BRUSSELS – The Flemish liberal party withdrew from Belgian Prime Minister Yves Leterme's ruling coalition on Thursday, threatening the five-month-old government with collapse.
Without the backing of the center-right Open VLD, one of five parties in the coalition, the government still has 76 of the 150 seats in the lower house of parliament but it would be hard to govern with such a slim majority.
Open VLD said it had lost confidence in the government because of its failure to resolve a dispute between French- and Dutch-speaking parties over electoral boundaries around the capital, Brussels.
"We have not agreed on a negotiated solution and therefore Open VLD no longer has confidence in the government," said Alexander De Croo, the party's chairman.
Leterme called an emergency meeting of his cabinet early on Thursday afternoon.
He became prime minister last November when Herman Van Rompuy left the post to become president of the European Union, despite concerns that Leterme's second term could prove as unstable as his first nine months leading the government in 2008, when Belgium lurched from one crisis to another.
Leterme's nine-month struggle to form that government in 2007 caused media speculation that Belgium could break apart and raised the risk premium investors demanded to hold government bonds.
The spread between 10-year Belgian bonds and German bunds had widened to 49 basis points on Thursday from 43 at Wednesday's close, although this was in line with a widening trend for other euro zone sovereign bonds.
Belgium, home to European Union institutions and the NATO military alliance, can ill afford to let domestic problems drag on as in July it takes over the six-month EU presidency, an organizational role held by each member state in turn.
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