Crisis talks as row threatens break-up of Belgium

Belgium's political leaders were in negotiations yesterday to resolve a fresh dispute between its Dutch-speaking Flemish majority and French-speaking minority that threatens to break up the country.

Yves Leterme, a Flemish Christian Democrat and prime minister for four months, plunged the country into crisis late on Monday by offering to resign over irreconcilable differences between prosperous Flanders in the north and stagnating Wallonia in the south.

Yesterday King Albert II, who has so far refused to accept Leterme's resignation, met at least half a dozen party leaders from both sides of the linguistic and economic divide in an effort to find a way out of the crisis. He is due to meet union leaders later today.

His goal, Belgian commentators say, is to persuade Leterme to form a new coalition government to deal with the country's growing economic problems. Last month Belgian inflation hit 5.8%, the second highest in the 15-nation eurozone.

Leterme's party, which emerged as the strongest in the June 2007 general election, has disavowed the efforts of its leader to persuade the Francophone Walloons to agree to more socioeconomic powers for Flanders. It met last night to debate the king's favoured scenario.

Albert II, who hopes to find a political solution by Monday, Belgium's national day, would entrust Leterme with the task of heading a federal government with socioeconomic powers, observers say. The regional leaders of Flanders, Wallonia and Brussels, the EU capital and a largely French-speaking enclave within Flanders, would then convene in the autumn to thrash out a reform of the federal state - greater devolution of powers and constituency boundary changes.

The alternatives would be to find a new prime minister, most likely Didier Reynders, the finance minister and Leterme's deputy, who has said he does not want the job; or to hold a general election in October, months before regional and European parliament elections next June, which could destabilise any new government.

Belgium has suffered a spate of political crises as the Flemish, who contribute two-thirds of the country's GDP, have become increasingly resentful of their fiscal subsidies to the poorer south. Flemish business executives openly campaign for the country's break-up but other political and business leaders say it is imperative that a country that has fervently supported a federal Europe remain united.