Belgian government talks in chaos

 

BORROWING COSTS RISE:BELGIAN BORROWING costs spiked as King Albert II interrupted his convalescence after a cancer operation to hold emergency talks on the latest setback in the chaotic 528-day effort to form a new government.

Amid deadlock over a budget plan for 2012, French-speaking socialist leader Elio Di Rupo resigned as chairman of six-party talks in the early hours of Monday morning.

The breakdown in the talks has led to renewed anxiety about the viability of the unitary Belgian state and scathing media criticism of the country’s political leaders.

The interest rate on Belgium’s 10-year bonds rose above 5 per cent yesterday for the first time since July 2008, two months before the global financial crisis triggered by the Lehman Brothers collapse.

As the sovereign debt crisis spreads to “core” euro zone countries, there are fears that Belgium could encounter difficulties raising money on private markets.

“A broken country,” declared the headline on French-language daily Le Soir, which lamented the left/right divide in the country and the divisions between French and Dutch speakers. The headline over the editorial in rival paper La Libre Belgique simply read: “SOS SOS.”

The king, who had a nose operation for skin cancer last week, is recovering at Ciergnon Castle, his country retreat. He has so far declined to accept the resignation of Mr Di Rupo, who stepped down once previously in July and who had been expected to become prime minister.

The monarch held individual consultations with four of the party leaders and meets the other two this morning.

After the parties spent 16 months discussing constitutional reforms, the talks on next year’s budget became increasingly fraught as the European Commission pressed for action to cut the deficit. Not even the threat of EU sanctions forced a compromise.