Belgium in Limbo: Coalition Negotiations Break Down Amid Fiscal Disagreements

Belgium’s ongoing political deadlock deepened on Thursday as Bart De Wever, leader of the Flemish nationalist party N-VA (New Flemish Alliance), returned his mandate to form a coalition government. This development marks another setback in the country’s efforts to create a stable government since the collapse of the previous administration.

The news came as De Wever’s deadline to form a coalition expired on 22 August. Following the failure of negotiations, De Wever has returned the mandate to Belgian King Philippe, further prolonging the political impasse.

De Wever had been tasked with negotiating the formation of a five-party coalition, a complex endeavour given Belgium’s deep political divisions between the Dutch-speaking Flemish community in the north and the French-speaking Walloons in the south.

The proposed coalition was set to include the centre-right Reformist Movement (MR), the centrist Les Engagés (Committed), the Christian Democratic and Flemish (CD&V) party, and the left-leaning Forward (Vooruit). However, cracks began to emerge in the talks last week, primarily due to disagreements over fiscal policy.

The Reformist Movement rejected De Wever’s proposal to introduce a capital gains tax, a measure intended to address Belgium’s budget deficit. The tax was designed to meet demands from the Forward party, which opposed austerity measures as a means to reduce the deficit. The failure to reconcile these opposing views led to the collapse of the negotiations.

With De Wever relinquishing his mandate, King Philippe is now expected to seek another negotiator to attempt to form a government. The continued political deadlock leaves Belgium without a functioning government, hampering its ability to address several urgent matters.

Consequences of the Political Stalemate

The immediate impact of the collapsed talks is multifaceted. Belgium remains without an official government, which affects its ability to fulfil key international obligations, including nominating a European Commissioner. Furthermore, the country’s budget deficit remains unresolved, with a plan required to be submitted to the European Commission by 20 September, or by the postponed deadline of 15 October.

This political paralysis is not unprecedented in Belgium, a country known for its protracted coalition talks. Following elections in 2010, Belgium set a record by going 541 days without a government. This was a result of the deep political and cultural divides between the Flemish and Walloon communities, making governance a continuous challenge in the federal system.

The latest round of political instability began in June 2024, when Belgian King Philippe accepted the resignation of Prime Minister Alexander De Croo’s government. De Croo’s decision to step down came in the wake of his liberal party, Open VLD (Open Flemish Liberals and Democrats), suffering a significant defeat in national elections, which coincided with European Parliament elections. His government has been functioning in a caretaker capacity since.

Looking Ahead: What’s Next for Belgium?

Belgium’s political landscape remains uncertain as King Philippe now faces the task of appointing a new negotiator to continue coalition discussions. However, with deep divides between the Flemish and Francophone parties, and growing dissatisfaction among voters, finding a solution will be a challenging task.

If coalition talks continue to falter, Belgium could be heading towards new elections, though this option is considered a last resort given the complexities of the country’s political system and its frequent reliance on coalition governments. In the meantime, Belgium will continue to operate under a caretaker government with limited powers, unable to tackle critical issues like the budget deficit or its international obligations.