UPDATE 1-Belgium hits back at French criticism over lax intelligence

(Adds comments from police union, details on secret service)

BRUSSELS, Nov 17 (Reuters) - Belgium hit back at French criticism of its response to Islamist militants, although it also faced domestic complaints that its police and intelligence services were chronically under-funded.

The suicide bombings and shootings that killed at least 129 people in Paris last week were planned in Belgium, French President Francois Hollande told parliament on Monday.

Two of the attackers were Frenchmen who lived in Belgium, French authorities have said. An international arrest warrant has also been issued for the brother of one of the attackers, a Frenchman who was living in Molenbeek, a poor district of Brussels home to many Muslim immigrants.

A French intelligence source, commenting on Belgium’s security resources, told AFP: “The Belgians just aren’t up to it”. Belgian officials scrambled to defend the country’s record.

“After Verviers, other countries congratulated us,” Belgian Justice Minister Koen Geens told state broadcaster RTBF. “Now, just like others, we were unable to prevent things from happening. If there is blame, I do not mind looking into it when the time is right.”

In January, Belgian police killed two men who opened fire on them in the eastern town of Verviers, during a dozen raids across the country on groups the police said were planning “terrorist attacks on a grand scale”.

Thirteen men were arrested in the raids. Guns, explosives and police uniforms were found in the raided apartment in Verviers.

“It will be up to the investigation to decide where the attacks in Paris were planned”, Guy Rapaille, the head of Belgium’s intelligence oversight committee, told RTBF. “We cannot decide in advance who are the ones responsible.”

After those raids, the government announced a 200 million-euro ($213 million) increase in its security budget. But the country’s largest police union said more than half that money had gone to cover unpaid bills.

“The reality is that our warehouses are empty. There aren’t even any trousers for our new recruits,” said Vincent Houssin, deputy chairman of police union VSOA.

Belgian intelligence services were also been neglected for a long time, said Belgian journalist Lars Bove, who has written a book on the subject.

“Previous governments have underestimated the problem,” Bove said. “Though this has changed with the present government, especially after Verviers, they still have some catching up to do.”

Belgian intelligence spending rose 20 percent this year, the department being the only section of the justice ministry to get a budget increase. The exact size of the service is a state secret, but Bove estimates some 600 people work there. ($1 = 0.9384 euros) (Reporting by Robert-Jan Bartunek; editing by Philip Blenkinsop and Larry King)