The Flemish conservative party CD&V, led by Wouter Beke, agreed on Wednesday (20 July) to join government-building talks without the NV-A, a nationalist party whose long-term ambition is to separate Flanders from Belgium.
The announcement, which came on the eve of Belgium's national day, was met with criticism from the N-VA, which said it was "very disappointed" by what it described as a "last-minute about turn".
The move is a U-turn for the CD&V. The centre-right party has so far insisted on the NV-A's participation in government talks, fearing that the separatist party would gain even more votes at its own expense if new elections were held.
Led by charismatic leader Bart De Wever, the N-VA became the biggest political force in Flanders after the June 2010 general election but has so far refused to enter government, arguing that proposed state reforms did not go far enough in devolving more powers to the regions.
The CD&V's move also came with strings attached. Speaking on television, leader Wouter Beke said the party would only enter a government if a solution were found to split the so-called 'Brussels-Hal-Vilvoorde' electoral district surrounding Brussels. Although it is situated on Flemish territory, the BHV district is bilingual and voters there enjoy special privileges, like being able to cast their ballot in French.
"When we have divided BHV, when we have resolved this problem, it will be a sign of trust and we can negotiate a government," Beke said on television.
Elio Di Rupo, the francophone socialist leader appointed by the King to lead coalition talks, is planning to hold a meeting on Thursday with the leaders of eight political parties – both French and Dutch-speaking – that could form the next government.
In a note to the King at the beginning of July, Di Rupo made concessions on the BHV issue but the proposals were rejected by the N-VA, which claimed they did not go far enough.
King's warning: Belgium's international role may suffer
King Albert II had earlier warned in a televised address that failure to form a government more than one year after the June 2010 general election was threatening the country's well-being and international standing.
"Our current situation causes concern for our partners, which can damage our role in Europe and even the momentum of European unification, which is opposed by Eurosceptics and populists," King Albert said. Belgium is home to European Union institutions and the headquarters of military alliance NATO.
The failure to form a new government and a public-sector debt burden of around 97% of annual economic output have also pushed up Belgium's borrowing costs.
Belgium came under fire in financial markets late last year when Standard & Poor's warned it might cut the country's AA+ credit rating, a negative outlook matched by Fitch in May.