Stephen Bates in Brussels
Jean-Luc Dehaene, the Belgian prime minister, has found himself cast in the unlikely role of the absolutist French monarch Louis XIV by angry compatriots and press cartoonists since he ruthlessly seized control of the economy in an attempt to prepare the country for the European Monetary Union.
The man spurned by John Major two years ago for the presidency of the European Commission is arguably the most powerful domestic politician in Europe. Belgian MPs passed three laws giving him executive power to raise taxes, cut social security budgets and set wage levels without prior consultation.
With a record that has annoyed the public and reduced his approval rating in opinion polls to less than 20%, Dehaene insists there is no alternative to emergency measures if the economy is to meet the Maastricht criteria for joining the single currency.
The government says it must make ready since its closest neighbours and trading partners are likely to be among the first to join. About 75% of its trade is with other Benelux countries, Germany and France.
Dehaene said he would press ahead with strict budgetary reforms. The atmosphere of crisis was dispersed, however, when he announced that his government would be taking three weeks’ holiday.
Dehaene said: “You can judge us when we have finished — and we will finish the job.”
Belgium is showing how far EU member states other than Britain are prepared to go for economic and monetary union, even at the risk of social tension such as grew in France last year. It has already suffered long-running demonstrations and protests against education cuts.
A representative for the finance ministry said: “We have no choice about joining. It is absolutely important to us if our trading partners are involved.”
The three framework laws were passed just as parliament was rising for its summer recess. They were backed by the government’s socialist and Christian Democrat partners, overcoming opposition attempts to thwart them with 3 000 amendments.
While the two laws relating to social security and next year’s budget will expire within a year, the legislation to determine wage levels is open-ended. An attempt to introduce a wages pact between employers and trade unions to limit pay rises and prevent strikes collapsed a few months ago.
Drastic action is undoubtedly needed if Belgium is to meet the Maastricht criteria. It needs to slash its budget deficit from 4,5% to 3% by the end of next year, and more than halve the ratio of its national debt, which stands at 133% of gross national product — by far the highest of any EU member state.
There is no chance of the debt’s being cut to the requisite 60%, but Belgium hopes the rules will be bent if it can show serious progress.
The government is seeking severe cuts, lopping nearly an extra 500-million from the generous social security provisions even before next year’s budget. Belgians are highly taxed, but are used to benefits which include 60% of their salaries for the first year of unemployment.
Dehaene said next year’s budget would be ready before parliament returned at the beginning of October.