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by Euro Reporter
2011-06-04 10:27:19
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Government in Crisis

It's approaching rapidly to the one year mark. That's how long the nation of Belgium has been without a government. Belgium has a geographic and linguistic divide that features a Flemish speaking north and a French speaking south. They are also divided by economics, with a more affluent north and a more socialist south. The divide has gotten so serious that main stream political parties are considering splitting the nation in two.


Belgium child sex victims sue Holy See

Dozens of victims of a child sex scandal in the Belgian Catholic church on Wednesday announced the launch of legal action against the Holy See, the first such suit in Europe. Lawyers and victims said at a news conference a summons was on its way to Rome as well as to Belgian bishops to appear before a Belgian civil court for failing to stop sexual abuse by priests and church workers under their responsibility. "The group of victims of sexual abuse in the church have summoned the Holy See, the Belgian bishops and superiors of religious orders and congregations in the Ghent Court of First Instance," they said.

A 40-page summons is being translated into Italian before being served on the Vatican. The group of some 80 plaintiffs, which lawyers said was growing by the day, said it was the first time in Europe that legal proceedings had been initiated against the church authorities. "The Pope is the head of the Holy See," said lawyer Walter Van Steenbrugge. "He is the appointer and authority over the bishops, which means that he can be liable for their errors. In addition, he can be held liable for his own faults. "He neglected to intervene himself and to give instructions, which meant that abuse was liable to continue and the damage was able to increase."

Belgium's Catholics are reeling over revelations last year of nearly 500 cases of abuse by priests and church workers since the 1950s, including 13 known suicides among victims. Among several victims who stood up to denounce the church's failure to stem the sexual abuse -- grey-haired men in their 50s and 60s -- was journalist and author Roel Verschueren, abused by Jesuits from the age of 12 to 14 "just around the corner from here," he said. "We've all been living for years with a church which is in denial," he told AFP. "Now we're turning the situation around. We're in charge; we're choosing an independent judicial framework." Verschueren said the victims first and foremost wanted the church to admit its guilt and to pay for the trauma of lost childhoods and lost years. "The victims of sexual abuse are often people who've lost their pride and self-dignity," he said. "They need fast help. In the United States, people win compensation of 160 million dollars, here and elsewhere in Europe you're offered 5,000 Euros to shut up."


Why Belgium could be the 'Greece of the North'

There are now growing fears that the debt crisis could reach the Eurozone’s core, with Capital Economics warning that 'Belgium may be the Greece of the North.' With the country without a government after 11 months, credit rating agency Fitch announced on 23 May that it had put the country on negative watch.  While Fitch’s decision is cause for concern, Belgium is still in a relatively strong position compared to others in the Eurozone. The economy expanded by 2.1% in 2010 and by 1% in the first quarter of 2011. Furthermore, with the budget deficit at 4.1% of GDP, its deficit is among the lowest in the region.

Yet Capital's European economist Emilie Gay highlights a number of reasons why the problem in Belgium may be about to increase. The political crisis tops her list. Gay says: 'Belgium remains without an elected government a year after the general elections. Admittedly, the fact that there is a caretaker government seems not to have hindered fiscal efforts so far. The government recently reduced this year’s budget deficit target to 3.6% of GDP and has passed fiscal measures to meet its target. 'But the divisions between the wealthier Flemish speaking Flanders and French speaking Wallonia are deep, with Flanders objecting to maintaining fiscal transfers to Wallonia. Politicians have talked about the country splitting, leaving question marks over how public debt would be serviced. While this is not on the cards for now, new elections may not be enough to solve the impasse.'

And while Belgium’s GDP posting for the first quarter was positive, Capital believes they will not meet the 2% growth predicted by the government. Sighting high inflation and possible fiscal tightening, it is expected that GDP will slow to 1.5%, making the nation more vulnerable to the larger economic crisis.  'As the strong euro starts to bite, exports may suffer more than in other core economies due to a recent loss of competitiveness, partly driven by wage indexation,' Gay says. 'And as inflation hovers above that in the region as a whole and further fiscal tightening may be needed, consumers will feel the pinch. Accordingly, we see Belgian GDP growth slowing to about 1.5% this year, perhaps making Belgium more vulnerable to contagion fears.'

Gay also points out Belgium's banks such as Dexia are highly exposed to peripheral government debt, meaning possible debt restructuring could require the government to recapitalise the sector and thus hike up public sector debt. 'In all, as concerns over Greece intensify, the need for Belgium to resolve its political crisis is becoming urgent. If it doesn’t do so soon, the fiscal crisis may edge deeper into the euro-zone’s core,' Gay says.

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