Belgium, my country, has been living in denial

Jean-Michel Paul

There was a time when Belgium was at Europe’s vanguard. It was the second country in the world to industrialize, the founder of art deco and surrealism, and a producer of Nobel scientists who discovered — among other things — the God particle.
I was born and bred in this country, but I fear we are now trailblazing a much less positive path for Europe.
Although IS has claimed responsibility for terrorist attacks in Brussels, they were also symptoms of a profoundly Belgian failure. The institutions of a well- policed and efficiently governed state have been evaporating for decades.
Belgium has been torn by the demands of its warring Flemish- and French-speaking communities. At the same time it has been squeezed by an ambitious European project that subsidized and empowered the country’s regions at the expense of the state. Belgian institutions were left hollowed out, impotent to address the strains of immigration and incompetent to penetrate a rising extremist threat.
This is at root a story of failed investment in all forms of capital — physical, human and institutional. For election cycle after election cycle, politicians squandered the wealth of the state to buy their way back to power. Investment became superfluous, vote-buying and social spending the priority. Belgian voters, who allowed this state of affairs to persist, share some of the blame.
When Belgium’s ironworks and coal mines were closed, governments preferred to deny the inevitable outcome and borrow to subsidize these loss-making industries. The nation’s public debt burden soared to a peak of 140 percent of gross domestic product. Rather than meet debt reduction requirements for joining the new euro currency in the 1990s, Belgium’s government chose to fudge budgets, airbrush statistics, sell assets at fire-sale prices and bring critical investment to a standstill. The result was catastrophic.
Public spending on investment fell by more than half, to just above 2 percent of GDP, from 5 percent in 1980. At first, the effects could be ignored, because Belgium was able to rely on past stock, but that cushion disappeared long ago.
For 30 years, there has been talk of building a Brussels commuter train service, similar to the RER in Paris or London’s new Crossrail. The land was bought, but the track remains half- built. Nor have we maintained the infrastructure we have. Potholes on the highways routinely force four bands of traffic to cram into one. Museum roofs leak while masterpieces stand unprotected. Recently, the tunnels of the capital’s main traffic artery were closed for months, because 20 years without proper maintenance had left them a safety hazard.
Funds were available for all of these priorities, but politicians funneled the money elsewhere. Social transfers, a sure vote winner, increased from to 30.7 percent of GDP in 2014, from 23.5 percent in 1980. The increase, went to handouts such as lifelong unemployment benefits and early-retirement pensions starting at 50.
As if that wasn’t enough, Belgium’s political parties divided public sector employment between them. To be a journalist in the public television station, one needs to have a political party affiliation. The same goes for even minor jobs at the municipal level. Political connections, rather than merit or hard work determined advancement.
Brussels, my city, was worst affected. Unable to agree on a peaceful divorce, because both sides claimed the capital, French-speaking Wallonia and Flemish-speaking Flanders plundered it. Brussels may be Europe’s third wealthiest region in per capita terms, providing a fifth of Belgian GDP, but it can only collect taxes from its residents, not from the many workers who commute from outside the city limits. The city treasury is forever empty as a result.
Police districts and the city’s 19 councils weren’t merged because the Flemish community, which accounts for just 10 percent of the capital’s population, would by law hold half of the the city’s ministerial posts. Inefficiencies and lack of coordination followed.
This is why it took so long for police to find Salah Abdeslam, Europe’s most wanted man after November’s terrorist attacks in Paris. For four months he hid under the nose of Belgium’s security apparatus, in the Brussels district of Molenbeek.
Faced with soaring marginal labour tax rates, too many of the able young have left the country. High levels of remittancesand of Belgian graduates moving to other developed economies suggest a brain drain. Those who stay go into the private sector, depriving public institutions — including the police and security services — of excellence. Those who try their best are overwhelmed by the size of the problems, running from one emergency to another, unable to focus on the long term challenges.
As Belgians left, poor uneducated migrants from North Africa arrived. Heavily subsidized by Belgium’s over-generous welfare system, but at the same time despised, much of this immigrant population has turned inward, alienated from wider society. Too
many young men and women have been
radicalized.
A failing state was unable to either stem illegal immigration, or to generate a business environment in which the private sector could create jobs for young second generation immigrants. They were left instead to fester in ghettos such as Molenbeek, marred by high unemployment, crime and an extensive drug economy.
Terrorist attacks such as those that struck Zaventem Airport and the Brussels metro system on Tuesday can happen to any country — Belgium did not invent the IS. But my country needs to stop living in denial. It was the logical conclusion of our failures that Brussels should produce so many of the perpetrators of extremists’ atrocities in Europe. We need to keep calm, as the British say, but not to carry on. The tragedy must, finally,
become the catalyst that forces Belgium
to change.
—Bloomberg

Jean-Michel Paul is founder and chief executive of Acheron Capital in London