Belgium started the search for a coalition government yesterday after Flemish separatists won a parliamentary election, causing unease on financial markets over the country's long-term future and its growing debt.
Concerns over calls by the victorious New Flemish Alliance (N-VA) for Belgium to break up on linguistic lines and the risk that long coalition talks could delay much needed cuts to state spending pushed up slightly the premium investors ask to hold Belgian government bonds yesterday.
“The party that got the most votes is a separatist party and it throws into question over a long timeframe, over a few years and longer ... who's going to pay that debt back,” Credit Agricole strategist Peter Chatwell said.
Belgian King Albert started post-election procedures by receiving outgoing prime minister Yves Leterme and formally accepting his government's resignation following the vote on Sunday.
At least four parties will be needed to form a coalition and the king was expected to hold further consultations with Flemish and French-speaking party leaders.
The N-VA, which is led by 39-year-old historian Bart De Wever, emerged as the strongest party in the Dutch-speaking Flanders region of northern Belgium and won the most votes in the whole of the linguistically divided country of 10.6 million people.
The French-speaking Socialists (PS) emerged as the second strongest party in Belgium, winning in a separate vote on Sunday in the southern, Francophone region of Wallonia.
Final results have yet to be confirmed, but the N-VA is projected to have 27 seats in the lower house of parliament, one more than the PS.
Together with the Flemish socialists, the PS could form the largest group in parliament, meaning PS leader Elio Di Rupo could become the next prime minister.
De Wever will want to make good on his promise to devolve more powers to the regions, but to form a government, he will need to make concessions to his coalition partners so there is no immediate prospect of Belgium breaking up.
Lengthy coalition talks could lead to policy paralysis, making the country more vulnerable on financial markets already uneasy about the ongoing sovereign financial crisis in the eurozone.
The EU said it was not worried by the strength of Belgium's commitment to the 27-country bloc and showed no sign of concern about the fact that it has no new government two weeks before it takes over the bloc's presidency for six months.
“Belgium is a founder member of the European Community and we expect Belgium to continue to show very firm, resolute commitment. We have no doubts about that,” spokeswoman for the executive European Commission, Pia Ahrenkilde Hansen said.
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