Royal Mission Impossible?

Verhofstadt hopes to mend the rupture between Francophone and Flemish-speaking leaders after coalition talks to form a new government collapsed last week.

This comes after King Albert II summoned Verhofstadt on Monday and asked him, according to a statement issued by the palace, "to inform the king on the way to get out of the impasse very swiftly, and to make all the contacts necessary to do so."

Belgian television reports have interpreted the Belgian king's move as bestowing “urgent” powers, including dealing with “international matters,” on Prime Minister Guy Verhofstadt. But this would be in violation of the Belgian Constitution which does not provide for extended powers to governments without a parliamentary majority.

Flemish Christian Democrat leader Yves Leterme, who was expected to succeed Verhofstadt, told the king on Saturday that he was unable to form a coalition after failing to reach a deal over how much power should be devolved to the regions.

Haunted by the specter of division along linguistic lines

The deadlock has sparked fears that Belgium would split into the Flemish and French-speaking parts.

"Our country is facing one of the most severe political crises of the last decades," Verhofstadt told a news conference in Brussels. "This situation cannot and must not continue for much longer," he added.

Verhofstadt said the country needed fundamental state reform, adding that the country's problems could be solved "when everyone recognized the seriousness of the situation and took responsibility." He said he wanted to reach an agreement on devolution and tackle urgent social and economic issues that go far beyond the authority of a caretaker government.

Situation remains unclear

But Verhofstadt, who was ousted in the June elections after eight years in office, did not give details of his plans or how the 2008 budget could be drafted under these circumstances.

Belgium's Flemish majority wants more autonomy for the relatively rich region of Flanders, a move seen as a political and financial threat in the French-speaking region of Wallonia. Many Flemish voters believe that their taxes -- amongst the highest in the world -- are used to subsidize the social security system in the south.

Verhofstadt said the country's image abroad was suffering because of the ongoing crisis. Business leaders say potential foreign investors will be driven away.

The liberal VLD leader managed to largely keep a lid on devolution-related issues during his term of office. But he was punished for that at the polls by Flemish voters. His rival Leterme has, however, angered Walloons by doubting their ability to learn Flemish, as well as confusing the French and Belgian national anthems.