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U.S. Department of State

Diplomacy in Action

Belgium (06/00)


For the most current version of this Note, see Background Notes A-Z.


Kingdom of Belgium

Area: 30,528 square kilometers (11,800 sq. mi.), about the size of Maryland.
Capital--Brussels (pop. 954,460). Other cities--Antwerp (447,632); Ghent (224,074); Li�ge (187,538); Charleroi (202,020); Bruges (115,991); and Namur (104,994).

Population (1999): 10,213,752; urban--69%.
Annual population growth rate: 0.4%.
Density: 861 per sq. mi.
Linguistic regions: Dutch-speaking 58%; French-speaking 32%; legally bilingual (Brussels) 9.3%; German-speaking 0.7%.
Religions: Predominantly Roman Catholic (although 5%-20% practicing); Catholic, Protestant, Jewish, Islamic, Anglican, Greek and Russian Orthodox recognized, as well as secularism.
Languages: Dutch, French, German.
Literacy: 98%.

Type: Parliamentary democracy under a constitutional monarch.
Independence: 1830.
Constitution: 1994 (revised).
Branches: Executive--King (head of state), Prime Minister (head of government), Cabinet. Legislative--bicameral parliament (Senate and House of Representatives). Flemish Parliament with the Flemish Government for regional, educational, and cultural affairs; Walloon Regional Council (legislator) and government for Walloon Regional Affairs; Francophone Community Council and government for Francophone cultural and educational affairs; Brussels Regional Council and government for Brussels regional affairs; and German language Community Council and government for cultural and educational affairs.
Major political parties: Christian Democratic, Socialist, Liberal (conservative philosophy in American terminology), Green (ecologist). Suffrage: Over 18, compulsory.
Political subdivisions: Ten provinces, three regions, three communities, 589 municipalities.
Flag: Three broad vertical bands--black, yellow, and red, from left to right Membership in international organizations: UN, NATO, EU, WEU, OSCE, WTO, OECD, G-10 (leading financial powers), BENELUX Customs Union, Schengen, and others.

GDP (1999): $266 billion.
Annual real growth rate (1999): 2.2%.
Per capita income (1999): $25,576.
Natural resources: Coal.
Agriculture: (1.4% of GDP) Products--livestock, including dairy cattle, grain, sugarbeets, nursery products, flax, tobacco, potatoes, and other fruits and vegetables.
Industry: (20% of GDP) Types--machinery, iron, coal, textiles, chemicals, glass, pharmaceuticals, manufactured goods.
Trade (1999): Exports--$187.3 billion: Iron and steel, coal, transportation equipment, tractors, diamonds, petroleum products. Imports--$172.8 billion: Fuels, chemical products, grains, foodstuffs. Trading partners--EU 76%; United States 6%.

Belgium is located in Western Europe, bordered by the Netherlands, the Federal Republic of Germany, Luxembourg, France, and the North Sea.

Although generally flat, the terrain becomes increasingly hilly and forested in the southeast (Ardennes) region.

Climate is cool, temperate, and rainy; summer temperatures average 77�F, winters average 45�F. Annual extremes (rarely attained) are 10�F and 90�F.

Geographically and culturally, Belgium is at the crossroads of Europe, and during the past 2,000 years has witnessed a constant ebb and flow of different races and cultures. Consequently, Belgium is one of Europe's true melting pots with Celtic, Roman, Germanic, French, Dutch, Spanish, and Austrian cultures having made an imprint.

Today, the Belgians are divided ethnically into the Dutch-speaking Flemings and French-speaking Walloons, with a mixed population in Brussels representing the remainder. About 70,000 German speakers reside in the east.

The population density is the second-highest in Europe, after the Netherlands.

Belgium derives its name from a Celtic tribe, the Belgae, whom Caesar described as the most courageous tribe of Gaul. However, the Belgae were forced to yield to Roman legions during the first century B.C. For some 300 years thereafter, what is now Belgium flourished as a province of Rome. But Rome's power gradually lessened. In about A.D. 300, Attila the Hun invaded what is now Germany and pushed Germanic tribes into northern Belgium. About 100 years later, the Germanic tribe of the Franks invaded and took possession of Belgium. The northern part of present-day Belgium became an overwhelmingly Germanized and Germanic- Frankish-speaking area, whereas in the southern part people continued to be Roman and spoke derivatives of Latin. After coming under the rule of the Dukes of Burgundy and, through marriage, passing into the possession of the Hapsburgs, Belgium was occupied by the Spanish (1519-1713) and the Austrians (1713-1794).

Under these various rulers, and especially during the 500 years from the 12th to the 17th century, Ghent, Bruges, Brussels, and Antwerp took turns at being major European centers for commerce, industry (especially textiles) and art. Flemish painting--from Van Eyck and Breugel to Rubens and Van Dyck--became the most prized in Europe. Flemish tapestries hung on the walls of castles throughout Europe.

Following the French Revolution, Belgium was invaded and annexed by Napoleonic France in 1795. It was made a part of the Netherlands by the Congress of Vienna in 1815.

In 1830, Belgium wrested its independence from the Dutch as a result of an uprising of the Belgian people. A constitutional monarchy was established in 1831, with a monarch invited in from the House of Saxe-Coburg Gotha in Germany.

Belgium was invaded by the Germans in 1914 and again in 1940. This, plus disillusionment over postwar Soviet behavior, made Belgium one of the foremost advocates of collective security within the framework of European integration and the Atlantic partnership.

Since 1944, when Belgium was liberated by British, Canadian, and American armies, the nation has lived in security and at a level of increased well-being.

A parliamentary democracy, Belgium has been governed by successive coalitions of two or more political parties, with the centrist Flemish Christian Democratic Party providing the Prime Minister most of the time. Two major political controversies have marked the postwar years: a dispute over King Leopold III's conduct during World War II (which caused him to abdicate in 1951), and the insistence of the nation's majority linguistic community--the Flemish--upon a reorganization of the state into autonomous regions.

The last 30 years also have been marked by a rapid economic development of Flanders, which had been largely agricultural and, since the industrial revolution, had become the poorer half of Belgium. This Flemish resurgence has been accompanied by a corresponding shift of political power to the Flemings, who now constitute an absolute majority (58%) of the population.

Belgium is an hereditary constitutional monarchy. The present King, Albert II, succeeded his brother, King Baudouin, who died July 31, 1993. Albert took the oath of office to become King on August 9, 1993.

As titular head of state, the King plays a ceremonial and symbolic role in the nation. A main political function is to designate a political leader to attempt to form a new cabinet after an election or the resignation of a cabinet. In conditions where there is a "constructive vote of no-confidence," the government has to resign and the Lower House of Parliament proposes a new Prime Minister to the King. The King also is seen as playing a symbolic unifying role, representing a common national Belgian identity.

The Belgian Parliament consists of a Senate and a House of Representatives (the Chamber). The House has 150 directly lected members. The Senate has 71 members. The executive branch of the government consists of ministers and secretaries of state (junior ministers) drawn from the political parties which form the government coalition. Formally, the ministers are appointed by the King. The number of ministers is limited to 15, and they have no seat in Parliament. The Cabinet is chaired by the Prime Minister. Ministers head executive departments of the government.

The allocation of powers between the Parliament and the Cabinet is somewhat similar to that of the United States--the Parliament enacts legislation and appropriates funds--but the Belgian Parliament does not have the same degree of independent power that the U.S. Congress has. Members of political parties represented in the government are expected to support all bills presented by the Cabinet.

The House of Representatives is the "political" chamber that votes on motions of confidence and budgets. The Senate deals with long-term issues and votes on an equal footing with the Chamber on a range of matters, including constitutional reform bills and international treaties.

The Prime Minister and his ministers administer the government and the various public services. As in Great Britain, ministers must defend their policies and performance in person before the Chamber.

The Cabinet and the Ministries
At the federal level, executive power is wielded by the Cabinet. The Prime Minister is President of the Cabinet. Each minister heads a governmental department. The Cabinet reflects the weight of political parties that constitute the current governing coalition for the Chamber. No single party or party family across linguistic lines holds an absolute majority of seats in Parliament. The present Cabinet, the Guy Verhofstadt Cabinet, consists of the following members of the Flemish Liberal Party (VLD), the francophone Liberal Party (PRL), the Flemish Socialist Party (SP), the francophone Socialist Party (PS), the Flemish Green Party (AGALEV), and the francophone Green Party (ECOLO).

Principal Government Officials (protocol ranking)
Prime Minister--Guy Verhofstadt (VLD)
Deputy Prime Minister, Minister of Employment--Laurette Onkelinx (PS)
Deputy Prime Minister, Minister for Foreign Affairs--Louis Michel (PRL)
Deputy Prime Minister, Minister of Budget and Social Integration--Johan Vande Lanotte (SP)
Deputy Prime Minister, Minister of Mobility and Transportation--Isabelle Durant (ECOLO)
Minister for Consumer Interests, Health, and Environment--Magda Aelvoet AGALEV)
Minister of Interior--Antoine Duquesne (PRL)
Minister of Social Affairs and Pensions--Frank Vandenbroucke (SP)
Minister of Civil Service Affairs--Luc Van Den Bossche (SP)
Minister of Defense--Andre Flahaut (PS)
Minister of Agriculture--Jaak Gabriels (VLD)
Minister of Justice--Marc Verwilghen (VLD)
Minister of Finance--Didier Reynders (PRL)
Minister of Telecommunications and Public Enterprises--Rik Daems (VLD)
Minister of Economic Affairs and Science Policy--Charles Picqu� (PS)
State Secretary for Foreign Trade--Pierre Chevalier (VLD)
State Secretary for Development Cooperation--Eddy Boutmans (AGALEV)
State Secretary for Energy and Sustainable Development--Olivier Deleuze (ECOLO)

Ambassador to the United States--Alex Reyn
Ambassador to the United Nations--Andre Adam

The Belgian Embassy is located at 3330 Garfield Street NW, Washington, DC 20008 (tel. 202-333-6900; fax 202-333-3079).

The Electoral System
The number of seats in the Chamber is constitutionally set at 150 elected from 20 electoral districts. Each district is given a number of seats proportional to its population (not number of voters) ranging from 3 for the Luxembourg district to 22 for Brussels. The districts are divided along linguistic lines: 10 Flemish, 9 Walloon, and the bilingual district of Brussels. Eligibility requirements for the Chamber are a minimum age of 21, citizenship, and residency in Belgium.

The Senate consists of 71 seats. For electoral purposes Senators are divided into three categories: directly elected; appointed by the community assemblies; and co-opted Senators. For the election of the 25 Flemish and 15 francophone directly elected Senators, the country is divided into three electoral districts. Of the Senators representing the communities, 10 are elected by the Flemish Council, 10 by the French Council, and 1 by the German-language Council.

The remaining category, the co-opted Senators, consists of 10 representatives elected by the first two groups of Senators. Eligibility requirements for the Senate are identical to those for the Chamber. Under the electoral system, smaller parties rather easily attain the required quorum (minimum number of votes required in a given district) and have representation in the federal parliament.

In Belgium, there are no "national" parties operating on both sides of the linguistic border. Consequently, elections are a contest among Flemish parties on one side and Francophone parties on the other. Several months before an election, each party forms a list of candidates for each district. Parties are allowed to place as many candidates on their "ticket" as there are seats available. The formation of the list is an internal process that varies with each party. The number of seats each party receives and where on a list a candidate is placed determines whether a candidate is elected or not.

Political campaigns in Belgium are relatively short, lasting only about one month, and there are restrictions on the use of billboards. For all of their activities, campaigns included, the political parties have to rely on government subsidies and dues paid by their members. An electoral expenditures law restricts expenditures of political parties during an electoral campaign.

Since no single party holds an absolute majority, after the election the strongest party or party family will create a coalition with some of the other parties to form the government.

Voting is compulsory in Belgium; more than 90% of the population participates. Belgian voters are given four options when voting. They may:

  • Vote for a list as a whole, thereby showing approval of the order established by the party;
  • Vote for one or more individual candidates, regardless of his/her ranking on the list. This is a "preference vote;"
  • Vote for one or more of the "alternates;" or
  • Vote for one or more candidates, and one or more alternates
1999 Elections
General elections were last held on June 13, 1999. Driven in part by resentment over a mishandled dioxin food-contamination crisis in June 1999, Belgian voters rejected Jean Luc-Dehaene's longstanding coalition government of Christian Democrats and Socialists and voted into power a coalition put together by Flemish Liberal Leader Guy Verhofstadt. The Verhofstadt government is comprised of the Flemish and francophone Liberals, Flemish and francophone Socialists, and the Flemish and francophone Greens, the first Liberal-led coalition in generations, the first six-party coalition in 20 years, and the first Green participation ever in Belgium's federal government.

Belgium has 25 seats in the European Parliament in Strasbourg. Elections for the members of Belgium's municipal and provincial councils will be held in October 2000.

Belgium's Linguistic Challenge
In the third century AD, Germanic Franks migrated into what is now Belgium. The less populated northern areas became Germanic, while in the southern part, where the Roman presence had been much stronger, Latin persisted despite the migrations of the Franks. This linguistic frontier has more or less endured.

The Industrial Revolution of the late 18th and the 19th century further accentuated the North-South division. Francophone Wallonia became an early industrial boom area, affluent and politically dominant. Dutch-speaking Flanders remained agricultural and was economically and politically outdistanced by Brussels and Wallonia. In the 20th century, and particularly after the Second World War, Flanders saw an economic flowering while Wallonia became economically stagnant. As Flemings became more well off and sought a bigger share of political power, tension between the two communities rose.

Linguistic demonstrations in the early sixties led in 1962 to the establishment of a formal linguistic border and elaborate rules were made to protect minorities in linguistically mixed border areas. In 1970, the Constitution was amended. Flemish and francophone cultural councils were established with authority in matters relating to language and culture for the two language groups.

The 1970 constitutional revision did not finally settle the problem, however. A controversial amendment declared that Belgium consists of three economic regions-- Flanders, Wallonia, and Brussels--each to be granted a significant measure of political autonomy. It was 1980, however, before an agreement could be reached on how to implement this new constitutional provision.

In August 1980, the Belgian Parliament passed a devolution bill and amended the Constitution, establishing:

  • A Flemish legislative assembly (council) and Flemish government competent for cultural and regional economic matters;
  • A francophone community legislative council and government competent for cultural matters; and
  • A Walloon regional legislative assembly and government competent for regional economic matters.
Since 1984 the German language community of Belgium (in the eastern part of Li�ge Province) has had its own legislative assembly and executive, competent for cultural, language, and educational affairs.

In 1988-89 the Constitution was again amended to give additional responsibilities to the regions and communities. The most sweeping change was to devolve to the communities responsibilities for educational matters. Moreover, the regions and communities were provided additional revenue, and Brussels was given its own legislative assembly and executive.

Another important constitutional reform took place in the summer of 1993. It formally changed Belgium from a unitary to a federal state. It also reformed the bicameral parliamentary system and provided for the direct election of the members of the community and regional legislative councils. The bilingual Brabant province was split into separate Flemish Brabant and Walloon Brabant provinces.

The Growing Power of Regional Governments
The new regional and community councils and governments have jurisdiction over transportation, public works, water policy, cultural matters, education, public health, environment, housing, zoning, and economic and industrial policy. They rely on a system of revenue-sharing for funds. They have the authority to levy taxes (mostly surcharges) and contract loans. Moreover, they have obtained exclusive treaty-making power for those issues coming under their respective jurisdictions.

Of total public spending (interest payments not considered), more than 40% is authorized by the regions and communities.

Regional Executives
President, Flemish Government--(VLD) Patrick Dewael
President, Francophone Community Government--(PRL) Herve Hasquin
President, Walloon Regional Government--(PS) Jean-Claude van Cauwenberghe
President, Brussels Capital Government--(PRL) Jacques Simonet
President, German Community Government--(PS) Karl-Heinz Lambertz

Provincial and Local Government
In addition to three regions and three cultural communities, Belgium also is divided into 10 provinces and 589 municipalities.

The provincial governments are primarily administrative units and are politically weak. A governor appointed by the King presides over each province. He or she is supported by an elected Provincial Council of 47 to 84 members which sits only 4 weeks a year.

Municipal governments, on the other hand, are vigorous political entities with significant powers and a history of independence dating from medieval times. Many national politicians have a political base in a municipality, often doubling as mayor or alderman in their hometowns.

The Lower House is officially called Chambre des Repr�sentants (in French) or Kamer van Volksvertegenwoordigers (in Dutch). In English, it is often called the Chamber of Deputies or the House of Representatives. All are correct.

The major parties in the Lower House are the Flemish Liberal Party (VLD), 23 seats; the Flemish Social Christian Party (CVP), 22 seats; the Francophone Socialist Party (PS), 19 seats; the Francophone Liberal Party (PRL), 18 seats; the right-wing Vlaams Blok party, 15 seats; and the Flemish Socialist Party (SP), 14 seats.

The two ecologist parties together have 20 seats. The moderate Flemish nationalist Volksunie has 8 seats. The President of the Lower House is Herman De Croo (VLD).

The Princes and Princesses of the royal line are full members of the Senate, but only Prince Philippe and Princess Astrid actually sit in the Senate. The President of the Senate is Armand De Decker (PRL).

Political Parties
From the creation of the Belgian state in 1830 and throughout most of the 19th century, two political parties dominated Belgian politics: the Catholic Party (Church-oriented and conservative) and the Liberal Party (anti-clerical and progressive). In the late 19th century the Socialist Party arose to represent the emerging industrial working class.

These three groups still dominate Belgian politics, but they have evolved substantially in character.

The Christian Democratic Parties. After World War II, the Catholic (now Christian Democratic) Party severed its formal ties with the Church. It became a mass party of the center, somewhat like a political party in the United States.

In 1968, the Christian Democratic Party, responding to linguistic tensions in the country, divided into two independent parties: the Parti Social Chr�tien (PSC) in French-speaking Belgium and the Christelijke Volkspartij (CVP) in Flanders. The two parties pursue the same basic policies but maintain separate organizations. The CVP is the larger of the two, getting more than twice as many votes as the PSC. CVP Party Chairman is Stefaan De Clerck. Deputy Joelle Milquet is president of the PSC. Following the 1999 general elections, the CVP and PSC were ousted from office, bringing an end to a 40-year term on the government benches.

The Socialist Parties. The modern Belgian Socialist parties have shed much of their early Marxist trappings. They are now primarily labor-based parties similar to the German Social Democratic Party and the French Socialist Party. The Socialists have headed several postwar governments and have produced some of the country's most distinguished statesmen. The Socialists also split along linguistic lines in 1978. Patrick Janssens is head of the Flemish Socialist Party (SP) and Deputy Elio Di Rupo is president of the Francophone Socialists (PS). In general, the Walloon Socialists tend to concentrate on domestic issues. In the eighties, the Flemish Socialists focused heavily on international issues, and on security in Europe in particular, where they frequently opposed U.S. policies. However, first with Willy Claes, then Frank Vandenbroucke and with Erik Derycke as Foreign Minister, all three Flemish Socialists, the party made a significant shift to the center adopting less controversial stances on foreign policy issues.

The francophone Socialists are mainly based in the industrial cities of Wallonia (Li�ge, Charleroi, and Mons). The Flemish Socialists' support is less regionally concentrated.

The Liberal Parties. The Liberal Parties chiefly appeal to businesspeople, property owners, shopkeepers, and the self-employed, in general. In American terms the Liberals' positions would be considered to reflect a traditionally conservative ideology.

There are two Liberal parties formed along linguistic lines: The Flemish Liberals and Democrats (VLD) who opened up their ranks to Volksunie defectors some years ago, are the largest political force in Belgium. The VLD is headed by Karl De Gucht, member of the Flemish regional parliament. The Party of Reform and Liberty (PRL) on the francophone side is headed by Euro-MP Daniel Ducarme. The PRL has formed an alliance with the Brussels-based FDF and is particularly strong in Brussels.

The Linguistic Parties. A postwar phenomenon in Belgium was the emergence of one-issue parties whose only reason for existence was the defense of the cultural, political, and economic interests of one of the linguistic groups or regions of Belgian society.

The most militant Flemish regional party in Parliament in the 1950s and 1960s, the Volksunie (VU), once drew nearly one-quarter of Belgium's Dutch-speaking electorate away from the traditional parties. The Volksunie was in the forefront of a successful campaign by the country's Flemish population for cultural and political parity with the nation's long dominant French-speaking population. However, in recent elections the party has suffered severe setbacks and now is down to only 8 seats in the 150-seat House. The Volksunie's party chairman is Deputy Geert Bourgeois.

Another special-interest party is the Front Democratique des Bruxellois Francophones (FDF). Until 1982, the FDF dominated the capital's municipal politics. It is led by Deputy Olivier Maingain. In 1995, FDF and PRL decided on closer cooperation.

Others. The Flemish (AGALEV) and francophone (Ecolo) Ecologist parties made their Parliamentary breakthrough in 1981. They focus heavily on nuclear and environmental issues and are the most consistent critics of U.S. policy. Following significant gains made in the 1999 general elections, the two green parties joined a federal coalition cabinet for the first time in their history.

Another one-issue party is the ultra-right Vlaams Blok (VB--Flemish Bloc) which broke away from the Volksunie in 1976. The VB has replaced the VU as the most militant Flemish regional party and is strongly opposed to the presence of large numbers of immigrants in urban centers. Its ultra-nationalistic philosophy and anti-immigration positions are often tinged with xenophobia and racism. Long dismissed as a "fringe" party by mainstream politicians, the VB shocked observers when in the 1991 elections it posted respectable scores in much of Flanders, but especially in Antwerp, and in 1995 and 1999 the VB did even better electorally. Party President is Euro-MP Frank Vanhecke.

Equally opposed to the presence of immigrants is the Brussels-based Francophone Front National.

Labor Unions
Belgium is a highly unionized country, and organized labor is a powerful influence in politics. About 53% of all private sector and public service employees are labor union members. Not simply a "bread and butter" movement in the American sense, Belgian labor unions take positions on education, public finance, defense spending, environmental protection, women's rights, abortion, and other issues. They also provide a range of services, including the administration of unemployment benefits.

Belgium's three principal trade union organizations are the Confederation of Catholic Labor Unions (CSC/ACV), the Belgian Socialist Confederation of Labor (FGTB/ABVV) and the Confederation of Liberal Labor Unions (CGSLB/ACLVB) which has 213,000 members.

Until the fifties, the FGTB/ABVV was the largest confederation, since then, however, the CSC/ACV has become the leading trade union force. In the most recent works council elections held in 1995, the CSC/ACV garnered close to 52% of the vote, the Socialist confederation obtained 37.7%, and the Liberal confederation 8.2%.

The Confederation of Catholic Labor Unions (CSC/ACV). Organized in 1912, the CSC/ACV rejects the Marxist concept of "class struggle" and seeks to achieve a just social order based on Christian principles. The CSC/ACV is not formally linked to its party political counterparts, the Christian Democratic parties (CVP and PSC), but exercises great influence in their councils.

The CSC/ACV is the leading union in all Flemish provinces, in the Flemish part of Brabant, and in Wallonia's Luxembourg province. It has almost equal strength with the socialist confederation in the Brussels area. Its President is Luc Cortebeeck.

The Belgian Socialist Confederation of Labor (FGTB/ABVV). The FGTB/ABVV derives from the Socialist Trade Union Movement, established in the late 19th century in Walloon industrial areas, Brussels, and urban areas of Flanders. Today the FGTB/ABVV is the leading union in the Hainaut, Namur, and Li�ge provinces and matches the CSC/ACV in Brussels. The FGTB/ABVV is led by President Michel Nollet.

Current Issues
By tight budgeting, the previous Dehaene II center-left coalition succeeded in qualifying the country for the Economic and Monetary Union. During its first year in office, the Verhofstadt cabinet has sought to implement justice and police reforms. While modernizing the judicial system is advancing according to plan, integrating the federal gendarmerie, judicial police, and local police into one single integrated force is meeting opposition from within the ranks.

Other priorities of the new cabinet are modernizing the civil service and adjusting the federal social security system to a rapidly aging population. Moreover, the cabinet has issued a blueprint for reforming the armed forces. The aim is to generate more outlays for new equipment by reducing staff.

With regard to Belgium's perennial institutional issues, the new cabinet has decided to discuss them within the framework of a government-sponsored "constitutional conference." The francophone parties demand additional financial means for francophone schools, while the Flemish parties are in favor of greater "fiscal autonomy" for the Flemish regional government.

Foreign Minister Louis Michel wants Belgium to play a more active role in Central Africa. Another of Michel's priorities is the combat against the far right in Europe. This has resulted in conflicts with the current Austrian Government. During the second half of 2001, Belgium will be in charge of the EU Presidency.

Belgium, a highly developed market economy, belongs to the Organization for Economic Cooperation and Development (OECD), a group of leading industrialized democracies. In recent years, with a geographic area about equal to that of Maryland, and a population of just over 10 million, Belgium's GDP level has placed it in the top 20 for all countries of the world. In 1999, the per capita income was $25,576.

Densely populated Belgium is located at the heart of one of the world's most highly industrialized regions. The first country to undergo an industrial revolution on the Continent of Europe in the early 1800s, Belgium developed an excellent transportation infrastructure of ports, canals, railways, and highways to integrate its industry with that of its neighbors. One of the founding members of the European Community (EC), Belgium strongly supports deepening the powers of the EC to integrate European economies. Belgium became a first-tier member of the European Monetary Union in January 1999.

With exports equivalent to about two-thirds of GNP, Belgium depends heavily on world trade. Belgium exports twice as much per capita as Germany and five times as much as Japan. Belgium's trade advantages are derived from its central geographic location, and a highly skilled, multilingual, and productive work force.

The Belgian industrial sector can be compared to a complex processing machine: It imports raw materials and semifinished goods that are further processed and reexported. Except for its coal, which is no longer economical to exploit, Belgium has virtually no natural resources. Nonetheless, most traditional industrial sectors are represented in the economy, including steel, textiles, refining, chemicals, food processing, pharmaceuticals, automobiles, electronics, and machinery fabrication. Despite the heavy industrial component, services account for 72.5% of GDP. Agriculture accounts for only 1.4% of the GDP.

Belgian Economy in the 20th Century
For 200 years through World War I, French-speaking Wallonia was a technically advanced, industrial region, while Dutch-speaking Flanders was predominantly agricultural. This disparity began to fade during the interwar period. When Belgium emerged from World War II with its industrial infrastructure relatively undamaged, the stage was set for a period of rapid development, particularly in Flanders. The postwar boom years, enhanced by the establishment of the EU and NATO headquarters in Brussels, contributed to the rapid expansion of light industry throughout most of Flanders, particularly along a corridor stretching between Brussels and Antwerp (now the second-largest port in Europe after Rotterdam), where a major concentration of petrochemical industries developed.

The older, traditional industries of Wallonia, particularly steelmaking, began to lose their competitive edge during this period, but the general growth of world prosperity masked this deterioration until the 1973 and 1979 oil price shocks and resultant shifts in international demand sent the economy into a period of prolonged recession. In the 1980s and 1990s, the economic center of the country continued to shift northwards to Flanders.

The early 1980s saw the country facing a difficult period of structural adjustment caused by declining demand for its traditional products, deteriorating economic performance, and neglected structural reform. Consequently, the 1980-82 recession shook Belgium to the core--unemployment mounted, social welfare costs increased, personal debt soared, the government deficit climbed to 13% of GDP, and the national debt, although mostly held domestically, mushroomed.

Against this grim backdrop, in 1982, Prime Minister Martens' center-right coalition government formulated an economic recovery program to promote export-led growth by enhancing the competitiveness of Belgium's export industries through an 8.5% devaluation.

Economic growth rose from 2% in 1984 to a peak of 4% in 1989. In May 1990, the government linked the franc to the German mark, primarily through closely tracking German interest rates. Consequently, as German interest rates rose after 1990, Belgian rates have increased and contributed to a decline in the economic growth rate.

In 1992-93, the Belgian economy suffered the worst recession since World War II, with the real GDP declining 1.7% in 1993. Growth improved in 1999, with real GDP growing by an estimated 2.2% (year-on-year) versus the 2% figure recorded in 1998.

Business investment (up 4.0% in real terms) and exports (up 4.4%) provided the economy's impetus. Private consumption, held back by weak consumer confidence and stagnant real wages, grew by 1% in real terms and public consumption by 0.9%.

Foreign Investment
Foreign investment contributed significantly to Belgian economic growth in the 1960s. In particular, U.S. firms played a leading role in the expansion of light industrial and petrochemical industries in the 1960s and 1970s. The Belgian Government encourages new foreign investment as a means to promote employment. With regional devolution, Flanders, Brussels, and Wallonia are now courting potential foreign investors and offer a host of incentives and benefits.

More than 1,200 U.S. firms had invested a total of over $20 billion in Belgium by 1999. U.S. and other foreign companies in Belgium account for approximately 11% of the total work force, with the U.S. share at about 5%. U.S. companies are heavily represented in chemical, automotive assembly, and petroleum refining. A number of U.S. service industries followed in the wake of these investments--banks, law firms, public relations, accounting and executive search firms. The resident American community in Belgium now exceeds 20,000. Attracted by the EU 1992 single-market program, many U.S. law firms and lawyers have settled in Brussels since 1989. Other foreign firms, particularly French ones, have invested locally for the same reason.

On May 1, 1998, Belgium became a first-tier member of the European Monetary Union. On January 1, 1999, the definitive exchange rate between the Euro and the BF was established at BF 40.33. Belgium will gradually shift from the use of the BF to the use of the Euro as its currency by January 1, 2002. To minimize confusion the old BF currency and the new Euro will only overlap for a period of 2 months. After that, the BF will be withdrawn from circulation and can only be changed into Euros at the local offices of the National Bank of Belgium.

About 80% of Belgium's trade is with fellow EC member states. Given this high percentage, it seeks to diversify and expand trade opportunities with non-EC countries. Belgium ranks as the 10th-largest market for the export of U.S. goods and services. If goods in transit to other European countries are excluded, Belgium still ranks as the 12th-largest market for U.S. goods.

Bilaterally, there are few points of friction with the U.S. in the trade and economic area. The Belgian authorities are, as a rule, anti-protectionist and try to maintain a hospitable and open trade and investment climate. The U.S. Government focuses its market-opening efforts on the EC Commission and larger EC member states. In addition, the EC Commission negotiates on trade issues for all member states, which, in turn lessens bilateral trade disputes with Belgium.

The social security system, which expanded rapidly during the prosperous 1950s and 1960s, has numerous programs, including a medical system, unemployment insurance coverage, child allowances, invalid benefits and other benefits and pensions. With the onset of a recession in the 1970s, this system became an increasing burden on the economy and accounted for much of the government budget deficits. Unemployment, which declined from a high of 14.3% in 1984 to an average of 8.5% in 1999, has become less of a problem recently. However, more than 60% of the unemployed have been so for over 2 years and over 80% for at least one year.

The national unemployment figures mask considerable differences between Flanders and Wallonia. Unemployment in Wallonia is mainly structural, while in Flanders it is cyclical. Flanders' unemployment level equals only half that of Wallonia. In general, sunset industries (mainly coal and steel) dominate in Wallonia and sunrise industries (chemicals, high-tech, and services) in Flanders.

From the second half of 1999 onward, Belgian unemployment figures declined substantially to 8.5%, one percentage point below the European average. Labor market participation also increased significantly from 54% in 1993 to 58.5% in 2000. In some sectors, labor shortages are already beginning to appear. To partly offset the increased labor costs which go with a tight labor market, the Belgian Government introduced stock option legislation for salaried employees in 1999.

Although Belgium is a wealthy country, it overspent income and undercollected taxes for years. The Belgian Government reacted with poor macroeconomic policies to the 1973 and 1979 oil price hikes: it hired the redundant work force into the public sector and subsidized ailing industries--coal, steel, textiles, glass, and shipbuilding--in order to prop up the economy. As a result, cumulative government debt reached 121% by the end of the 1980s (versus a cumulative U.S. federal public debt/GNP ration of 31.2% in 1990). However, thanks to Belgium's high personal savings rate, the Belgian Government managed to finance the deficit from mainly domestic savings, which minimized the deleterious effects on the overall economy.

The main objective of Belgian Government economic policy in recent years has been to attain a budget deficit of 3% by the end of 1997, a goal that was successfully attained. This was one of the five criteria for membership into the first-tier group of Economic and Monetary Union (EMU) under the Maastricht treaty. Historically, Belgium has done relatively better on its budget in times of cyclical downswings. The total budget deficit in 1999 (federal, regional plus social security) amounted to 1.2% of GDP. This represents a substantial decrease from the 7.1% deficit recorded in 1992, as well as a significant difference from the expected figure of 2%, well within the Maastricht criterion.

Belgium cannot possibly bring its accumulated debt down from the 1999 level of 113% of GDP to the Maastricht target of 60%. In order to meet the "substantial progress" criterion" for its debt, Belgium has run a substantial primary surplus (excluding interest payments), reaching 6.2% of GDP in 1999.

The Concert of Nations sanctioned the creation of Belgium in 1830 on the condition that the country remain strictly neutral.

During the two World Wars Belgium tried, but was unable, to follow a policy of neutrality. In 1948, Belgium signed the Treaty of Brussels with Great Britain, France, the Netherlands, and Luxembourg, and one year later became one of the founding members of the Atlantic Alliance.

Belgium remains a strong proponent of NATO. It cooperates closely with the United States within the alliance framework, in addition to supporting European defense efforts through the Western European Union (WEU).

At the same time the Belgians, perceiving their diminutive role on the international scene, are strong advocates of strengthening economic and political integration within the EU. Recently, having federalized their own country, many Belgians view themselves as the ultimate "European federalists."

Both NATO (since 1966) and the EU have their headquarters in Brussels; SHAPE (Supreme Headquarters Allied Powers Europe) is in the south of the country, near Mons. Since January 1993, the WEU has been headquartered in Brussels.

Because of its location at the crossroads of Western Europe, Belgium has historically been the route of invading armies from its larger neighbors. With virtually defenseless borders, Belgium has traditionally sought to avoid domination by the more powerful nations which surround it through a policy of mediation.

Belgium actively seeks improved relations with the new democracies of central and eastern Europe through such fora as the Organization for Security and Cooperation in Europe, EU association agreements, and NATO's Partnership for Peace with the former Warsaw Pact countries and several others.

Relations between the United States and Belgium are excellent. Good will and affection for Americans continues as a result of the U.S. role during and after the two World Wars. However, there also is a willingness to criticize U.S. policies and a tendency to adopt a more explicitly European viewpoint on many issues.

As an outward looking nation, Belgium works closely with the United States bilaterally and in international and regional organizations to encourage economic and political cooperation and assistance to developing countries. Belgium has welcomed hundreds of U.S. firms to its territory, many of which have their European headquarters here.

Principal U.S. Officials
Ambassador to Belgium--Paul Cejas
Deputy Chief of Mission, U.S. Embassy--Martin L. Cheshes
Permanent U.S. Representative to NATO (USNATO)--Ambassador Alexander R. Vershbow
Deputy Chief of Mission, USNATO--Douglas L. McElhaney
Ambassador to the European Union--Richard Morningstar
Deputy Chief of Mission, USEU--John Cloud

The U.S. Embassy in Belgium is located at 27 Boulevard du Regent, 1000 Brussels (tel. 02/501-2111, fax 02/511-2725). The European Logistical Support Office (ELSO) is at Norrderlaan 147, Box 12A, 2030 Antwerp (tel. 03/542-4775, fax 03/542-6567).

The U.S. Mission to NATO (USNATO) is at NATO Headquarters, on the Autoroute de Zaventem, 1110 Brussels (tel. 02/724-3111, fax 02/726-5796). The U.S. Mission to the EU is located at 40 Boulevard du Regent, 1000 Brussels (tel. 02/508-2222, fax 02/502-8117).

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