Belgium is not a country prone to breaking world records. This summer, the nation’s athletes took home a sum-total of ten Olympic medals, while its most striking star performance in the last decade has been in a wholly different area – the time taken to form a government. After the 2009 elections, the country was left without a federal cabinet for 541 days, thanks to a dispute over territorial language rights between the parties of Dutch-speaking Flanders and French-speaking Wallonia. Officially, it is the longest period a modern nation has been government-less without state authority crumbling. This amid a global financial crisis which brought most of the European periphery to the economic brink.

The results of the stalemate were conspicuous. Given its levels of public debt, many expected Belgium to pursue the austerity policies uniformly adopted across the Atlantic world. Yet the absence of an elected executive meant this didn’t happen. Instead of slashing state expenditure, the country’s interim governments stuck to a rule of ‘provisory twelfths’, in which budgets were renewed each month without ambitious cuts. To some economists, this offered a counterfactual lab test. Left-liberals such as Paul Krugman hailed the Belgian approach to crisis governance: non-governance, or rather a kind of demand management on autopilot appeared a friendlier alternative.

After the final round of elections this June, Keynesianism faute de mieux seems decidedly out of vogue. In both Wallonia and Flanders, a bloc of right-wing parties has gained decisive pluralities on multiple levels of Belgium’s intricate federal architecture. In Flanders, the country’s wealthier region, this intensified well-established trends, with the centre right N-VA (New Flemish Alliance) and far-right Vlaams Belang (Flemish Interest) coming in first and second. Both seek reforms that would further hollow out federal institutions and hand more power to regions. Last week a centre-right coalition was formed that plans to crack down on migrant welfare allowances and further restrict access to social housing, compensated by vague promises about expanded child-care facilities and investment in public transport.

In Wallonia, the rightward shift was less easy to anticipate. A prototypical post-industrial region – usually the breeding ground for Europe’s emerging extreme right – it has long continued to vote for the Parti Socialiste (the Walloon Socialist Party). This year, however, the party finally appeared exhausted, the victim of an aging base and failure to renew its cadres. The main beneficiary has been the Mouvement Réformateur (Reformist Movement) – nominally still a liberal party, now channelling the extreme right energy generalising itself across the continent – together with the rebranded Christian-Democrats of Les Engagés, who were also able to scoop up votes from the ailing Greens. Earlier this summer, MR and Les Engagés struck a dealing reducing inheritance tax and vowing to cut the sprawling officialdom characteristic of the region – prelude to the shock therapy which Wallonia supposedly missed out in in the 1990s.

Taken together, this appears to have granted Belgium an uncharacteristic political homogeneity. With the right ascendant across the country, a federal government should now be easy to form. As usual, however, Belgian appearances are deceptive. Once upon a time, Flemish nationalists invoked the political divergence between regions – a chiefly right-wing Flanders, an incorrigibly left-wing Wallonia – as the ultimate argument for amicable separation. But with a right-wing coalition in the South, Walloon conservatives can reject these claims. Why split the country if the regions find themselves on the same political side? To do so would deprive them of right-wing collaborators across the language border, a vincolo esterno that could keep a check on left-wing passions in the region. This pragmatism is shared by Flemish export firms, crucial to the social base of the N-VA, who crave legal certitude and a safe supply of labour – if possible, from a poorer Wallonia. An older generation of Flemish nationalists, who still hope that the party will help the region secede, is bound to be frustrated. Once again, the largest regional majority in Europe is set to lose out on its own state, unlike the Irish, Czechs and Slovaks which gained theirs decades ago.

Behind these regional questions lurks Belgium’s ominous economic prospects. In the 2010s, in spite of its toweringly high public debt, the country was spared the bond vigilantism inflicted on the PIIGS (Portugal, Italy, Ireland, Greece and Spain). Yet public expenditure has continued as interest rates have been hiked, worrying politicians that the public deficit will scare off the foreign investment on which the Belgian (and mainly Flemish) economy depends. For those on the right, this relates to another world record. Belgium has the most generous welfare state in the world, according to recent research that compares allowance systems including pension payments, unemployment benefits and sick pay. The research provides an inadvertent history of the fortunes of social democracy. While in 1981 Belgium still ranked fifth – behind erstwhile flagbearers of Scandinavian social democracy like Sweden and Denmark – in the late 2010s the country slid into first place.

How best to explain Belgium’s social-democratic resilience? The research suggests several factors: compulsory voting, intact union power, the remnants of corporatist party systems that united employees and employers in the same party outfits. The former ensures that politics does not become an exclusive affair of the highly educated, who are more likely to vote for the right. Meanwhile, trade unions collectivised labour bargaining, while the Belgian pillar structure provided cohesion between classes. When the Christian Democrats was eager to force a neoliberal revolution in the 1980s on Belgium, the party’s union wing consistently hit the brakes on the more radical measures proposed by the party elite. An intraclass party that had to serve both employers and workers could not afford open class warfare; the harsher edges of Anglo-Saxon neoliberalism were smoothed over.  

The consequences proved unique. In both France and Italy, a version of wage indexation – which adjusts worker earnings to the price of a variety of consumer goods – perished as early as the 1980s and 1990s. In Belgium, right-wing parties did force index jumps and were able to practice wage moderation by stealth. Yet legislatively, wage indexation, along with continuous unemployment benefits, generous public sector pensions and early pensions, have survived as those in neighbouring countries have not. 

This all begs a tempting question. Did Belgium never experience a neoliberal revolution? For pro-market think tanks and parties, the ascription ‘neoliberal’ to a country with over 100% debt to GDP ratio, a generous public sector and a quasi-intact welfare state, is laughable. In recent weeks, the counter-argument has been forcefully made by the Belgian historian Brecht Rogissart. For Rogissart, neoliberalism is a collective class strategy, which provides businesses with oxygen to regain post-war growth figures by curbing the organised working class. And in this sense, he argues, neoliberalism reigned in Belgium from 1982, when a coalition of Christian-Democrats and liberals gained emergency law permission to devalue the franc and implement wage repression. His argument has clear political consequences. Rather than a delayed revolution, Rogissart sees recent developments represent the completion of a process begun in the 1980s. Belgium’s right are ‘the last neoliberals’, to borrow a phrase applied to Macron by French political scientists Bruno Amable and Stefan Palombarini.

Like a Belgian Javier Milei, the leader of the Walloon MR Georges-Louis Bouchez – fiercely pro-Israel and economically libertarian – hopes to bring shock therapy to the West-European equivalent of East Germany, after which Wallonia can once again become a cheap provider of labour to a Northern export economy. To him, no further regionalization of the country is required; shock therapy is best pursued in national lockstep, with Flemish nationalists shelving their separatist demands over the demands the economic elite. This ‘subaltern bourgeoisie’ – as Matthias Lievens put it, borrowing a phrase from Perry Anderson – never had to wage a revolutionary contest with an aristocracy and required no heroic history to support its rule. Economically dominant yet not politically hegemonic: this is the comfortable yet liminal position which Flemish capitalists occupied after the Second World War. Yet such dominance without hegemony is now at threat, as the European industrial crisis spirals out from the German heartland.

2023 marked the worst year for industrial bankruptcies in years, and 2024 has seen equally bloody figures in construction and hospitality sectors. The root causes of the crisis are easy to conjecture – not the national debt or the wage handicap per se, but the flagging German economy, which is losing ground in the EV market and reeling from high energy costs after its enforced decoupling from Russian gas supplies. The penetration of Chinese producers has had chaotic knock-on effects for the satellite economies of Europe’s German core, which must either reorient to American supply lines or await concerted supranational action. It is uncertain whether austerity can do much to aid this catch-up effort. Belgium has limited control over the flows of capital to which it has made itself a conduit – and thereby remains a distinct beneficiary of potential multilateral action on the European level. The blockbuster productivity report compiled by Mario Draghi earlier this summer seems to hint at this. Even if not offering the prospect of absorption into a Hamiltonian federation, the Draghi strategy can only benefit Belgium.

There is a bind, however: the most dynamic sectors of the economy still see themselves as existentially dependent on German economic performance, which informs an incorrigibly austerian mindset. To them, Europe-wide public investment comes with mortal risks. Rather than vie for a supranational strategy, they see German discipline as the essential prerequisite for their own profit rates. Better instances of collective class irrationality are hard to find. To avert industrial cataclysm, a small nation such as Belgium – which lost its national capitalism somewhere between 1945 and 1973 – can only pin its hope on wiser masters.

Read on: Anton Jäger, ‘Rebel Regions’, NLR 128.