Today Belgium equals Iraq's record for failure to form a government, 249 days from the election and still going strong.
For once I agree with the Economist, the trouble is in Flanders. This should have been a relatively easy government to form, needing only 76 seats out of the 150 member parliament. The Green-Left were the strongest parties, with 53 seats in total. The Liberal parties were the next strongest, with 31 seats in total. The centre-right parties performed very badly, at historically low levels, with a total of 31 seats. So a Green-Left-Liberal alliance would give 84 seats, enough to form government. All the parties are socially progressive, although there are divisions on economic policy (from the free marketeers in the Liberal parties, to the unionists in the socialist parties) but nothing greater than the conflict between many left-wing parties in other countries. Indeed, the Socialists, Greens and Liberals have worked together successfully before, in the "Purple-Green" coalition under Guy Verhofstadt, from 1999 to 2003.
The problem is with two Flemish Nationalists parties, NVA (New Flemish Alliance) and Vlaams Belang (Flemish Interest). Vlaams Belang won 12 seats, and everyone is use to ignoring them, because there policies are extremist right-wing and xenophobic. NVA is more difficult. It is a centre-right wing party, not especially extremist, but are strict Flemish nationalists, ultimately wanting Flemish sucession. The NVA claims they won the election with 27 seats, making them the biggest single party (but still smaller than either the Socialists or the Liberals, which run seperate parties in the Flemish and French-speaking areas).
Unfortunately, this means there are three ways that government can for:
1) "Purple-Green" coalition, with 84 seats. Proven and without major ideological splits. The only problem is that the Flemish parties in the Purple-Green coalition are reluctant to exclude NVA from parliament. Firstly, because it would look bad excluding the largest single party, and secondly because they share some sympathy with the NVA on partial divergence and they are worried about losing further votes to the NVA at the next election.
2) "National Unity" coalition, with 124 seats. Add together the centre-right, Liberals, Socialists and NVA, leaving out only the Green parties, the independent Jean-Marie Dedecker (maybe, they could be included) and Vlaams Belang. This is what everyone has been striving for, but it is almost impossible - there are polar opposite views on nearly every topic - social issues, language issues and economic issues. This has been done several times in Belgium before (minus NVA), with four different governments under Yves Leterme and Herman Van Rompuy from 2008 to 2010, but tends to fall apart often because of the divsions. And really, what is the point of elections where every party goes into government together?
3) A nationalist right-wing coalition, with 84 seats. Add together all the parties that are right-wing on economics - the centre-right parties, the Liberals and the NVA and you get to 84 seats. Possibly 85, if you include Jean-Marie Dedecker. The parties are relatively close on economic conservatism, with only social issues causing friction, between the progressive Liberals and the conservative centre-right. However this is a classic government formation in Europe, and was the most common government in Belgium before 1999. Except, this all happened without NVA. With NVA, the French-speaking centre-right and Liberal parties are not attracted to the coalition, because NVA is demanding a lot of concessions (essentially, they want everything they went to the election with, without a sign of compromise on any topic). Without NVA, there are not the numbers to form a government (only 57 seats).
So the problem is that with three ways to form government, every party is trying to work out which option will give them the most. The Liberals, for example, would get the most on the social policy front in option #1 and the most on the economic front in option #3. And if you split the Liberals into the French and Flemish-speaking Liberal parties, they would prefer options #1 and #3, respectively, on language issues. The Flemish socialists would prefer option #1 on social and economic policies, but option #2 would give them more progress on language issues and protect their vote at the next election.
Personally, I would prefer option #1. It is a proven effective and long-lasting government, and has good social and economic balance. Not much would change on the language divisions, but that is hardly urgent and the most sensible solution (enlarging Brussels, in my opinion) is rarely discussed. Unfortunately, I think we will end up with option #3. The centre-right parties, despite a terrible result, are use to working with the Liberals and share a lot of common ground with the NVA. If the NVA can just back down half an inch on the language division, the French-speaking right-wing will sign up. Belgium will be the worse for being run by free marketeers that want to split the country, but I wouldn't be surprised if this result is announced within a few weeks.