Belgium.

Capital: Brussels

Head of State: King Albert II (since August 1993). Inherited title that is mostly ceremonial

Head of Government: Prime Minister Guy Verhofstadt (since July 2003) The leader of the party with the most seats in the Chamber of Deputies is appointed by the monarch

Parliament: Two houses--the Chamber of Deputies (150 seats) and the Senate (71 seats). Deputies are elected by proportional representation to serve four-year terms; among Senators, 40 members are directly elected by popular vote, 31 are indirectly elected.

POLITICS

Language is a complicating factor in Belgium. the country is a federal state consisting of three regions: Flanders in the north where the official language is Dutch; Wallonia in the south where French is the official language and Brussels, the capital, where French and Dutch share official language status. There is also a small German-speaking minority of some 70,000 in Wallonia.

There are now three levels of government (federal, regional, and linguistic community) with a complex division of responsibilities; this reality creates six governments each with its own legislative assembly.

National governments are nearly always coalitions; the current one has the Socialists and Liberals cooperating with Flemish Liberal Guy Verhofstadt as prime minister. Between them the. parties have around two-thirds of the seats in parliament. The Green Party, which was a member of the previous coalition, retained only four seats in the 2003 elections. The government's primary objective is raising employment, but it is somewhat hamstrung by lack of money.

The far-right Vlaams Blok, which wants Flemish independence, caused shockwaves by winning nearly a fifth of the vote in Flanders and more than 10 percent of the vote nationally. Other mainstream parties pursue a policy of having no dealings with the bloc.

Mr. Verhofstadt's first term in office, which' began in 1999, saw tax cuts, slow growth, high unemployment, and problems with balancing the budget. It also saw some controversial moves such as the legalization of euthanasia. Mr Verhofstadt promises further tax cuts, a balanced budget and reforms to the county's bureaucracy.

ECONOMY

This modern, private enterprise economy has made the most of its central geographic location, highly developed transport network, and diversified industrial and commercial base. Industry is concentrated mainly in the populous Flemish area in the north. With few natural resources, Belgium must import substantial quantities of raw materials and export a large volume of manufactures, making its economy unusually de pendent on the state of world markets. Analysts are forecasting a gradual economic improvement in 2004. The government is expected to run small budget deficits until at least 2005 that will add to the already large accumulated debt.