December 19, 2007 / 7:22 AM / 12 years ago

Belgian PM agrees deal for interim government

BRUSSELS (Reuters) - Belgium’s caretaker prime minister reached agreement on Wednesday on forming an interim coalition government, providing a temporary solution to a political crisis after an election six months ago.

Belgium's Joelle Milquet, chairwoman of the French-speaking Christian Democrat party (CDH), addresses a news conference in Brussels December 18, 2007. REUTERS/Thierry Roge

“The prime minister has unblocked the situation,” a spokesman for Guy Verhofstadt said, adding that an interim government could be sworn in on Friday after a French-speaking party agreed to join a five-party coalition.

The linguistically divided country, home to the European Union and NATO, has been without a new government for a record 192 days, sparking speculation that the 177-year-old state could split into Dutch- and French-speaking regions.

Thousands of Belgian trade union members marched on Saturday in protest against the failure of politicians to form a government and tackle rising fuel and food prices.

Belgians also feared the prolonged deadlock had damaged the country’s image and was driving away foreign investors.

“For Europe, this means the crisis is over for Belgium,” said long-serving finance minister Didier Reynders, head of the French-speaking Liberals — one of the five coalition parties.

Verhofstadt was asked by King Albert to put an end to the political deadlock after Flemish Christian Democrat leader Yves Leterme failed in two attempts to form a government despite emerging as the winner from June’s election.

Providing it passes a parliamentary vote of confidence, currently scheduled for Sunday, an interim government would last no longer than March 23, 2008, after which Leterme should lead a more permanent coalition.

Verhofstadt, in power for more than eight years, has grown in popularity throughout the crisis and is now considered the only unifying political figure in the country.

UNDERLYING TENSIONS

Leterme was unable to find a compromise with French-speaking parties on a reform to boost regional autonomy, a key demand for Flemish parties, which represent more than 6 million of Belgium’s 10.4 million people.

The more separatist and affluent Dutch-speaking Flanders region wants control of labor market policy and to be able to vary taxes, currently a federal government prerogative.

The French-speaking Wallonia region, where unemployment is more than double that of Flanders, feels it will lose out from a reform and that the federal state could become an empty shell.

Analysts cautioned that the tensions between Flemish and Walloon would remain despite the end of the political impasse.

“The crisis is not over. No one knows what will happen after Easter,” said Carl Devos a political scientist at Ghent University.

“It’s like a fire that has not really been put out. It’s smoldering for now and in January, unless talks resume, you will see flames rising again.”

Devos stressed that only an agreement on state reform would put an end the crisis.

Tension between the communities was underlined on Saturday when the winner of the Miss Belgium contest, a French-speaker, was booed by members of the audience after failing to answer a question in Dutch.

Additional reporting by Philip Blenkinsop and William Schomberg; editing by Keith Weir

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