Political talks: it's all about money

The political negotiators are discussing the transfers of powers to the regions and the new funding mechanisms for both the federal state and the regions. The situation ended in a deadlock on Thursday evening, but today there is more positive news. Political commentators estimate that an accord could be struck quite soon.

The 8 political parties at the table and formateur Elio Di Rupo, who is heading the talks, are still struggling with a deal on a major state reform. After BHV and Brussels, they are now concentrating on a new financing law and the transfer of powers from the federal level to the regions and language communities.

The question is how much extra cash the regions will receive in order to take up their new responsibilities, and to which extent the regions will be allowed to determine their personal tax rate.

In fact, it's all about money. The Francophones want the needs of the regions (population, the number of pupils and students) to serve as a basis to determine who will get how much, while the Flemish parties are eager to have more tax revenues, in order to reward regions that are doing well.

Yesterday evening, Mr Di Rupo was again using shuttle diplomacy to try and break the stalemate. At 1 o'clock this morning, the talks were stopped. Pessimism reigned supreme, but there was optimism this morning. It turns out that a new compromise text worked out by Mr Di Rupo was well received by the Flemings.

Under Mr Di Rupo's latest proposals, the different regions would each receive 10.7 billion euros in tax revenues, the so-called "fiscal autonomy." Wouter Van Besien of the Flemish greens: "There are some good things on the table. We have the fiscal autonomy, and at the same time the regions will become more responsible for their policy choices. At the same time, the future of Brussels and the federal government is safeguarded."

It is said that Mr Di Rupo will continue "to the finish" this evening or tonight. The negotiators will not be allowed to return home before a deal on the financing law has been reached.

2012 budget: still no decision

In the meantime, deputy premier Guy Vanhengel (Flemish liberal) suggests that negotiators should also start with the social economic agenda and discuss the cuts that the next government will have to make, in order to gain time as the financial crisis is worsening again.

Normally, the PM of the caretaker government Yves Leterme (Flemish Christian democrat) was due to meet Elio Di Rupo (Francophone liberal) today in order to decide who will draw up next year's budget. However, this meeting was postponed at the request of Mr Di Rupo, who needs more time to discuss the financing laws first.

Francophone liberal leader Charles Michel also suggested linking the discussion on the financing laws to the choices the next government has to make. If this is the case, it looks "logical" that Mr Di Rupo and his new team will be drawing up the budget after all, the VRT's political journalist Johny Vansevenant estimates.