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OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHBS #1099/01 2001249
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O 181249Z JUL 08
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7725
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BRUSSELS 001099 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL BE
SUBJECT: KING ALBERT REJECTS PM LETERME'S RESIGNATION; 
 
REFORM TALKS WILL CONTINUE 
 
REF: A. A. BRUSSELS 1094 
     ¶B. B. BRUSSELS 1074 AND PREVIOUS 
 
¶1.  (SBU)  SUMMARY:  King Albert rejected Prime Minister 
Leterme's resignation and, after discussions with many 
political and labor leaders, called for "credible" dialogue 
on institutional reform for more devolution of power to the 
regions.  Leterme's resignation turned into a clever 
political strategy play which has now overcome the rigid July 
15 deadline imposed by the PM's coalition partners. Leterme 
is still very much involved in the process and the King 
appointed a committee of three respected statesmen to 
restructure and restart the institutional reform talks. 
Though the same problems remain, King Albert apparently 
agreed with Leterme that the regions should be involved in a 
revised format, and the ball is now in the Francophones' 
court.  END SUMMARY. 
 
2  (SBU)  King Albert late on July 17 decided to refuse Prime 
Minister Yves Leterme's (CD&V) resignation and instead 
appointed three prominent mediators whose task it will be to 
"examine how guarantees can be offered for starting a 
credible institutional dialogue."  The three are Christian 
Democratic (CDH) Minister of State and European 
parliamentarian Raymond Langendries,  Liberal (MR) Minister 
of State and Representative Francois-Xavier de Donnea, and 
Socialist Minister-President of the German-language Community 
Karl-Heinz Lambertz. Their joint mission expires July 31. 
 
¶3.  (SBU)  The announcement from the Royal Palace came after 
the King had completed his consultations with Leterme, Vice 
Premiers, majority and opposition party presidents, and with 
trade union and business leaders.  CD&V party president 
Marianne Thyssen July 17 stated that after the Prime 
Minister's failure to clinch an institutional deal, it was 
now the turn of the Francophone political leaders to test the 
waters.  However, Francophone party presidents Reynders (MR), 
Milquet (CDH) and Di Rupo (PS) are very apprehensive about 
resuming negotiations at this stage and prefer to give the 
task first to the elder politicians with an exploratory 
mission. 
 
¶4.  (SBU)  Commenting on King Albert's decision, Thyssen said 
it met her party's demands for guarantees and a timetable. 
The New Flemish Alliance (N-VA), the CD&V's small government 
coalition ally whose insistence on a July 15 deadline pushed 
Leterme to offer his resignation, was more apprehensive, 
doubting that a breakthrough will materialize within such a 
short time.  All the Francophone parties cautiously endorsed 
the King's decision. 
 
¶5.  (SBU)  In a July 18 meeting with Olivier Henin, MR's 
leading economic advisor and director of Finance Minister 
Reynders' cabinet, Henin agreed institutional matters such as 
BHV (ref B) and voting districts are directly linked to 
socio-economic issues and trust between the parties.  As has 
been reported in the media, there is a general consensus on 
socio-economic policy measures reached just days before PM 
Leterme submitted his resignation.  Henin said he feared if 
the current government changed and a new government was 
formed, the socio-economic achievements covering pensions and 
family benefits could be lost.  He thinks these agreements of 
a newly re-worked budget, closing pension gaps between 
categories of workers, tax indexation, and family benefits 
for the employed, show a sense of consensus and cooperation 
between the Francophone and Flemish parties. 
 
¶6.  (SBU)  Henin believes the biggest road block lies in the 
lack of trust and cooperation between the two Christian 
Democratic parties.  He even went so far as to say the CDH 
(the Francophone Christian Democrats headed by Joelle 
Milquet) and its leaders are very much in need of 
"convincing," and that it is the job of the MR as a 
francophone leader to explain the importance of cooperation 
to the CDH leaders.  It appears to Henin that all other 
francophone parties are ready and willing to negotiate not 
only socio-economic issues, but also major institutional 
reforms as suggested by Flemish parties (though not those of 
the extreme right).  It will take a strong effort by the 
other francophone parties, as well as francophone regional 
players, such as Walloon Minister-President DeMotte, to 
convince the CDH and its constituents that change is needed 
and compromise is a necessity. 
 
¶7.  (SBU)  The socio-economic gap between Flanders and 
Wallonia did not seem an impossible gap to resolve, theorized 
Henin, as he noted the initial gap between Spain and the rest 
of the EU when Spain first entered the union back in the 
 
BRUSSELS 00001099  002 OF 002 
 
 
1980s.  As Spain was able to recover and close the economic 
gap, Henin believes that with reform and cooperation, 
Wallonia too can close the gap and contribute to a unified 
Belgium. The socio-economic policy agreement, which 
now simply needs parliamentary approval to become a reality, 
is only the first step in that direction; institutional 
consensus will only come when current economic problems are 
resolved.  Henin asserts the best discussions will occur 
without artificial deadlines and with all issues on the table 
for the best chance of compromise, but negotiators must 
resolve the BHV question to move forward on institutional 
questions. 
 
(SBU)  COMMENT:  By refusing his resignation and by more or 
less adopting Leterme's scenario, the King has demonstrated 
he still has faith in Prime Minister Leterme. The King's 
decision allows the current government to move forward on 
agreed upon socio-economic reforms to aid beleaguered 
Belgians facing higher inflation and unemployment.  Through 
his most recent consultations with regional political 
leaders, King Albert acknowledges Belgium's regions and 
communities must play the key role in charting out a new 
institutional framework.  The ball is now in the court of the 
Francophone parties and the elder statesmen.  The same 
problems remain, but now some can relax a bit enjoy their 
National Day and summer vacations.  END COMMENT. 
 
FOX 
.