A Bitter Cure

The medicine of austerity

"Belgium has become, like the Ottoman Empire before 1914, the sick man of Europe." That characterization, by the French daily Le Monde, might once have seemed ridiculous for a country whose postwar prosperity nourished one of the highest standards of living in Western Europe. But while a succession of revolving-door governments (32 in 38 years) grappled with endemic linguistic feuds between Dutch-speaking Flanders and French-speaking Wallonia, a reluctance to give up the good life pushed the country beyond its means. Soaring wage costs drove out foreign investors, unemployment rose to 12.5%, and runaway government spending set the divided nation on a course toward insolvency.

Last week Prime Minister Wilfried Martens, 45, a Ghent lawyer who has led five coalition governments in three years, began to administer bitter economic medicine to reverse the country's decline. He secured emergency powers for one year to establish economic reforms by royal decree, rather than through parliament. Martens announced an 8.5% devaluation of the franc and, most important, suspended Belgium's system of indexing all wages to inflation. "This is the tenth time in Belgian history that the government has been given special powers by the King," Martens told TIME Correspondent Sandra Burton. "Many of the other occasions were times of war, and I consider this period to be war in terms of the economic problems we face."

Martens' aim is to bring Belgium's high labor costs and overly protective practices into line with those of other European countries. Surprisingly, the nation's aggressive unions reacted with restraint. "Devaluation is a fact," said Georges Debunne, secretary-general of the Socialist-led Federation Generate du Travail de Belgique. "We must do everything to make it succeed."

Instead, the unions directed their wrath toward the European Community, which last week issued an important rebuff to a Belgian plan to restructure the nation's archaic steel industry at a cost of $1.1 billion and 5,000 lost jobs. Two major trade unions in Wallonia promptly began a weeklong series of strikes and demonstrations.

Martens fears that the Community decision could revive the smoldering cause of linguistic separatism because the ailing steel industry is concentrated in French-speaking Wallonia. Says he: "All the tensions surrounding the regional balance in the country have been provoked again." That, in turn, could threaten the :ntire recovery program. Martens' four previous governments collapsed over linguistic or economic disputes.

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