As the EU institutions shift back up to cruising speed after the summer break, Belgium has resumed its leadership of the Union for the remaining four months of its presidential term without having solved its domestic political problems. The negotiations on state reform, which began in a climate of optimism, have once again hit a dead end.

The Socialist leading the negotiations, Elio Di Rupo, who was expected to be named prime minister, stepped down on 3 September after failing to work out an agreement between the country’s two communities. In spite of the scope of the proposed reform, which comprised major transfers of powers to the regions and a solution for the problem of Brussels-Halle-Vilvoorde, the final compromise was rejected by the Flemish nationalists (N-VA) and Christian Democrats (CD&V). In keeping with established practice, King Albert II has appointed two mediators, a decision that brings to mind the previous crisis (in 2007), when the sovereign demonstrated boundless creativity, appointing “explorers” and “mine-clearers” to break the impasse. The formation of a new government does not appear to be imminent, in any case. Once an institutional agreement has been reached, the parties in the majority will still have to agree on major budget cuts before putting together a government team.

Some Belgian officials will consequently be obliged to participate simultaneously in these difficult negotiations and in the Belgian Council Presidency. This is the case of Employment Minister Joëlle Milquet and Health Minister Laurette Onkelinx, who are sure to have very tight agendas for some time to come.

Finance Minister Didier Reynders is not in this situation. His party, the MR, was defeated in the recent elections and is not taking part in the state reform talks. The Ecofin president has put his free time to good use, building an agreement in the three-way talks on financial supervision. He is not likely to have the time to be bored in the coming weeks. The Ecofin agenda is heavy, ranging from the tax on financial transactions to capital requirements for banks.

Like Reynders, Belgium will strive in the coming months to prove that it can take on its European responsibilities. On 5 September, the caretaker Prime Minister, Yves Leterme, met Commission President José Manuel Barroso to discuss the issues of the day, including the flagship initiatives planned as part of the new ‘Europe 2020’ strategy. The Commission, which has already presented its Digital Agenda, has confirmed that it will soon present proposals on innovation, youth, poverty and industrial policy. Belgium hopes to exercise its talents as a mediator in discussions by the 27 member states, even in the absence of agreement between the two communities that make up the country.