Belgium political crisis eases, talks to resume

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BRUSSELS, Sep 29 (Reuters) Belgium's political crisis eased today after a mediator reported back to King Albert II that once-warring Flemish and francophone parties had found sufficient common ground to resume coalition talks.

Belgium is still without a new government 111 days since the June 10 federal election despite a series of attempts by senior politicians to bridge the gap between the parties of the Dutch-speaking region of Flanders and of francophone Wallonia.

Parliamentary speaker Herman Van Rompuy, a veteran Christian Democrat, appears to have succeeded as a background negotiator in his month since being appointed mediator by the king.

In a brief statement, the royal palace said Van Rompuy had reported his findings back to the king today afternoon.

''It appears that there are sufficient elements of convergence to allow negotiations to be resumed under the leadership of a formateur,'' the palace said.

The ''formateur'', the person charged by the king with forming a government, is widely expected to be Christian Democrat leader and former premier of Flanders, Yves Leterme, who has already failed once to build a coalition.

Leterme's Flemish Christian Democrats emerged as the clear winners of the June election, but their key demand to devolve more powers has met with stern opposition from French-speakers, including their francophone centrist allies.

Certain barbed comments and a refusal to sing the national anthem have also not endeared Leterme to those outside Flanders.

BREAK-UP The impasse prompted media to speculate that the 177-year-old nation might be better off breaking apart.

Newspaper articles have regularly described the merits and pitfalls of separation, while the peaceful ''velvet divorce'' of Czechoslovakia has been cited as a possible model to follow.

Investors too have sensed the crisis, scurrying out of the country's debt. That sent the spread between yields on Belgian government bonds and those on benchmark German bonds to their widest level in five years a week ago.

Assuming he is indeed asked to form a government, Leterme would once again seek to forge a four-way centre-right alliance of Christian Democrats/Centrists and Flemish and francophone Liberals.

Leterme wants Belgium's regions, and notably Flanders, to control their own work promotion schemes to be able to vary taxes, but has not called for the country to break up.

Belgium's regions and linguistic communities already rule over transport, housing, agriculture, education and culture.

Most Belgians favour keeping the country together, although more than 40 percent in Flanders favour independence for their region.

Reuters MP VP0155

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