Address of H.E. Yves Leterme Prime Minister of Belgium Deutsche Gesellschaft für Auswärtige Politik

 

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Excellencies

Ladies and Gentlemen,

 

I wondered for a moment if I should not draft this address in the format of FAQ’s, frequently asked questions. But then I thought better of it, for that would not be the way to address this distinguished audience.

 

Still, I’d like to start with the answer to a question I myself and my compatriots hear only too often. The question is: How does your country go on without a government? And the very short answer to that is: ‘It doesn’t’. I do not mean by this that Belgium does not go on, that it is at a standstill. I mean that it does not go without a government. I am the living proof that Belgium has a prime minister and a government. And I can assure you that my government does indeed work, that it takes the necessary decisions.

 

Why do I stand before you to try and explain what exactly is happening in Belgium and to Belgium? The reason is evident. Because Germany is extremely important to us.

 

 

 

Germany is our largest neighbour, and the largest country of the European Union. It is our most important economic and trading partner. It is a good friend and trusted ally. It is a country with which we share to a large degree our vision of an ever closer European union. It is, last but not least, a country with which we have old and deep cultural ties. The German language is one of the official languages of Belgium.

 

In diesem Zusammenhang möchte ich noch hinzufügen, dass ich es bedaure, dass so wenig junge Mitbürger noch Deutsch lernen und dass so wenig Belgier diese Sprache beherrschen. Die deutsche Sprache ist nicht nur die Sprache des grössten EU-Staates, eines äusserst wichtigen europäischen Partners Belgiens, sondern sie eröffnet auch den Zugang zu einer der glänzendsten Kulturen unserer Welt. 

 

This being said, I’d like to add, in all modesty, that Belgium is not without importance for Germany.

 

 

I wonder how many people in Germany realise that Belgium ranks seventh on the list of Germany’s economic partners. In 2008, the Belgian import from Germany amounted to 64,3 billion euro, the Belgian exports to Germany to 55,1 billion euro.

 

Moreover, on the political level, we are, as I have said, good allies and friends. The Belgians welcomed wholeheartedly, without any reservation, the German reunification. We mostly support the German views on European integration in general.

We totally agree on the need to have a stronger economic governance of the euro, on the need to complement the monetary union with the necessary economic union.

 

Where we disagree, as can happen between the best of friends, we do it without acrimony, and in mutual respect.

 

Also in the framework of the Benelux, the Union of Belgium, the Netherlands and Luxemburg, have we worked on closer cooperation with our German neighbours. As the prime minister of Belgium I helped to initiate cooperation between the Benelux and her border regions.

We started on our eastern border. With my erstwhile colleagues Jan Peter Balkenende and Jean-Claude Juncker we organised the cooperation between the Benelux and the Land Nordrhein-Westfalen, home to 17 million people and some of the largest German companies. The Iron Rhine, an issue of major importance for Belgium, illustrates the significance of this trans border cooperation.

 

So I think it is important for you to know how stable is your Belgian neighbour and partner. Well, it has been said about the music of Wagner that it is a lot better than it sounds. I’d like to paraphrase this, and say that Belgium is in much better shape than it may look from the outside where you hear more about our problems than about our successes. We all know that good news is no news.

 

So let me give you some good news, starting on the front which has been most worrisome to the Union and especially the eurozone, that of the financial stability.

 

Belgium most definitely does not belong in the company of countries whose internal financial situation might be a threat to the stability of the euro. If some financial writers have tried to point a finger to Belgium as the next possible weak link in the euro chain, it is not because of our economic and financial situation, but because of what they perceive as political uncertainty.

 

I do not intend to swamp you under a mass of figures. But I do want to point out why the fundamentals in Belgium are sound, because it is important for you to know.

 

First: Belgium as a whole is a rich and strong economy. We are creditors towards the rest of the world, not debtors.

 

Secondly, the strong financial position of Belgium is due to the traditional high savings rate of our families. This rate is significantly higher than in the rest of the eurozone. The savings of our families largely exceed the public debt. To put it in graphic terms, the Belgians can buy back the public debt three times with their savings.

 

Thirdly, Belgium will be able to pay off the public debt more easily than other member states of the eurozone, because of the economic growth. I said I would not swamp you under figures, but I have to mention some in order to substantiate this claim. The Belgian economy grows by more than 2%, above the eurozone average. Job creation amounted to 1.2% last year, compared to 0.3% in the Euro area and the EU. The unemployment rate declines to 8.3% this year and is far below the EU average of 9.5%.

 

I’d like to add that this growth is due partly to the strong economic performance of Germany. Whatever happens in and to our most important economic partner strongly impacts on Belgium, which is one of the most open economies of the world.

 

Due to the factors I mentioned, Belgium is among the few EU member states with net foreign assets. They amount to 26% of our Gross Domestic Product, which puts us in the company of Germany. Only The Netherlands and Cyprus do better.  Net foreign assets are the most important indicator of the financial soundness of an economy.

 

Ladies and Gentlemen,

 

These sound fundamentals would not be there without the conviction, the commitment and the work of successive Belgian governments.

 

Recently, Belgium has had a - mild - divergence of views with some of the partners in the eurozone about the proposed abolition of the automatic indexation of wages, an important part of the social system of Belgium and Luxembourg. This is a very sensitive issue in our country where tripartite consultations between the employers, the trade unions and the government play an important role in setting out the guidelines for social policy and in keeping the social peace. It is – I will say this frankly – politically impossible to tell our population that we should abolish our wage indexation system overnight because (quote) ‘Europe’ (unquote) demands it.

 

But let me add immediately that this does absolutely not mean that we are lax in our monetary and industrial policy.

 

Quite the opposite is true. Belgium wholeheartedly shares the ambition of Germany and other euro-partners for stronger economic policy coordination.

 

A strong common currency does indeed require discipline and convergence.

That is why, prior to the launch of the euro, in July 1996, Belgium adopted the Law on Competitiveness. This law states that Belgian wage costs can not increase above those of its three major trading partners: Germany, France and the Netherlands.

 

This Law keeps Belgian Unit Labour Costs in line with the average of the Eurozone and prevents our automatic wage indexation system from undermining our competitiveness and financial solidity.

 

We continue to abide by this law, also under this caretaker government. Last month, in the framework of a broader package of labour market measures, we adopted a new wage agreement which limits real wage growth to 0.3% for the period 2011 -2012.

 

I’d like to mention two other very important areas where the Belgian government has taken major decisions to ensure financial discipline and stability.

 

The first is inflation. I know that inflation is a very sensitive issue for some of our partners, especially for Germany.

These last months, the Belgian inflation rate started to exceed the average of the eurozone. This is largely due to the high share of energy prices in the consumer basket, and to the fact that the suppliers pin their prices monthly to the volatile import prices of oil and gas.

 

Two weeks ago, the government tackled this problem. Energy prices will be indexed on a quarterly instead of monthly base. And, more importantly, the energy regulator will monitor other price adaptations and prevent discretionary increases above those in the neighbouring countries. In this way, Belgium will bring its inflation rate back to the European Central Bank’s medium term target of 2%, thereby increasing the margin for real wage increases.

 

Secondly, the most important condition for a strong euro is, of course, sound public finances in the member states. I can tell you that my government also delivers on this front. Again, I have to mention some figures to substantiate this.

 

Our Stability Programme aimed at reducing the budget deficit to 4.1% of the Gross Domestic Product this year. But the government decided to do better and this month approved measures to cut the deficit to 3.6 % of GDP, thereby doing better than the European Commission requested. We shall reach our target of a debt rate of 3% of the GDP next year, and balance our budget in 2015.

 

We also tackle the issue of the ratio of our total debt to the GDP. As in other countries, this ratio increased as a result of the financial crises. It will now drop below 98% of GDP and continue its declining path.

 

Ninety eight percent is, of course, still high. But we must compare with our partners. And there, we see that the difference between the Belgian ratio of debt to Gross Domestic Product and the European one has never been so small.

 

As I said, we are working hard to further reduce it. Labour market reforms will increase the effective retirement age of the Belgian labour force and contribute to the sustainability of our generous social system.

 

Ladies and Gentlemen,

 

On the European level also Belgium exerts itself to ensure financial stability.

 

The crisis of the euro was mainly a crisis of weak banks and excess borrowing. With Germany and other partners, Belgium has insisted to include financial stability in the Pact for the Euro. The upcoming bank stress test is a key feature of that Pact.

 

We are not afraid of this test. Our banks have been restructured and we are confident that the EU stress test will prove their solvency and liquidity. Beginning of April, a new and effective supervisory authority will start its work.

 

And we want even more progress on the European level.

 

Belgium is the 9th most competitive economy of the EU according to the World Economic Forum, in between Austria and Luxembourg. We want to retain and better that position. Therefore, being among the most open economies of the world, Belgium supports, like Germany, more international trade and a deepening of the Single Market to improve competitiveness.

 

Ladies and Gentlemen,

 

I’d like to pay tribute to the leadership chancellor Angela Merkel has shown in these areas where the eurozone and the European Union do indeed need to take new qualitative steps towards the necessary economic union.

 

The endeavour to move towards an ever closer union is something which is precious to Belgium, and which Belgium and Germany share. So, we really appreciate it when this chancellor, as her predecessors did, shows strong leadership at decisive moments.

 

Ladies and Gentlemen,

 

I took some time to point out to you the fundamental economic and financial stability of Belgium, because in this period of pressure on the euro, or at least on some euro-countries, this issue is very much in the forefront.

 

But this is not the only area in which you may count on continuity and stability. You can also be assured that Belgium will remain a reliable partner of Germany on the broader European spectrum.

 

As you know, Belgium held the rotating presidency of the European Union in the last semester of last year. We were gratified by the praise we received from the other member states and the European institutions for what was described as an efficient presidency.

 

I think I can say we were successful in bringing about a number of agreements on issues which had been blocked for years.

 

And I can say that we were successful because we did not use the presidency for grandstanding. We embedded our priorities in the European agenda so as to help to move the Union forward. We coordinated intensively with the other member countries. And we worked very closely with the European institutions, with a special attention for the new competences of the European Parliament under the Lisbon Treaty. It is well known that Belgium favours the “méthode communautaire”, and there also we were able to count on German support.

 

A joke was made that our presidency was successful because we had a caretaker government which had not much else to do than to concentrate on Europe.

 

This is a caricature because, as I hope I demonstrated to you, my government does work hard on the national level.

The presidency was successful because it was prepared very thoroughly by our excellent diplomats, and by our governments.

 

I say governments because Belgium is a federal country, where many competences which fall under European rules have been devolved to the regions. So Belgium’s European policy is also the subject of coordination between the federal government and the regional governments. This process can be time consuming but it is necessary in a federal country.

 

It brings the added advantage that the European policy of Belgium is supported by a very large political spectrum. When I add up the political parties which form the federal and the regional governments, I can say that our European policy, our European presidency, were and are supported by 80 percent of the population. This also is a guarantee of stability and continuity.

 

This continuity also goes for our broader foreign policy where both our countries very much share the aims and endeavours for strenghtening security, peace, freedom throughout the world. A very strong example of this is Afghanistan where, in Kunduz, our soldiers stand shoulder to shoulder and the German command is exemplary.

 

Ladies and Gentlemen,

 

Belgium is one of the countries where every poll still shows a very large support for the European Union, for further European integration.

 

Now, I know it has been said that this support is inspired by specific internal conditions, that the Belgians see European integration as a means to side-step or overcome their internal divisions. This is too superficial an interpretation.

 

Support for the European Union is still strong because our population realises that European cooperation is in its own interest. We all know it: if you are not at the table, you are on the menu. Too often, our territory has been on the menu of other European powers, has been occupied in wars which it did nothing to provoke and everything to prevent. So, our citizens very much realise the value of a European integration which has brought peace, stability and prosperity to most of our continent, and which gives their country a place at the table.

 

Moreover, the situation of Brussels as the capital of Europe brings the European Union close to our citizens in the physical sense. It is often said that Belgium is in the heart of Europe and that is true. But it is also true that Europe is in the heart of the Belgians, of Belgium, literally and figuratively.

 

Being on the subject of Belgium’s public opinion, I’d like to say a word on the present situation. I have explained to you that Belgium is stable country with sound economic fundamentals. But I do not want to minimise the problems of the current situation. We do need a new government which reflects the new majority in the parliament, and which has full powers.

 

But we also need this government to work on a new basis, that of a revised political system, with clearer packages of competence for the national and regional levels, with a larger autonomy and fiscal responsibility for the regions, and also with a federal government which is leaner but meaner, which preserves the means and competences to function efficiently. We need this because a large part of the population demands it. We need this because it will improve Belgium’s capacity to remain a competitive economy.

If the long negotiations on the formation of a new government result in such a revised system, which I hope, then this crisis will have been fruitful. 

 

One thing I am sure of: Belgium will remain a trusted ally and good friend of Germany. We share our commitment to a very humane political system which derives its name from a part of your country and on which I have written a book, the Rhineland Model. We share our European ambitions. Our economies are interwoven. We have intensive exchanges on all fields, among them the cultural field which provides the golden threads in the rich fabric of our relations.

 

Here, I would like to say a sincere word of thanks to our ambassadors. On the Belgian side, this goes as well for Ambassador Renier Nijskens as for Ambassador Mark Geleyn who recently left this post. I know how hard and well they both worked and work to keep our relations on their excellent footing. Und ich möchte auch sehr aufrichtig dr. Reinhard Bettzuege, den Deutschen Botschafter in Belgien, danken für seine aüsserst wertvolle Arbeit und für die Freundschaft die er Belgien zeigt. 

 

Ladies and Gentlemen,

Geography makes us neighbours. Cooperation makes us partners. Our common ideals for Europe – and yes, that old fashioned word still means something – our common ideals for Europe make us friends, now and in the future.

 

I thank you for your attention

Ich danke ihnen für ihre Aufmerksamkeit

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