The Belgium Political Crisis: A Study of Coalition Negotiations

Open Access
Author:
Shapiro, Benjamin D
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Chandrani Kalyan Chatterjee, Thesis Supervisor
  • Russell Chuderewicz, Honors Advisor
Keywords:
  • Belgium Political Crisis
  • Coalition Negotiations
  • Game Theory
  • Negotiations
  • Belgium
  • Economics
  • Political Science
  • Ben Shapiro
  • Deadlines
  • Random Costs vs Fixed Costs
  • Financial markets affect political outcomes
Abstract:
In 2010, Belgium’s current government resigned leading to a government formation process that left Belgium without a fully function government for 589 days. During this period, regional parties negotiated towards forming a majority government, but due to divergent interests and a lack of a deadline the negotiations continued to an unprecedented length of time. Although the caretaker government did well at dealing with the day-to-day business, the delayed process had economic and political costs to Belgium society. This paper focuses on why the negotiations took so long, why the negotiations ended, and if there are any systemic changes that could be made to reduce the length of negotiations without biasing the outcome. I find that the diverging interests caused by a changing political environment combined with the safeguards protecting negotiating parties from costs are the main contributors to the length of the negotiations. Furthermore, it was the costs from financial markets whose pressure forced parties to compromise and form a majority government. I show this through an analysis of the events, data on government formations, and a model of coalition negotiations. In addition to these findings, my model shows that gradually adding fixed costs can reduce the length of negotiations while not significantly biasing the outcome.