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May 24, 2010 |  2 comments |  Print | E-Mail Your Opinion  

Paul  Pass

Belgian Political Stability and its Implications for the US Economy

Paul Pass: In spite of the present media attention to the economic problems in Greece, a problem is brewing in the heart of Europe that European and American policymakers would be ill-advised to ignore. The possible break-up of the Belgian state might have severe repercussions on the stability of the European Union and negatively affect the US economy as well. For the sake of future transatlantic relations, the US and Europe should pay close attention to the developments in Brussels.

With its capital city serving as the de-facto capital of Europe, Belgium represents an interesting case study of European aspirations. In terms of its economic and cultural evolution, two interrelated developments need to be noted: its early industrialization at the beginning of the 19th century and its cultural divide. During the 20th century, a marked transition of economic power occurred from the French-speaking Walloons in the South to the Flemish-speaking population in the North. Whereas the Flemings had traditionally based their economy on agriculture, industry was stronger in the South. Therefore the southern part of Belgium witnessed higher growth rates and ultimately accumulated greater economic wealth than the North during the 19th century and the early 20th century. Even though Flemings outnumbered Walloons during this time, the French-speaking community possessed much of the political and economic power in Belgium. This all changed in the latter part of the past century: Whereas the Flemish community was able to adapt and successfully rebuilt its economy along the services sector, Wallonia failed to make this transition. The outh of Belgium experienced the decline typical of a heavily industrialized region in the late 20th Century.

The per capita GDP in the Walloon provinces of Hainut, Liège, Limburg, Luxembourg, and Namur is lower than the European average. In the context of the Belgian welfare state's redistribution of wealth, this means that the Flemish community is subsidizing Wallonia's poor economic performance. A great number of Flemings are opposed to the continuance of this practice. Moreover, while Flemings and Walloons have historically been united in their common belief in the Catholic faith, this factor today plays a negligible role, as ever declining church attendance shows. Despite their shared religious heritage, the two communities have less and less in common, as economic disparities persist in Belgium.

Not surprisingly, Flemings and Walloons are increasingly unable to come to an agreement to form parliamentary coalitions in Brussels, and many extremist political parties in Belgium are openly discussing the break-up of the country. Belgium's political and economic situation is often likened to Europe in miniature: Different cultures have to try to reach an agreement at the political table, while their fundamentally different economies are forced to work together in order to produce growth. Belgian unity is such a difficult prospect that the last Belgian Prime Minister to score even minute success in this realm received so much praise that other European leaders saw him as a worthy candidate for the post of President of the European Council: Herman Van Rompuy was Belgian Prime Minister from December 2008 to November 2009 and is currently serving his first term as President of the European Council.

If Flanders were to secede from Belgium, it would be the first partition of a country in modern Europe since the break-up of the former Yugoslavia. Undoubtedly, such an event would have a lasting effect on the stability of the European Union as a whole. Even though the secession would be a purely domestic Belgian affair, it might well undermine investors' confidence in the European project and the Euro. The Greek financial crisis has already pushed the Euro to its weakest stance relative to the US dollar in the past half decade. The dismantling of the Belgian state would further damage the European currency. A weak Euro would hurt the American economy too, since European firms with offices in the United States would find it increasingly expensive to employ the hundreds of thousands of workers they currently do. Job cuts would be the result, and any type of recovery would be rendered far more difficult. A strong and united Belgian state therefore is in the best interest of the US economy. Legislators and business leaders in the United States should keep their eyes on Brussels not only because of the European institutions there: What happens in the chambers of the Belgian government is just as important to the future of Europe as what happens in the corridors of the Berlaymont, the Espace Léopold, or the Justus Lipsius building.

Paul Pass is a former Congressional Intern in the Office of Mary Jo Kilroy, US House of Representatives, and a former Outreach Intern at the Delegation of the European Union to the US. He received a BA in International Affairs from Miami University and an MA in European Affairs from Indiana University.

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Geoffroy  d'Aspremont Lynden

May 26, 2010

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I would like to add that, besides Greece, Portugal, Spain, Ireland or Great Britain, Belgium's public deficit and debt levels are extremely high and worrying.
Furthermore, without political stability, austerities measures and necessary reforms will hardly be initiated.

It seems that, neither within Belgium nor outside, politicians care about this situation.
Tags: | Economic crisis | Belgium |
 
Unregistered User

June 10, 2010

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Sorry, I don't buy it - on two levels.

1) The Belgians are entitled to their own chaos, tumult, and problems if it's self-selected. Farbeit for anyone to imagine that they're doing anyone's rights any favors by trying to influence it, especially since there is no risk to the EU or the US, and the fact that Belgium is not having a Rwanada-esque civil war.

2) It isn't the US' problem, it the Belgians, and the Belgians' alone. The United States has done enough to sort out Europe's internal squabbles over the past half century.
Step up to the plate, peeps! We won't be blackmailed (or P-whipped to be more accurate), into dealing with the EU internal organ failures. If for no other reason alone, to rehabilitate Europe out of the learned helplessness of having outsiders tend to their difficulties.
i.e. The Former Yugoslavia, ameliorating the opposition to the unification of Germany, etal.
 

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