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Diplomacy in Action

Belgium (06/05)


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

Flag of Belgium is three equal vertical bands of black (hoist side), yellow, and red.

PROFILE

OFFICIAL NAME:
Kingdom of Belgium

Geography
Area: 32,547 square kilometers (12,566 sq. mi.), about the size of Maryland.
Cities: Capital--Brussels (pop. 992,041). Other cities--Antwerp (452,474); Ghent (228,016); Charleroi (200,460); Li�ge (184,303); Bruges (116,811); and Namur (105,705).

People
Population (2004): 10,396,421; urban--69%.
Annual population growth rate: 0.4%.
Density: 861 per sq. mi. Linguistic regions--(Dutch-speaking) Flanders 58%; (French-speaking) Wallonia 31.7%; (legally bilingual) Brussels Capital Region 9.6%; German-speaking 0.7%.
Religions: Predominantly Roman Catholic, with Protestant, Jewish, Muslim, Anglican, Greek and Russian Orthodox, as well as secularism, "recognized" religions receiving government subsidies.
Languages: Dutch, French, German.
Education: Literacy--98%.

Government
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 and government for regional and community affairs; Walloon Regional Parliament and government for Walloon regional affairs; Francophone Community Parliament and government for Francophone community affairs; Brussels Regional Parliament and government for Brussels regional affairs; and German-language Community Parliament and government for community affairs.
Major political parties: Christian Democratic, Liberal, Socialist, Green, Vlaams Belang.
Suffrage: Over 18, compulsory.
Political subdivisions: Ten provinces, three regions, three communities, 589 municipalities.

Economy
GDP (PPP) (2004 est.): $355.5 billion.
Annual real growth rate (2004): 2.7%.
Per capita income (PPP) (2004): $34,518.
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: (24% of GDP) Types--machinery, iron, coal, textiles, chemicals, glass, pharmaceuticals, manufactured goods.
Trade (2003 est.): Exports--$189.2 billion: Iron and steel, coal, transportation equipment, tractors, diamonds, petroleum products. Imports--$173 billion: Fuels, chemical products, grains, foodstuffs. Trading partners--EU 74%; United States 6%.

GEOGRAPHY AND PEOPLE
Belgium is located in Western Europe, bordered by the Netherlands, 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 100�F.

Geographically and culturally, Belgium is at a 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.

Belgium is divided ethnically into the Dutch-speaking Flemings and French-speaking Walloons, the 70,000 residents of the eastern German cantons, and the bilingual capital of Brussels. The population density is the second highest in Europe, after the Netherlands.

HISTORY
Belgium derives its name from the Belgae, a Celtic tribe. 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, the great cities of 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 castle walls throughout Europe.

Following the French Revolution, Belgium was invaded and annexed by Napoleonic France in 1795. Following the defeat of Napoleon's army at the Battle of Waterloo, fought just a few miles south of Brussels, Belgium was separated from France and made part of the Netherlands by the Congress of Vienna in 1815.

In 1830, Belgium won 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 Germany in 1914 and again in 1940. Those invasions, 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 British, Canadian, and American armies liberated Belgium, the country has lived in security and at a level of increased well-being.

Language, economic, and political differences between Dutch-speaking Flanders and Francophone Wallonia have led to increased divisions in Belgian society. The Industrial Revolution of the late 18th and the 19th century accentuated the linguistic 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. The last 50 years have marked the rapid economic development of Flanders, resulting in a corresponding shift of political and economic power to the Flemish, who now constitute an absolute majority (58%) of the population.

Demonstrations in the early 1960s led to the establishment of a formal linguistic border in 1962, and elaborate rules made to protect minorities in linguistically mixed border areas. In 1970, Flemish and Francophone cultural councils were established with authority in matters of language and culture for the two-language groups. Each of the three economic regions--Flanders, Wallonia, and Brussels--was granted a significant measure of political autonomy.

Since 1984, the German language community of Belgium (in the eastern part of Li�ge Province) has had its own legislative assembly and executive, which have authority in cultural, language, and subsequently educational affairs.

In 1988-89, the Constitution was again amended to give additional responsibilities to the regions and communities. The most sweeping change was the devolution of educational responsibilities to the community level. As a result, the regions and communities were provided additional revenue, and Brussels was given its own legislative assembly and executive.

Another important constitutional reform occurred in the summer of 1993, changing 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 community and regional legislative councils. The bilingual Brabant province, which contained the Brussels region, was split into separate Flemish and Walloon Brabant provinces. The revised Constitution came into force in 1994.

A parliamentary democracy, Belgium has been governed by successive coalitions of two or more political parties. The centrist Christian Democratic Party often provided the Prime Minister. The June 13, 1999 general election saw a significant drop in overall Christian Democratic support. Driven in part by resentment over a mishandled dioxin food-contamination crisis just before the June 1999 election, Belgian voters rejected Jean Luc Dehaene's longstanding coalition government of Christian Democrats and Socialists and voted into power a coalition led by Flemish Liberal Leader Guy Verhofstadt. The first Verhofstadt government (1999-2003) was a six-party coalition between the Flemish and Francophone Liberals, Socialists, and Greens. It was the first Liberal-led coalition in generations and the first six-party coalition in 20 years. It also was the first time the Greens had participated in Belgium's federal government. In the most recent general election in May 2003, the Greens suffered significant loses, while the Socialists posted strong gains and the Liberals also had modest growth in electoral support. Liberal Prime Minister Guy Verhofstadt reconstituted the coalition as a four-party government in July 2003, with only the Liberals and Socialists in power.

GOVERNMENT AND POLITICAL CONDITIONS

National Government
Belgium is a hereditary constitutional monarchy. The current monarch is King Albert II, who took the oath of office on August 9, 1993.

As titular head of state, the King plays a largely ceremonial and symbolic role in the nation. His primary political function is to designate a political leader to attempt to form a new cabinet following either an election, the resignation of a government, or a parliamentary vote of no confidence. The King 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 House of Representatives has 150 directly elected members. The Senate has 71 elected members. The executive branch of the government consists of ministers and secretaries of state (junior ministers) drawn from the political parties that form the government coalition. The number of ministers is limited to 15, and they have no seat in Parliament. The Council of Ministers is chaired by the Prime Minister and consists of the ministerial heads of the executive departments.

The allocation of powers between the Parliament and the Council of Ministers is somewhat similar to 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" body 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 limited range of matters, including constitutional reform bills and international treaties.

The largest parties in the current Chamber are the Flemish Liberal Party (VLD), 25 seats; the Francophone Socialists (PS), 25 seats, the Francophone Liberals (MR), 24 seats; the Flemish Socialists and Spirit alliance (SP.A/Spirit), 23 seats, the Flemish Christian Democratic party (CD&V), 21 seats; the right-wing Vlaams Belang party (VB), 18 seats; and the Francophone Christian Democrats (CDH) 8 seats. The Francophone Greens (ECOLO), have 4 seats, while the New Flemish Alliance (NV.A) and Francophone Front National each have 1 seat. The Flemish Greens (AGALEV -- now Groen!) did not win any Chamber seats in the 2003 election, but have one "co-opted" Senator (see below) as a result of an agreement with the Flemish Socialist Party.

The Prime Minister and his ministers administer the government and the various public services. Ministers must defend their policies and performance in person before the House.

The Council of Ministers
At the federal level, executive power is wielded by the Council of Ministers. The Prime Minister chairs the Council. Each minister heads a governmental department. No single party or party "family" across linguistic lines holds an absolute majority of seats in Parliament. Consequently, the Council of Ministers reflects the weight of political parties that constitute the governing coalition for the House, currently the four-party Liberal-Socialist coalition.

Principal Government Officials
Prime Minister--Guy Verhofstadt
Deputy Prime Minister, Minister of Justice--Laurette Onkelinx
Deputy Prime Minister, Minister of Finance--Didier Reynders
Deputy Prime Minister, Minister of Budget and Public Enterprise--Johan Vande Lanotte
Deputy Prime Minister, Minister of Interior--Patrick Dewael
Minister of Foreign Affairs--Karel De Gucht
Minister of Defense--Andre Flahaut
Minister for the Economy, Energy, Foreign Trade, and Science Policy--Marc Verwilghen

Ambassador to the United States--Frans van Daele
Ambassador to the United Nations--Johan Verbeke

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 House of Representatives is constitutionally set at 150, elected from 11 electoral districts. Each district is given a number of seats proportional to its total population (not number of eligible voters) ranging from 4 for the Luxembourg district to 24 for Antwerp. The districts are divided along linguistic lines: 5 Flemish, 5 Walloon, and the bilingual district of Brussels.

The Senate consists of 71 seats. For electoral purposes, Senators are divided into three categories: 40 directly elected; 21 elected by the community parliaments; and 10 "co-opted" Senators. For the election of the 25 Flemish and 15 francophone directly elected Senators, the country is divided into three electoral districts--Flanders, Wallonia, and the Brussels Capital Region. Of the 21 Senators representing the communities, 10 are elected by the Flemish Parliament, 10 by the French Community Parliament, and 1 by the German-language Parliament.

The remaining category, the 10 "co-opted" senators, are elected by the first two groups of senators. The princes and princesses of the royal line are also members of the Senate--currently Prince Phillippe, Prince Laurent, and Princess Astrid.

In Belgium, there are no "national" parties operating on both sides of the linguistic border. Consequently, elections are a contest among Flemish parties in Dutch-speaking Flanders and Francophone parties in Wallonia. Only in officially bilingual Brussels can voters choose from either Flemish or Francophone parties. Several months before an election, the parties form a list of candidates for each district. Parties are allowed to place as many candidates on their "list" 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, or how many individual votes a candidate receives, determines whether a candidate is elected. Since no single party holds an absolute majority in Parliament, after each election the strongest party or "party family" will create a coalition with other parties to form the government. Voting is compulsory in Belgium; more than 90% of eligible voters participate.

Belgium has 25 seats in the European Parliament in Strasbourg.

Belgium's Linguistic Divide
In August 1980, the Belgian Parliament passed a devolution bill and amended the Constitution, establishing "Community autonomy." As a result, in Flanders, the Flemish Parliament and government are competent for both regional and community affairs; in Wallonia, the Francophone Community Parliament and government are competent for community affairs, while the Walloon Regional Parliament and government are responsible for regional affairs. Subsequent constitutional reform established a community Parliament and government governments for the German-speaking cantons in 1983, and a regional Parliament and government for the Brussels Capital Region in 1989.

The regional and community governments have jurisdiction over transportation, public works, water policy, cultural matters, education, public health, environment, housing, zoning, economic and industrial policy, agriculture, foreign trade, and oversight of provincial and local governments. They rely on a system of revenue sharing with the federal government for most of their funds. They have the authority to levy taxes (mostly surcharges) and contract loans. Moreover, they have obtained 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.

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. Each governor is supported by an elected Provincial Council of 47 to 84 members (depending on the size of the province), which sits only four 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 originate from municipal political bases; and many often double as mayor or alderman in their hometowns in addition to their federal and regional political positions.

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 and the Liberal Party. In the late 19th century the Socialist Party arose, representing the emerging industrial working class. These three groups still dominate Belgian governments, but they have evolved substantially in character and face new electoral challengers.

The Christian Democratic Parties. After World War II, the Catholic (subsequently Christian Democratic) Party severed its formal ties with the Church. It became a mass party of the center (more like a political party in the United States). In 1968, the Christian Democratic Party responded to linguistic tensions in the country by dividing into two independent parties, now known as the Center Democratic and Humanistic (CDH) in Francophone Wallonia and the Flemish Christian Democrats (CD&V) in Flanders. The two parties share similar policies but maintain separate organizations.

The Socialist Parties. The modern Belgian Socialist parties are labor-based parties. Despite the post-World War II dominance of the Christian Democrats, the Socialists headed several postwar governments. The Socialists also split along linguistic lines in 1978. The francophone Socialists dominate the cities and towns of Wallonia and Brussels. The Flemish Socialists' support is less concentrated.

The Liberal Parties. Liberal Parties in Belgium have chiefly appealed to business people, property owners, shopkeepers, and the self-employed. In American terms, the Liberals' positions could be considered to reflect a more conservative economic ideology. The two current Liberal parties were formed in 1971, after the original all-Belgium Liberal Party split along linguistic lines. They are the Flemish Liberals and Democrats (VLD) (Prime Minister Verhofstadt's party) in Flanders and the Reform Movement (MR) in Wallonia.

Greens. The Flemish (Groen!) and Francophone (ECOLO) ecologist parties made their Parliamentary breakthrough in 1981. Following significant gains in the 1999 general elections, the two Green parties joined a federal coalition cabinet for the first time in their history in Prime Minister Verhofstadt's first six-party coalition government. The parties experienced significant losses in the May 2003 election, however; with ECOLO winning only four seats in the House and AGALEV failing to win any seats. They were thus excluded from the new coalition formed by returning Liberal Prime Minister Verhofstadt in 2003. Following the election, AGALEV changed its name to "Groen!."

The Linguistic Parties. A postwar phenomenon in Belgium was the emergence of linguistic-based parties, which were formed to defend the cultural, political, and economic interests of one of the linguistic groups or regions of Belgian society.

The far-right Vlaams Belang (Flemish Interest) is the most militant Flemish regional party, with a separatist, anti-immigration, law and order platform. The Vlaams Belang was formerly called the Vlaams Bloc, until a 2004 high-court ruling confirmed a lower court verdict that the Bloc was a "racist" party. Faced with further legal problems, the Bloc disbanded and resurrected itself as the Vlaams Belang, with the same party leaders but a less radical party policy. Late 2004 polls showed the Vlaams Belang as the most popular political party in Flanders. Its predecessor, the Vlaams Blok, had broken out of its "fringe" party status in the 1991 federal election, when it posted significant electoral support in much of Flanders, especially Antwerp. The Bloc continued to gain in popularity in each successive federal and regional election. In the 2004 regional elections, the Bloc received 24% of the votes in Flanders, with only the alliance of CD&V and NVA winning more votes at 26.3%.

In Wallonia, the small Francophone nationalist Front National (FN) surprised many political pundits by gaining enough votes in the May 2003 federal election to survive the new 5% cutoff limit for votes in any precinct required to enter Parliament. FN retained its 1 Chamber seat and gained 2 new Senate seats.

The now-defunct Volksunie Party (VU) was the most militant Flemish regional party in Parliament in the 1950s and 1960s, drawing nearly one-quarter of Belgium's Dutch-speaking electorate at the height of its popularity. However, as much of the VU's nationalist agenda was realized through subsequent Constitutional reforms that saw the devolution of significant power to the Regions, the VU suffered severe setbacks in more recent elections, winning only 8 seats in the 150-seat Chamber in 1999. In 2001, Volksunie splintered into a traditional Flemish nationalist faction, the NVA (currently in alliance with the CD&V since before the 2004 regional election), and a more liberal faction, Spirit (in an electoral alliance with the Flemish Socialist Party since before the 2003 federal election).

Labor Unions
Belgium is a highly unionized country, and organized labor has been a powerful influence in politics, although less so in recent elections. About 53% of all private sector and public service employees are labor union members. Unlike many American unions, Belgian labor unions take positions on a wide range of political issues, including 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 and health insurance programs.

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). Until the 1950s, the FGTB/ABVV was the largest confederation; since then, however, the CSC/ACV has become the leading trade union force.

The Confederation of Catholic Labor Unions (CSC/ACV). Organized in 1912, the CSC/ACV rejected 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 (CD&V and CDH) but exercises influence in their councils. The CSC/ACV is the leading union in all Flemish provinces and in Wallonia's Luxembourg province. It has almost equal strength with the socialist confederation in the Brussels area.

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 Confederation of Liberal Labor Unions (CGSLB/ACLVB). With 240,000 members, this is the smallest of the major union groups. Drawing primarily from management positions, the Brussels-based CGLB/ACVB is Belgium's most pro-business union. The union is not formally affiliated with any political party.

Current Issues
Belgium is a member of the European Economic and Monetary Union. Budgetary issues remain a key concern of the Verhofstadt government, particularly given the slow economic growth Belgium and most of Europe have experienced of late.

As a result of bills enacted in 2001, control over local government, agriculture, and foreign trade was devolved from the federal to the regional governments. The Verhofstadt I government (1999-2003) also implemented justice and police reforms. An integrated federal police force is now fully operational. Also under that government, a liberal euthanasia bill came into force in fall 2002, and the legality of gay marriages came into effect in early 2003.

During the second half of 2001, Belgium held the EU Council Presidency. As EU President, Belgium helped boost the issue of EU enlargement, culminating in the Laeken Summit in December 2001, when the EU named the 10 countries that subsequently became EU members in 2004. Belgium also successfully chaired the Eurogroup in 2001, which played a key role in helping the EU work through the economic and financial issues related to the launching of the Euro currency.

Belgium's reaction to the September 11, 2001 terrorist attacks was strong and supportive. For example, Belgium played a key role in helping to obtain EU-wide agreement on a European arrest warrant and in facilitating extradition of terrorist suspects. In support of Operation Enduring Freedom, Belgium contributed a navy frigate in the Mediterranean, AWAC crews for surveillance flights over the United States, as well as aircraft for humanitarian assistance to Afghanistan. Belgium has contributed ground troops to ISAF since 2002 and provides humanitarian and reconstruction assistance to both Afghanistan and Iraq.

Current issues before the Verhofstadt government include job creation, having promised to create 200,000 new jobs; election reform; modernizing the civil service; dealing with rising health care costs; and adjusting the federal social security system to a rapidly aging population. The Government is also in the process of reforming the armed forces. The military seeks to increase its rapid reaction and peacekeeping competencies by improving efficiency.

Belgium is increasing its counter-terrorism capabilities by adding domestic legislative, judicial, intelligence, and law enforcement tools that increase its ability to prevent or respond to terrorism. The government also cooperates with other European states and the United States in investigating cases of international terrorism. A Brussels trial of al-Qaida-related defendants ended in September 2003 with sentences for 18 of the 23 accused, with another 2004 terrorist-related trial resulting in 8 more guilty verdicts. Belgium operates within UN and EU frameworks concerning the freezing of terrorist assets, but has yet to develop a domestic legal framework to act independently.

ECONOMY
Belgium, a highly developed market economy, belongs to the Organization for Economic Cooperation and Development (OECD), a group of leading industrialized democracies. With a geographic area about equal to that of Maryland, and a population of just over 10 million, Belgian per capita GDP ranks among the world's highest. In 2004, the per capita income (PPP) was $34,518. The federal government has managed to present balanced budgets in recent years, but public debt remained high, at 96% of GDP in 2004. GDP growth in 2004 was 2.7%, above the Euro-zone average.

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 present-day European Union to integrate European economies further.

With exports equivalent to over two-thirds of GNP, Belgium depends heavily on world trade. 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 semi-finished goods that are further processed and re-exported. 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 74.6% 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. As 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 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 sent the economy into a period of prolonged recession. In the 1980s and 1990s, the economic center of the country continued to shift northward to Flanders.

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 now have substantial autonomy in courting potential foreign investors, as each deems appropriate.

More than 1,400 U.S. firms invested over $25 billion in Belgium by 2003. U.S. and other foreign companies in Belgium account for approximately 11% of the total work force, with the U.S. share at about 6%. U.S. companies are heavily represented in the chemical sector, 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.

Monetary
On May 1, 1998, Belgium became a first-tier member of the European Monetary Union. Belgium switched from the Belgian franc (BF) to the Euro as its currency after January 1, 2002.

Trade
About 75% of Belgium's trade is with fellow EU member states. Given this high percentage, Belgium seeks to diversify and expand trade opportunities with non-EC countries. Belgium ranks as the 11th-largest market for the export of U.S. goods and services. If goods in transit to other European countries are excluded, Belgium 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. As a result, the U.S. Government focuses its market-opening efforts on the EU Commission and larger member states. Moreover, the Commission negotiates on trade issues for all member states, which, in turn lessens bilateral trade disputes with Belgium.

Employment
The social security system, which expanded rapidly during the prosperous 1950s and 1960s, includes 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. 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.

Belgium's unemployment rate was 8.0% in 2004. A total of 4.4 million people make up Belgium's labor force. The majority of these people (73%) work in the service sector. Belgian industry claims 25% of the labor force and agriculture only 2%. As in other industrialized nations, pension and other social security programs have become a major concern as the "baby boom" generation approaches retirement.

Budget
Although Belgium is a wealthy country, it overspent income and under-collected taxes for years. The Belgian Government reacted with poor macroeconomic policies to the 1973 and 1979 oil price hikes: hiring the redundant work force into the public sector and subsidized ailing industries like coal, steel, textiles, glass, and shipbuilding in order to prop up the economy. As a result, cumulative government debt reached 121% of GDP by the end of the 1980s. However, thanks to Belgium's high personal savings rate, the Belgian Government financed the deficit from mainly domestic savings, minimizing the deleterious effects on the overall economy.

The federal government ran a 7.1% budget deficit in 1992 at the time of the EU's Treaty of Maastricht, which established conditions for Economic and Monetary Union (EMU) that led to adoption of the common Euro currency on January 1, 2002. Among other criteria spelled out under the Maastricht treaty, the Belgian Government had to attain a budget deficit of 3% by the end of 1997; Belgium achieved this, with a total budget deficit in 2001 (just prior to implementation of the Euro currency) that amounted to 0.2% of GDP. The government has balanced the budget every year since. Belgium's accumulated debt remains high, at 96% of 2004 GDP.

FOREIGN RELATIONS
The Concert of Nations sanctioned the creation of Belgium in 1830 on the condition that the country remains strictly neutral. During the two World Wars Belgium tried, but was unable to follow a policy of neutrality due to the German invasions. In 1948, Belgium signed the Treaty of Brussels with Great Britain, France, the Netherlands, and Luxembourg, and a year later became one of the founding members of NATO.

Belgium remains a strong proponent of both NATO and European defense efforts. Belgium also is a strong advocate of strengthening economic and political integration within the EU. 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, NATO's military headquarters) is in the south of the country, near Mons.

Belgium supported the expansion of NATO and EU membership to the new democracies of central and eastern Europe and is actively engaged in the Organization for Security and Cooperation (OSCE) in Europe. Belgium will hold the Chairmanship of the OSCE in 2006.

U.S.-BELGIAN RELATIONS
The United States and Belgium are good friends and allies, despite occasional disagreements on a limited number of foreign policy issues. Good will and affection for Americans continues as a result of the U.S. role during and after the two World Wars, most recently exhibited during the 60th anniversary commemorations of the Battle of the Bulge and the liberation of Belgium in 2004.

The U.S. appreciates Belgian activism in international affairs including its participation in the International Security Assistance Force in Afghanistan, its early 2004 support for NATO air policing over the new NATO Baltic members, peacekeeping missions in the Balkans, and its frequent provision of airlift in international crises. The U.S. continues to believe that Belgium could be even more active in sharing the international security burden.

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 there.

Principal U.S. Embassy Officials
Ambassador--Tom C. Korologos
Deputy Chief of Mission--William Imbrie
Political Counselor--Theodore H. Andrews
Economic Counselor--Terri L. Robl
Management Counselor--Kathleen Austin-Ferguson
Commercial Counselor--Camille Sailer
Regional Security Officer--Darwin D. Cadogan
Public Affairs Counselor--Chris Rochester
Consul--Hale C. VanKoughnett

The U.S. Embassy in Belgium is located at 27 Boulevard du R�gent, 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 Consular section in Brussels is located at 25 Boulevard du R�gent.

U.S. Mission to NATO
Permanent U.S. Representative to NATO (USNATO)--vacant
Charg� d'Affaires, a.i., USNATO--John M. Koenig

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).

U.S. Mission to the EU
Ambassador to the European Union--vacant
Deputy Chief of Mission, USEU--Mike McKinley

The U.S. Mission to the EU is located at 15, rue Zinner, 1000 Brussels (tel. 02/508-2222, fax 02/514-4339).



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