended up in the hands of the Dutch and Belgian governments. BNP Paribas agreed to buy the main banking unit and insurance business in Belgium.
A Brussels appeals court halted the sale on Dec. 12, ordering that it be put to a shareholder vote. The court said there were indications, though no proof, that the government interfered in the process.
Reynders, who Belgian media expect to stay in the government, said Dec. 21 that he would be open to sweetening the deal for Fortis holders.
“If we have to pay more, we’ll pay more,” Reynders said on RTBF television, L’Echo reported.
North-South Wealth Gap
Leterme had tendered his resignation in July, only to be rejected by the king, reflecting the opposition among French- speaking parties to Flemish calls for more local control over tax, labor-market and health-care policies.
The average worker in Flanders generates 28,584 euros in annual economic output, leading to resentment that Flemish taxes are used to prop up the south’s aging industrial economy, where output averages 20,817 euros, European Union data show.
In a poll published yesterday of attitudes in the French- speaking south to Belgium’s politicians, Leterme ranked 15th out of 20. His Flemish Liberal predecessor as prime minister, Guy Verhofstadt, came in third in the poll, conducted by La Libre Belgique newspaper.
Swept up in the European recession, Belgium’s economy is likely to shrink 0.2 percent in 2009 after expanding 1.4 percent this year, the central bank predicts. Business confidence plummeted to a record low in December, the central bank said yesterday.
To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net
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