That also means formateur Elio Di Rupo doesn’t have to be so diplomatic anymore. He seems a rather calm and patient man – indeed, such qualities were a prerequisite for making any progress towards resolving this intra-community stalemate – but even he couldn’t resist recently telling Flemish television – as picked up by the newspaper De Standaard – who he feels really got in the way of his work and made it take sooooooo long. No surprises: it was the Flemish N-VA party headed by Bart De Wever, a party whose stated goal is the eventual (and peaceful, and gradual) secession of Flanders from Belgium. Di Rupo claims to have gotten “zero results” out of De Wever during the long course of negotiations.

He also disputed De Wever’s claim that the new governmental accord serves to harm Flemish interests. After all, the other Flemish political parties* signed up to it. Surely four out of five parties cannot be wrong!

* If you’re interested, they are: Open VLD, SP.A, CD&V and Groen! Note that all punctuation, including Groen!’s exclamation-mark, is as found in the original name.

                          

“The Belgium of tomorrow will look entirely different” announced today Elio Di Rupo, the formateur who had labored for months at the assignment of King Albert II to try to form a new government. But the political differences were so deep between the Dutch- and French-speaking parts of the country, on a number of issues, that nothing less than this sort of thorough-going transformation of the functions of Belgian government at all levels – in finance, in division-of-powers, etc. – was necessary to break the impasse. For example, apparently the Belgian federal Senate will be transformed a body designed more to represent as three blocs the three “states” – Flanders, Wallonia, Brussels – that make up the country.

If you’re as excited about this as I am, and can read Dutch, then the full text of the new agreement is available for you on-line. Otherwise, I’ll see if there is anything further to report on this development – i.e. that isn’t boring and/or overly provincial; there may be nothing else – and bring it up here.

                          

Or not. At least not that last part, for it’s hard to get very enthusiastic about a country which a while ago broke the world record for operating without a proper, approved government after its last elections (which happened at the beginning of June, 2010). Instead we have newspaper editorials marking the day like the one impishly offered by Liesbeth van Impe in the Nieuwsblad, entitled Fear and Cynicism. And as the latest in a long line of formateurs (politicians appointed by the king to cobble together a workable governing coalition), a bow-tie-wearing dude called Elio di Rupo, finds himself having to deal with squabbling political parties and scheduled negotiation-meetings that fail to convene, the prospect continues to hang over the country that a split-up might be the only solution left.

Hmm . . . a National Day for a nation on the verge of separating roughly down the middle. Don’t know about you, but that reminds me of 150 years ago and July 4, 1861, when all of the states that were to make up the Confederacy had seceded, and blue and grey armies were headed towards each other on respective sides of the new internal border. Especially since that day was described recently in an excellent New York Times piece, one in its “Disunion” series marking that 150th anniversary.

OK, there are no Flemish and Walloon armies mobilized and headed for each other, and it’s a sure thing there never will be – for one thing, the rest of the EU would never allow it. And while the very real cultural differences separating the two sides here are accentuated by different languages in a way that was never the case between the American North and South, the crucial difference between the two situations is that, in Belgium, it’s not the case that one side senses an existential threat to one of its main economic asset-classes (i.e. Southern slavery – not that the North was truly aiming to enforce abolition; it’s a complicated question, but most historians agree – see the NYT piece as well – that it was Union, not the destruction of slavery, that motivated the North to mobilize against the seceding South).

Indeed, it’s actually the differences between these two situations that are the most enlightening, and there may well be another crucial one here. Check out the Nieuwsblad title again: Fear and Cynicism. Then read that NYT piece on July 4, 1861; whatever there was in North and South public opinion way back then, there was precious little fear and absolutely no cynicism. The South wondered whether it really should celebrate the Fourth, as it mobilized to protect what it saw was its legitimate choice to declare independence and go its separate way; the North, on the other hand, celebrated the Fourth with steely determination to remind itself why it shortly had to take up the grim task that awaited it of bringing the Southern states back to heel.

The Flemish-Walloon dispute that threatens to rend Belgium in two is very different. It is safer from the prospect of bloodshed, as mentioned; but then it is also cheaper, more petty, more ignoble. It doesn’t really have to do with property, or certainly with questions of freedom, but it does have to do with money, with base accusations of one side sponging off the other and with the resentments coming the other way those give rise to. And it’s about long-held grudges, about memories of past slights, about revenge against a French-speaking Establishment that dominated business and government for most of the state’s 181-year existence (until recently), and which sent a largely Dutch-speaking rank-and-file to die in the trenches during the First World War for a nation they had little enthusiasm for even then.

So that now, Ms. Van Impe writes:

The equilibrium in this land seems lost for quite a while now. For the fourth time in five years we celebrate the National Holiday without an approved government. After more than 400 days of negotiations the chance of any improvement is distant.The land is in just a dreary state as the wavering summer. Cloudy, with chance of rain and local thundershowers.

Then again, to continue her weather simile, the Belgians will surely take that “wavering summer” (kwakkelende zomer) any day over the ferocious heat now rampant over former Civil War battlefields in the United States. Likewise, perhaps even a miasma of small-mindedness is preferable to outright internecine warfare. Just ask anyone from the former Yugoslavia.

                          

Belgium is effectively on the way to political break-up. Will the political chaos lead to financial turmoil & banking/sovereign debt stress?

January 10, 2011 7:34 pm via webReplyRetweetFavorite

@Nouriel

Nouriel Roubini

. . . wait a sec – look, I’m actually not ready to deal with such issues! Please allow me here instead to join so many Belgians, both French- and Dutch-speaking, in just letting my mind fly very, very far away from any thoughts of state bankruptcy, to the refuge of young feminine beauty. Yes, as so many national media outlets were there to report, Justine de Jonckheere (below, and more pictures here) was chosen last Sunday as Miss Belgium 2011.

Quite apart from the event’s intrinsic appeal, the Miss Belgium pageant is certainly a tonic in these times because of its sheer status as one Belgian national institution that has not been ripped into separate French- and Dutch-speaking halves. Indeed, as La Libre Belgique points out, Sunday evening’s event, broadcast out of the casino in the sea-side (and thus Flemish) town of Knokke, was a killer TV-event. It actually attracted more than 1 in 3 of French-speaking viewers, while the Flemish audience-share, at around 15%, was also double what other top shows usually attract on a Sunday evening.

That’s all very nice, but it doesn’t mean that there’s no tension over the pageant’s results, considering so many native Belgians have such an interest in them. You can rest assured that, at any given time during the tournament, approximately half the country is encouraging – whether overtly or covertly – candidates from a French-Belgian (Walloon) background while the other half is rooting for the Dutch-speaking girls. It’s accepted that whoever wins needn’t necessarily know much about how to speak the country’s “other” language yet, but that one of her first duties (and those of the two runners-up) will be to start studying it to get up to a passable level of ability as soon as possible. Still, and as beautiful as she is, this year’s winner must have certainly induced a hard swallow among tournament officials, for her last name in particular – De Jonckheere – is almost at a slap-in-the-face level of Dutchness – most true French-speakers would have very little idea how to pronounce it! Nonetheless, year after year everyone is ready to accept any result – even that of 2008, when the winner was a Czech emigrée to Wallonia who could speak no Dutch at all – as long as the tournament process is, shall we say, free and fair.

The problem, dear readers, is that this year there are troubling signs that the Miss Belgium contest was anything other than that. For one thing, as La Dernière Heure reports, one contestant claims that the fix was in for Ms. De Jonckheere from nearly the beginning. Now, this whistle-blower is Maureen Lazard, a French-speaking contestant from Walloon Brabant, but she still alleges that Justine De Jonckheere had long been the favorite (in French: la chouchoute) of tournament director Darline Devos, for whatever reason, to the extent that everyone knew she was going to win and the selection process would be distorted to make that happen. (“Devos” is really a Dutch name – de vos, the fox, quite appropriate for a beauty-pageant director – so maybe that had something to do with it.)

Sour grapes from a loser – yes, that’s what all that sounds like. But there’s another, more serious allegation, this time reported in a Flemish newspaper, namely the “SHE” supplement to the Gazet van Antwerpen. Keep in mind that Ms. De Jonckheere is practiced in finding loopholes to rules – she’s a law student – and also that a certain weight in the decision about the winner is contributed by votes sent in from the general public as SMSs. SHE magazine cites evidence that the winner invested around €12,000 to buy telephone calling-cards to engineer a flood of incoming SMS votes in her favor. Again, the complaint has been lodged on behalf of – yes – another French-speaking contestant, a certain Lara Binet out of Liège, but the only answer tournament director Devos offers is that there could not have been any fraud, since she had monitoring personnel in place as votes were counted.

Sounds lame to me. And anyway: look at Justine’s picture again, at those shifty eyes! I have to conclude that the 2011 Miss Belgium Tournament has been tainted by scandal just when that sort of national institution that can truly draw the interests of the land’s Dutch- and French-speakers together was needed more than ever. There may still be the national football team; there may still be the national armed forces; but otherwise such institutions are falling by the wayside one-by-one, with grave implications for the country’s future and therefore for its solvency.

                          

You might have a recollection of that somewhere in the back of your mind (unless you yourself are Belgian, in which case the memory is a bit more prominent). Yet why should anyone really care – unless, of course, they are Belgian? Maybe not even then: the country seems to run fairly well even without a formal national government in place and, indeed, currently carries out the duties of the rotating EU presidency. There’s really no threat of any sort of violence, despite the current high levels of frustration within the Belgian political establishment.

One reason is the enormous Belgian national debt, since one of the points of forming a proper government is to come up with a team willing to take on the responsibility of making sure it gets paid back, in the right amounts and on time. But a simpler reason may simply be fascination – of the pileup-on-the-highway sort – with the sloppy, sordid mess that the government-forming process has become over these long six months (so far).

Take the latest sensation, namely the interview given two weeks ago to Der Spiegel by Bart De Wever, head of the N-VA party that is the largest in Flanders (Belgium’s northern, Dutch-speaking part) mainly by virtue of its strong separatist tendencies. “Strong” I say, but apparently not “overwhelming” in that for much of the past six months (if not now) De Wever has consented to appointment by the King as bemiddelaar, i.e. the politician officially designated to try to form a new government. As the authoritative Flemish paper De Standaard points out today, however, the venting De Wever delivered to Der Spiegel clearly shows he is about out of patience with the whole charade:

If it were possible to set the necessary reforms in one Belgian state on track, I wouldn’t stand in the way. But that is not possible. The Walloons [i.e. the French Belgians], above all the Socialists as their strongest [political] party, are blocking all meaningful reforms.

And that is hardly all. The interview is entitled “The sick man of Europe” (Europas kranker Mann), an epithet applied by De Wever himself (along with een mislukt land, “a failure of a land”) to the country in which he is an elected politician, one which for that matter he is sure “has no more long-range future.”

Since it’s apparent he operates under the assumption that no one in the French-speaking half of Belgium has bothered to take up the German language, De Wever goes freely on to reveal other tasty tidbits. Like he expects his N-VA party to be voted out of power in Flanders in the next election if it does in fact ever enter any new national government – because N-VA voters clearly never voted for that, but rather for some sort of intelligent separation process! Like he doesn’t feel he can trust King Albert II, since his sympathies so obviously lie on the side of the Walloons.

But it turns out that politicians from Wallonia actually are able to access German texts one way or another. Newscasts from Belgian radio today (yes, including those in Dutch) are crackling with their indignant French-speaking voices pointing out – with justification – how all this “hopeless” talk is about the last thing Belgian state finances need now that international bond speculators are starting to shift their jaundiced eyes from Greece, Ireland, etc. to pick out other possible sovereign-debt deadbeats.

Oh, and they also point out how outright rude De Wever is, considering the recent government-forming efforts by the current bemiddelaar, Johan Vande Lanotte – another Flemish politician, with the sort of funky Dutch/French name you can only find in Belgium, but from a different party – seem to be coming along so well. Yeah . . . right.

(BTW De Standaard also includes a link to De Wever’s Der Spiegel interview itself, and in a Dutch translation – not only because of its Dutch audience, but also since anyone who wants to read it in the original German needs an on-line subscription to access it behind Der Spiegel’s paywall!)

UPDATE: Sure enough, now we have this entry on the FT’s Alphaville blog reporting how S&P has shifted its outlook on Belgium’s sovereign debt from “stable” to “negative,” namely for the unusual reason of “political uncertainty,” i.e. no government. It further threatens a downgrade to the country’s AA+ rating if there’s no such proper government in place within six months – or if that “proper” government nonetheless seems to be ineffective in addressing the state’s worsening fiscal issues.

                          

For four months Belgium has been without a government, its public debt is approaching 100% of GDP and the spread of Belgian 10-year bonds over the German benchmark is today three times as high as at the beginning of this year. Is Belgium the next country with a sovereign debt crisis?

As if the EU needed another such problem! Nonetheless, with the political system there seemingly unable to form a government, with a national split-up now a real possibility – the option is now being discussed in Walloon (French) circles as well as Flemish ones – who’s going to take care of payments on its ever-expanding sovereign debt?

The analysis, by Susanne Mundschenk and Raphael Cottin for EuroIntelligence, is a couple weeks old but still definitely worth a (belated) mention, as is the accompanying 10-page PDF document that goes into even more detail. All are in English.

                          

What these “stress tests” are all about is an auditing exercise whereby banks’ balance-sheets are subjected to a standard scenario positing a business downturn, meaning theoretically that more people would not be able to pay back their loans, there would be lesser demand for new loans, and the like, and so you see how the bank would do in such a situation – first of all whether it would even stay solvent and so survive (at least without receiving some sort of state aid). And, as stated, both these Belgian banks already did the exercise and came through it with OK results. But the whistles have sounded and the competitors are being directed back to their starting-blocks to do it all again, and for a good reason: those previous stress tests did not include checking for any situation in which government bonds held by the banks might not be fully repaid. That’s rather an important omission: we’re talking in particular Southern European (or PIGS, if you like) government bonds here, and KBC Bank alone has €60 billion worth of them in its portfolio.

How then could anyone have considered the previous stress tests, which did not account for those public obligations, anything but a waste of time? Well, many cynics (or call them analysts) have felt that the real purpose of such tests was in the first place as a propaganda exercise meant to return a comforting “All OK!” for each such bank tested to calm investors’ and markets’ fears. This whole “stress test” idea was taken over in the first place from the American financial authorities, who performed them on the big American banks in spring-summer of last year, and ongoing coverage particularly from the Naked Capitalism financial weblog not only blew the whistle on that American exercise but also has found serious flaws in the European stress tests happening now. In fact a major complaint (also put forward in a related financial blog here) about the validity of the European tests was their alleged failure to take into account such sovereign risk.

Broens’ piece shows that that at least is not happening in Belgium, although he doesn’t say why, like who decided to make these exercises a bit more bona fide and call back KBC and Dexia to do them “right.” His language is in the passive tense – “in the meantime it has been decided to expand the test” – although one first guess would have to be the Belgian financial authorities.

UPDATE: A new entry on Naked Capitalism tacitly concedes that these European “stress tests” will in fact include banks’ exposure to sovereign debt in their calculations. It then goes on to sketch the great worry resulting from that: What happens when these more-honest tests reveal that too many banks in fact stand in need of more capital, possibly from governments which in many cases are no longer in a position to provide the same?

                          

The company’s progress within Europe is of particular amusement, especially Central Europe which, after all, originally introduced the café/coffeehouse and coffee culture in general to the world a little less than four centuries ago. It’s a bit as if GM were to establish a high-performance automotive division in Northern Italy, with the explicit mission of showing Ferrari, Lancia, etc. how the game should be played. Belgium, at least, has heretofore largely avoided this scourge, but apparently not for long, as we see from the recent article by Caroline Boeur in La Dernière Heure with the breathless title Soon a fifth Starbucks?

That’s right, right now all of Belgium boasts only four such establishments. (France, in contrast, has fifty). A full three of them are located together at Zaventem, the Brussels airport, while the fourth is at Antwerp’s central train station. As Boeur explains, in the first instance this has to do with Belgians’ preference for drinking their coffee at home, rather than in public: in contrast to the scant number of Starbucks, the Philips Senseo (a luxury coffee-maker) has 40% penetration among Belgian households, and apparently home expresso machines (which the Senseo is not; Boeur does not make that clear) have become “cult objects.”

Then again, the Antwerp Starbucks, in particular, has witnessed scenes usually only encountered at the opening of the first McDonalds at places like Moscow or Beijing: hundreds of people lined up before the doors hours before the official opening last 24 February, followed by profit figures that place it among the five-best within Europe. (Oh, and hundreds of fans on its very own Facebook fan page as well, although it’s safe to say that wasn’t true for McDonalds in Moscow or Beijing.)

Rest assured, then, that both Starbucks and its partner in Belgium, Autogrill (an Italian-headquartered firm specializing in restaurants at airports and auto rest-stops), are giving the task of further expansion top priority, although both are tight-lipped about when and where the next coffee shop will spring forth. And the fact that the DH can write on the subject with a tone that recalls movie star fan magazines shows that the media there continues to drink the purple Starbucks cool-aid – er, coffee.

                          

Not to worry, though: Belgium is on the case! Minister for Culture Fadila Laanan – that’s right, she’s of Moroccan extraction – has just unveiled a twenty-point plan for coming to the rescue, as the mysterious journalist “S.L.” discusses in La Libre Belgique. (You can get the 13-page PDF of Minister Laanan’s plan – in French, bien sûr – here. Yes, in the meantime the Belgium government has fallen, but it takes so long to put a new one together that you can be sure that Ms. Laanan will remain at least in a caretaker capacity for some time.)

Alright, now that we’re on the other side of the jump it’s probably time to abandon the snarky attitutde – although really, the thought of Belgium pioneering a public policy approach to much of anything save perhaps French fry quality or beer microbrewing still has to elicit a chuckle. However, what should be kept in mind is the limited scope of the ambition here: Ms. Laanan’s initiative is not even meant for the entire Belgian music industry, but only for that within the country’s French-speaking community. And it is still useful to examine what she has in mind, to see whether she “gets it” and how her proposal squares against other opinions about what ails the music industry,

For the music industry does ail in Belgium, too, even “vertiginously” so, as “S.L.” puts it: a 60% fall in sales over the last six years. What does Fadila Laanan see as the cause of this commercial catastrophe? Two things: 1) Lack of cultural (i.e. governmental) support, and, of course, 2) The explosion of illegal downloading and file-sharing.

Right there you could think that she is on the wrong track. We’re talking here about non-”classical” music, after all – since when did that stand in need of any support from the government in order to thrive? As for file-sharing, that’s the quick-and-easy cause to blame for the record companies’ problems, but in reality the cause-and-effect connection is not definitive; many studies have shown that the sort of finding and sampling functions such file-sharing enables actually serve to increase the music sales. Others would assert that those record companies are hurting mainly because they have ceased to offer much in the way of what customers really want to buy: whole CDs are mostly filled with mediocre songs, for instance, when people really just want to own and listen to the hits. Furthermore, with the increased influence of streaming services the entire notion of “buying” one’s music seems to be giving way to renting it instead, to even a “utilities” model under which (just like for electricity or water – or for Internet) a steady fee is paid for unlimited access – but not ownership – of songs via the Internet.

But there’s little sign of any of that in the specific measures outlined in this Ministry of Culture proposal. Rather, money is mainly to flow into efforts to boost both music’s visibility and professionalism. (Remember, we’re talking specifically here about French-language popular music within Belgium.) Those funds will go to support independent record labels and artistic agencies; to prompt the creation of more video clips as a means to better promote the music; to invest in resources and talent so that both concerts and artistic managers can have a higher degree of professionalism; and the like. At the same time, of course, the government’s legal resources are to be mobilized yet again to counter illegal downloads and file-sharing. Indeed, in her proposal Ms. Laanan specifically promises that Belgium will push hard for this when it takes up the EU Presidency, which it is scheduled to do at the beginning of July. (Of course, that is likely to turn into a farce, among other reasons because the country is sure to lack a working government at that point, but this is a subject for a later blogpost . . .)

Introducing: Larsen

And then the proposal brings up “Larsen.” That, believe it or not, is the name of the streaming music channel that the Ministry of Culture intends to put on-line sometime in June, a “true on-line catalogue of artists of the French[-speaking] Community, available free to all.” Quite apart from the choice of the name – “Larsen” might work as a music channel for Scandinavian lands, one imagines, but it’s hard to see what’s particularly Belgian about it – this seems to show that at least someone there in the Ministry of Culture has an idea of what is really going on in the music industry today. The thing is, “Larsen” also has the potential to work at cross-purposes with the other goals of this initiative – e.g. downloading is a no-no, but hearing a song for free on-line is OK? – depending on what precisely it turns out to be. Which is why, one suspects, it is left so undefined for now, both on the Ministry of Culture’s official announcement and in the Libre Belgique article.

Ever hear the story of King Canute of Merry Olde England? It’s said that he had his throne placed by the seashore, and then sat in it with all his kingly regalia and commanded the incoming tide to halt. It did him little good, and you really have to think that Fadila Laanan’s initiative will be just as successful in stifling current music industry developments, whether or not she confines the Belgian government’s efforts to French-language popular music within that country. Indeed, even the European Union as a whole would have a hard time having any effect. Any such effort would really have to be a global one – and that pretty much describes the Anti-Counterfeiting Trade Agreement that has been circulating among governments as of late. Perhaps I should have written about that instead – perhaps I still will – but until recently the ACTA has been kept behind closed governmental doors.

                          

At least twice as fast, in fact – apparently it varies by season. Spring: 2.8 times warmer than the world average; winter: 2.4; summer: 2.1; autumn: 1.8. But let’s also make clear the scale that we’re talking about here: on average (i.e. for all four seasons) world average temperatures have risen by one-half a degree, while in Western Europe over that same period the rise has been from one to one-and-a-half degree. (They must be talking about Centigrade, by the way, so for Fahrenheit multiply all scalar numbers here by 1.8.)

And why has this happened? Naturally Global Warming comes up for discussion here, but on the other hand keep these two things in mind: 1) The phenomenon under discussion here is why Western Europe is warming faster than everywhere else: why would Global Warming be more virulent here? And 2), Authoress Kim Herbots admits that no link to Global Warming can be proven, and is echoed in that by the scientists she quotes within the article. So what are the reasons? Ironically, Western Europe’s success in reducing airborne pollution has a lot to do with it, since that allows the sun more access to get through the atmosphere and warm that particular part of the Earth. But also of importance is the general lack of any continental winds carrying cold air from the East, as well as the very real dry and warm southern winds coming from the South, especially in spring and summer.

If this difference in the temperature rate-of-change is a fact, then, is it good or is it bad? For now, both weather experts whom Herbots consults call it good: more sun and heat, especially good in the winter, so among other things less need to expend energy for artificial warmth.