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Belgian parties fail again to form government

22 november 2011, 12:15
Socialist chairman and royal formator Elio di Rupo arrives for a meeting of the six remaining negotiating parties, in Brussels. ©AFP
Socialist chairman and royal formator Elio di Rupo arrives for a meeting of the six remaining negotiating parties, in Brussels. ©AFP
Belgium's feuding political parties failed to seal a coalition deal Monday, leaving the eurozone nation without a government for 526 days amid a split over budget cuts needed to soothe jittery markets, AFP reports.

The divided kingdom is under pressure to get its act together to avoid being sucked into the eurozone debt crisis, but six-party talks that began Sunday broke up without a deal at 2:00 am (0100 GMT) Monday.

Socialist leader Elio Di Rupo, who is expected to head any new government, described the situation as "dramatic" and will mull how negotiations will next proceed, according to national news agency Belga.

After reaching a deal last month on institutional reforms that had divided the country's French-speaking and Flemish parts for decades, politicians from left and right are now split ed over how to slash the Belgian debt.

King Albert II, who has made impassioned pleas for politicians to end the squabbling, appealed again for a deal last week, saying it was urgent to form a government to "defend the future well-being of all citizens."

Caretaker premier Yves Leterme and the European Commission have repeatedly called for a deal that would bring the public deficit below three percent of gross domestic product by 2012 -- rather than the 4.6 percent now forecast.

EU economic affairs commissioner Olli Rehn warned Belgium and four other EU states earlier this month that they could face fines if they failed to get their public finances back in order.

Belgium's borrowing costs have spiked in recent months, but so far the nation has fended off the type of market pressure that toppled the Italian government this month and forced Greece, Ireland and Portugal to seek bailouts.

The six parties from across the political spectrum are split over how to slice 11.3 billion euros ($15.3 billion) off the deficit next year and some 20 billion in all by 2015.

The Francophone and Flemish liberal parties say Di Rupo's proposals rely too much on tax hikes and not enough on spending cuts and structural reforms of the pension and unemployment systems.

Flemish liberals Open Vld said the latest proposals were "insufficient," calling them an "unbalanced scenario that will not spark the increase in the rate of (economic) activity needed to preserve our prosperity."

The Francophone liberals MR argued that the taxes would strain the economy by hurting small- and medium-sized companies.

But the other parties, Christian-Democrats from Flanders, Socialists from both linguistic regions, and French-speaking centrists are ready to back Di Rupo's budget plan.

Angry at the deepening austerity, trade unions will hold a demonstration on December 2 and have threatened to lead a general strike.

Belgium's growth prospects, like the rest of the debt-saddled 17-nation eurozone, have deteriorated in recent months.

The European Commission published new growth figures this month showing that Belgium's economy would expand by 0.9 percent next year, as against the 2.2 percent previously predicted by the EU six months ago.

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