Flanders chief set to lead next Belgian government

By Philip Blenkinsop

BRUSSELS (Reuters) - Belgian voters punished the liberal-socialist government in an election on Sunday and cleared the way for Flemish premier Yves Leterme to become prime minister and pursue a devolution of power to the regions.

Guy Verhofstadt conceded his 8-year term as prime minister was at an end after his liberals slid from being Flanders' strongest party to third place with most of the results counted.

Economic and foreign policy are unlikely to change radically but the result could prompt fresh haggling over power-sharing among the regions. Forming a government may take at least three months in a country where political compromise is the norm.

Leterme's Christian Democrats and their small nationalist allies N-VA saw their share of the vote surge to 30.5 percent in the northern region that is home to 60 percent of Belgians.

Belgium's likely next prime minister claimed victory before rapturous supporters waving the Flemish flag.

"It seems to be a very large victory so I'm very happy," the 46-year-old told Reuters television. He vowed to work for "a modern restructuring of the state".

Leterme wants the regions, already responsible for public works, transport, agriculture and the environment, to have more control over labor policy, justice and health. The francophone parties will take some convincing.

Verhofstadt told party workers his time was up.

"I was prime minister for eight years and I think we've done good work... I was your leader and the face of the campaign and I take personal responsibility for the result," he said.

The Socialists were the biggest losers. They suffered heavy losses in Flanders and risked falling behind the centre-right Reform Movement in French-speaking Wallonia after a series of embezzlement scandals.

Ecologist parties made strong gains, giving them a chance of entering a new coalition. The far-right Flemish nationalist Vlaams Belang was stable.

Critics say it is racist and that it targets Muslims in its opposition to multi-culturalism and mainstream parties seem certain to shun it.

CONSTITUTIONAL REFORM

Voters chose from separate francophone and Flemish party lists, depending on where they live. The federal government normally consists of majorities in both regions.

A Christian Democrat/Socialist government had seemed most likely but such was the slide in the Socialists' support that this coalition alone no longer seems possible.