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New setback in Belgium's crisis as king's envoy resigns - rating agencies warning of downgrade

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(26 January 2011) Belgium's longest political crisis in history hit a new setback Wednesday when King Albert II's mediator threw in the towel after failing to break a deadlock between Dutch and French-speaking leaders.

Johan Vande Lanotte "asked the king to be discharged from his mission. The king accepted and will start consultations tomorrow," the palace said.

Vande Lanotte has been trying for three months to find common ground enabling leaders from the two sides of the language divide to come together to form a coalition government. Belgium has been rudderless for even longer, for more than seven months, and since January holds Europe's record as the nation longest without government.

"It was impossible to break the impasse," Vande Lanotte said at a news conference. "There is no real perspective of progress."

Though a figurehead sovereign, Albert II has named a succession of go-betweens since June 13 elections failed to produce an outright winner -- but none have made headway in efforts to hammer out a coalition deal acceptable to leaders both from the Dutch-speaking north and French south. Though a caretaker government is in charge of daily business, as the impasse continues fears are mounting of a break-up of the country of 11 million that plays host to key global institutions, NATO and the EU. Ratings agencies have warned of a downgrade failing a stable government in the near future, raising the prospect of Belgium being dragged into the rumbling eurozone crisis. Vande Lanotte had tendered his resignation a first time, in January, but the king had asked him to carry on, raising hopes of a new incentive to bridge the gulf. Last weekend, Belgium's feuding Flemish and French-speaking leaders came under mounting pressure from the street to form a government when more than 34,000 angry citizens marched across Brussels in a protest organised on Facebook.

"What do we want? We want a government," said the marchers, shouting "Shame!" at the politicians.

The squabble between the seven parties involved in the long talks is over a deal to transfer federal powers to the different language communities.

"It was not possible to bring the seven parties around the negotiating table," Vande Lanotte said.

Flemish separatists emerged the leading party in the June election, with the Dutch-speakers -- who represent 60 percent across Belgium -- demanding more autonomy for their region, notably in fiscal and social policy. But the French-speaking south fears a loss of subsidies for their once wealthy region as well as the start of a break-up of the country.

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