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Leterme government fate in King Albert II's hands


Latest update : 2008-12-22

Belgium's King Albert II has deferred any decision to accept a resignation offer by Prime Minister Yves Leterme, after his government was implicated in a legal scandal following the breakup of Fortis bank.


REUTERS  - Belgium was left scrambling for political leadership for the third time in a year on Saturday after the government collapsed following its botched attempt to bail out troubled financial group Fortis.


Prime Minister Yves Leterme tendered his government's resignation on Friday after a damning report by the Supreme Court found signs of political meddling to sway a court ruling on the future of the bank, a victim of the credit crunch.


Belgium's King Albert, who under the constitution must decide whether to accept the resignation, held late-night talks with Leterme in the palace about the resignation offer on Friday but deferred any immediate decision.


"We'll have to look at how we assure stability in our country -- political stability we don't have at the moment," Finance Minister Didier Reynders said.


Leterme has been in power only for nine months as leader of a fragile, five-party coalition meant to ease a dispute between Belgium's linguistic groups that had reignited speculation the 178-year-old country could break up.


Opposition parties demanded fresh parliamentary elections, although analysts doubted the ruling parties in Leterme's coalition will want to test voters just as Belgium slips into recession, and with the Fortis debacle fresh in their minds.


Leterme denied accusations he had sought to influence an appeal court which last week upheld a challenge by shareholders to a state-led carve-up of the bank, but acknowledged that the Supreme Court's findings made his position untenable.


"I trust the parliamentary investigation committee that is to be set up will bring to light the facts as they occurred and establish the truth," he said in a statement.


Leterme tendered his resignation a first time in July after failing to break a political deadlock among the country's Dutch- and French-speaking groups, but the king refused it that time.


A year ago, the king brought back former premier Guy Verhofstadt to head a caretaker government after Leterme had failed to form a coalition following June elections.


It might be harder for Leterme to remain in power on this occasion, with analysts suggesting he was unlikely to feature in any new cabinet.


His government was accused of seeking to influence the verdict of the Brussels appeal court, which last week froze the state-led carve-up of Fortis and part sale to France's BNP Paribas.


The government still needs to push through parliament a key deal to boost the economy, which is widely expected to contract in the fourth quarter.


It also has important legislation on wages awaiting approval and needs to find some way of resolving the debacle surrounding Fortis, Belgium's largest private sector employer.


Leterme came to power in March after nine months of deadlock over the extent that powers should be devolved to Belgium's regions -- a key demand for Dutch-speaking Flemish parties.


He comes from an area known for its support for Flemish independence, but nevertheless straddles the linguistic divide in having a Flemish mother and Walloon father and supporting the Standard de Liege, a French-speaking football club.


Date created : 2008-12-20