“This country needs a global plan.” These are the words of Deputy Prime Minister Frank Vandenbroucke (Vooruit), last weekend The time. According to the socialist, soon, after the elections, all levels of government will have to “get over their shadows” to boost the budget and reform the labor market.
With that statement, Vandenbroucke joins an increasingly impressive list. Earlier in the campaign, Sammy Mahdi (CD&V) and Bart De Wever (N-VA), among others, also expressed their admiration for Dehaene and his political legacy: the Global Plan from the 1990s. That plan is invariably regarded as a textbook example of how reform policy is possible even in this ‘solidified country’.
De Wever, last Thursday, during the presentation of his budget plan: “Although the truth is that we are facing an effort that is greater than that of Dehaene. His Global Plan has led to a significant improvement in the primary balance. But we will have to go deeper. We are in a worse position today.”
Potverdekke
Saturday night, May 2, 1998. Prime Minister Dehaene is seen in possession of a sandwich and a glass of beer in the corridors of the Justus Lipsius building in Brussels. European government leaders sit together to decide which member states may participate in the new euro currency. Belgium will be there.
At the press conference afterwards, Foreign Minister Erik Derycke (SP) puffed: “Ale, we are going home. Damn it.”
That evening a burden also falls from Dehaene’s shoulders. For years, his government policy has been dominated by the arrival of the euro and the associated Maastricht standards, which are pushing the Belgian budget deficit towards 3 percent of GDP. Many think that our country will not make it. With a deficit of 7 percent of GDP in the crisis year of 1993 and a national debt of 137 percent, there seems little reason for optimism.
Still, Dehaene manages to get a euro ticket. His recipe? The Global Plan, a reform package developed by Christian Democrats and Socialists that saw the light of day in 1993 and slashed state finances. Measures such as the health index, a three-year wage freeze and an extensive crisis tax (the so-called Special Social Security Contribution) are being implemented.
“The situation was really acute,” recalls economist Paul De Grauwe (London School of Economics). “Belgium had ended up in an ‘interest snowball’ where the interest on our debts was higher than GDP growth. Then you end up in a vicious circle that can only be broken with significant intervention. Dehaene’s Global Plan was actually a classic recipe: a combination of savings and taxes.”
This is certainly not painless: at the end of 1993 the country was hit by a wave of strikes. Trains are diverted, roads are cut off, flights are disrupted and the port of Antwerp is blocked. More than 900,000 working days are lost. A strike record that lasted until 2014, during the protests against Michel I. The banks must be privatized. Part of the Belgian gold reserves are being sold.
But in the end it works. On May 2, 1998, Belgium passed its euro exam. Dehaene would later write in his memoirs: “I was under the illusion that restructuring public finances would be relatively easy. That turned out to be a miscalculation.” (Dehaene cannot enjoy his success for long anyway. In 1999 – in the midst of a dioxin crisis – he loses the elections to his liberal competitor Guy Verhofstadt.)
No one
The similarity between then and now seems obvious. The total Belgian budget deficit has increased to 27 billion euros in recent years, which corresponds to 4.6 percent of GDP. Europe demands that this be reduced to 3 percent. According to the (provisional) new accounting rules, even up to 1.5 percent by 2031.
Although De Grauwe points out that fortunately Belgium will not have to deal with an interest rate snowball in 2024. Although interest rates have risen, they remain manageable overall. “We will have to do something about our budget, that much is certain, but I don’t think we are back in the 1990s. And let me emphasize once again that the Global Plan was absolutely no economic fun. Not even for the common man, who saw the tax burden rise. Let us not mystify the past too quickly.”
Rik Van Cauwelaert, columnist for The time and living memory of the Wetstraat, sees something in a republication of the Global Plan. Rising health costs and the unpredictability of the war in Ukraine may force politicians to do so, he estimates. “Only: I don’t see a new Dehaene.”
“At the time, the Global Plan was made possible by a well-oiled collaboration between Dehaene, Budget Minister Herman Van Rompuy and the director of the National Bank Fons Verplaetse,” says Van Cauwelaert. “On the other hand, there was the continued support of the socialists. Despite all the savings, they wanted to continue. Everyone was convinced of the importance of joining the euro. Not achieving that would have been an insult. Dehaene himself was not really concerned with his popularity in the beginning – which helped.”
The political stars are very different thirty years later. The decline of the traditional power blocs means that eight parties may soon be needed to form a government. All those parties have their agenda and sensitivities. Van Cauwelaert pityingly: “Write a Global Plan with someone like Georges-Louis Bouchez (MR).”
