Eyskens tries to sell Belgians on austerity program
Belgium has emerged from its latest and most portentous crisis to date deeply scathed but still remarkably alive. Outwardly, the crisis was nothing new -- only the collapse earlier this month of a government. It had happened 29 times before in the past 36 years. Few winced.
Yet there were lessons. What made the exit of Prime Minister Wilfried Martens, who has headed four governments in three years, special and particularly worrisome, was that it was the first Cabinet departure in recent memory prompted by hard economic and social realities rather than long-standing political and linguistic rivalries between the country's two main communities, the Dutch-speaking Flemings and the French-speaking Walloons.
Central to the downfall of Martens was widespread opposition to his tough austerity package, introduced in February, which sought to remedy the nation's economic ills by dismantling the union-backed system of wage-price indexation and drastically cutting public spending on unemployment benefits and other social services.
Trade unions, in a month-long series of strikes, sit-ins, and street protests , led what slowly grew into a national movement against the Martens plan to freeze wages and slash welfare spending.
Some political infighting within Martens's own Christian Democrat Party hastened his fall and replacement within a week by Mark Eyskens, also a Christian Democrat and the son of a distinguished politician and five-time prime minister. But it was Mr. Martens's own failure to pacify the country with the right formula of crisis-fighting proposals that did him in deep down.
Until now the country's frequent political crises have been acceptable because extraordinary export earnings have made Belgium prosperous. With only 3 .8 percent of the population in the 10-nation European Community, it has managed to account for 10 percent of all exports. Half of Belgium's income is earned from foreign trade.
Recently, however, skyrocketing wage costs have pointed the way to sharply reduced export levels and scared investment -- both foreign and domestic -- away. This has hurt the recession-plagued domestic industries, especially steel and textile, still further.
Today, Belgium boasts the dubious distinction of having Western Europe's highest unemployment rate, largest foreign debt, highest wage scale, and lowest growth rate.
Mr. Eyskens, finance minister in the Martens government, has kept the Martens Cabinet completely intact except for Robert Vandeputte, a former national bank governor and currency expert who was brought back from retirement to serve as finance minister.
Moreover, Eyskens so far has appeared inclined to employ many of the same tricks for righting Belgium that Martens tried, and failed to get the country to accept. And he may be even less persuasive than Martens.
Some new ideas could come out of a special conference of government ministers , trade unionists, employers, and farming representatives to be held later this spring. Among proposals to be discussed are uncoupling wages from the consumer price index, reducing the tax and social security burden on industry, introducing strict price controls, and stepping up efforts to increase investment in industry and reduce wage costs.
Some economists believe that if the new government can succeed in modifying the system of wage-price indexation --despite union opposition -- (a move supported earlier this month by EC finance ministers) the country may be ready to accept a modest devaluation of the franc in order to help exporters and loosen the yoke of high interest rates on industry. One move in this direction came April 15 when the government cut its bank rate by one point to 15 percent -- only two weeks after it had raised it to a record level. The action took European financial markets by surprise.
Most analysts, however, see little willingness among Belgium's policymakers to go beyond cosmetic patchwork and deal directly and forcefully with underlying causes. Lurching from crisis to crisis has become something of a postwar tradition, they argue, and only sharply declining living standards will change that. Meanwhile, the 100,000 workers who are expected to lose their jobs this year, bringing unemployment to 477,000, could speak out in what union leaders say will be Belgium's hottest summer.