Saturday, September 22, 2007

Belgium on the edge of splitting up? Let’s hope so. Freedom thrives with decentralisation.


Attributed to all non-Dutch speaking readers, whether they are intellectualy capable to learn it or not

Belgium:

- 10 million people

- 2 communities (apart from a tiny German minority in the east of 90.000 people): Dutch-speaking Flanders in the north (6 million people) and French-speaking Wallonia in the south (3 million people)

- a capital, Brussels (1 million people), geographically located in the north, but where most people speak French, 10% speaks Dutch and an international presence of both rich diplomats and poor immigrants remains.

The country might split into its 3 cultural worlds:

- Dutch-speaking “Northern-European” Flanders

- International Brussels (as a city state like Luxemburg, where EU institutions can remain)

- and French-speaking Wallonia, culturally oriented on France

If this happens, poorer Wallonia will not be able to afford its expensive welfare system any longer but could in the long term grow richer when pursuing free market reforms and applying the tax haven - strategy that nearby Luxembourg, the world richest country per capita, applied.

If this happens, Brussels will have to cut down on its own expensive and waistful government costs, but might be profiting from it to grow even more as an international diplomatic hub.

If this happens, Flanders will save a lot of money that is now being paid to sustain the Belgian system, and might be able to grow even more as "the logistic port to Western Europe", by using the money to improve infrastructure and to reduce the incredibly high tax burden of 45,6% that lies on citizens and companies.

However my estimate is that the chance of splitting up at the moment is only small. This due to the following factors:

1. A split up would completely end the political power of the Francophone Socialist Party (PS), as this is the main political force in Francophone Belgium, obtaining its votes mainly from unemployed people and state employees, both benefiting from the money sent by Flanders through the welfare state system.

A split up would end the money streams from Flanders to Wallonia, and thus the necessary sources to fund the Walloon welfare state governed by the PS. It would responsabilise Walloon unemployed people, and would force them to start up their own companies and create their own wealth. Although this might be a painful process, it is the only way to heal Wallonia, suffering from a far lower GDP than Flanders.

Due to huge corruption scandals, the PS temporarily lost many of its votes, but it is still in charge in the regional governments and no Francophone party will dare to challenge the core of its power, and that is the welfare system that is hindering the south in its development and is keeping several hundreds of thousand people totally dependent of welfare, derived from wealth that was created in Flanders but is controlled by the PS.

2. Some Flemish are reluctant to secede, as they fear they would lose Brussels, now the capital of the 2 communities. To my esteem this fear is not justified, as the reality is that Brussels needs Flemish investments (public and private) more than the other way around. An independent Brussels would not change the situation as it is now: many Flemish (and Walloon) people would still work in Brussels, but the very high cost of keeping the country together through expensive unnecessary institutions would disappear.

People don't like change, but certain factors are pushing for this nevertheless:

1. The cultural differences between the 2 communities have grown over the years. When it comes to culture, the 2 communities are just as different as the US and Mexico. Brussels is a nice mix of the two, combined with a growing international aspect.

2. Financially the federal level, providing for most of the welfare (pensions, social security), is getting into problems. This due to:

- huge government expenses in the past (Belgian public debt is still 87% of GDP, coming from 130%, and the likely increase of international interest rates might make this even higher)

- the under-funding of the federal level to provide for the federal welfare expenses (whereas the regional entities are over-funded though not having the same burden to pay for welfare)

- most importantly: the very expensive compromises that were made to keep it all together. A study by the European Central Bank (Public Sector Efficiency, an international comparison, 2003), discussed in Belgium, considers that the Belgian state waists 34% of its means, this being worse than the European average (21%) and Luxembourg (0% according to the study). The reason for this is not just the welfare state, but the fact that many institutions were created to pacify the 2 communities (e.g. 2 different parliaments for the French-speaking community in Belgium, one in Brussels, one in Namur, and plenty of institutions in Brussels, in order to protect the Flemish minority in that city).

Apart from accidental political events too dificult to explain for outsiders, and not as important either, these explained socio-economic drivers are really behind the Belgian crisis. Going back almost to the founding of Belgium, set up in 1830 as a mere Francophone state, discriminating the Flemish majority for at least 100 years, these drivers have contributed to a push for more autonomy that might end up in a split-up.

With regards to the EU - project, it is clear that an eventual split-up of Belgium would be a blow for those that want to make of the EU a regulatory superstate, based on the French model, while promoting a semi-racist artificial European nationalism, hostile towards our American and Asian friends.

The decade of globalisation that pushed governments into being more responsible, is without any doubt an extra trigger for all this, and might come to play a role in the future secession of Scotland, Catalonia, Northern Italy or Western Germany. As economists Spolaore and Alesina have explained in their essay "The size of Nations": in the age of globalisation, rich countries will be small countries. Who knows that lesson might apply for countries like France, the US, Russia, India or China one day.


4 Comments:

Blogger monica said...

Thanks for the post, Pieter, it's really informative.

People here in Brazil are very shocked by this crisis in Belgium (those who read foreign media, that is), as they tend to think that secession doesn't happen anywhere civilised. Actually that impression is used to ridicule a couple of weak separatist movements around here. If Belgium was to split up, i guess it would make separatism respectable again, not just a 3rd world problem. And that would be... interesting.


PS : Hahahah... is this Leterme guy serious? Now THAT'S something I wouldn't expect to see anywhere civilised :p

7:53 PM  
Blogger himself said...

"end the political power of the Francophone Socialist Party (PS), as this is the main political force in Francophone Belgium"

FAUX! Le MR est la première force en Wallonie et chez les francophones.

"A split up would end the money streams from Flanders to Wallonia"

Il est prouvé qu'en rétablissant le principe "je paie mes impôts, là où je travaille", que c'est Bruxelles qui contribue le plus à la solidarité nationale.

"corruption scandals, the PS"

le plus grand prolème est l'hyperpolitisation de l'administration.

"Brussels needs Flemish investments "

Ah bon ??? lesquels ?

"Brussels is a nice mix of the two"

Absolument pas.

Je m'arrête là, trop d'erreurs dans ton analyse.

2:15 AM  
Blogger tripa22 said...

Don't have any money for online poker? Let start you out..for FREE. With our free poker money promotion we will give you up to $150 in free poker money ....http://sponsorpoker.blogspot.com

3:32 PM  
Blogger goooooood girl said...

Very good......

9:50 PM  

Post a Comment

<< Home