Verhofstadt II
Following the 2003 general elections, Verhofstadt formed his second cabinet without the green parties, who were virtually annihilated in the election. For various reasons, the formation of the second government was delayed well beyond normal: the economic situation worsened to 1999 levels, both politically similar parties (liberals and socialists) gained approximately the same seats. Additionally, the various world governments were pressing for the abolition of the law of universal competence (also known as the "genocide law"), which gave Belgian judges the authority to accuse and sentence non-Belgians with crimes against humanity. Accusations that were made had rarely been followed up, and were often dismissed as being little more than politically motivated international insults. Verhofstadt's second government was sworn in on July 12, 2003, with both coalition partners having agreed to abolish the so-called "genocide law" and replace it with a much weaker one.
Guy Verhofstadt second Government consisted of his liberal Open VLD their sister liberal MR, the Flemish social democratic SP.a and their sister social democratic party PS to form another Purple coalition.
In the Flemish regional elections of June 13, 2004, his party lost votes, slipping into third place in Flanders. Though this has had no direct impact upon his position as Prime Minister, there were rumours that the Christian Democratic and Flemish (CD&V) party that won the elections, would participate in federal government. Verhofstadt was suggested as a candidate to replace Romano Prodi as the next President of the European Commission, but his candidacy was opposed and rejected by a coalition led by Tony Blair and Silvio Berlusconi.
Since then, Verhofstadt has been faced with internal crisis after crisis. The first crisis coming to a head in the autumn of 2004 was the question whether DHL would invest in Brussels Airport, located in the Flemish municipality of Zaventem. The question which nearly caused the collapse of the cabinet was whether to grant DHL extra landing rights during the night, this being a hot topic of public debate and various court cases. In the end the split between employment and night rest was for nought as DHL had only used the Zaventem option in order to get better conditions from Leipzig.
After the DHL crisis, Verhofstadt was faced with a communautary crisis with regard to dividing the administrative arrondissement Brussels-Halle-Vilvoorde commonly abbreviated to BHV. The dividing was an issue that the parties forming the Flemish regional government had written in their government agreement. This caused a veto to be posed by the Walloon parties. The crisis dragged on until spring 2005 when the matter was shelved until after the federal elections of 2007 as the Flemish parties forming the government, given the for them disastrous opinion polls, did not want the government to collapse. The constitutional court of Belgium ruled that all elections held after June 10, 2007 would be constitutionally invalid because of the non-separation of Brussels-Halle-Vilvoorde.
In the autumn of 2005, Verhofstadt managed to score a success when he was able to negotiate a "Generation Pact" with regard to employment and social reforms, regardless of the opposition and actions of the unions.
Verhofstadt was sworn in as municipal councilor in Ghent in January 2007, as a result of the 2006 municipal elections. In the council, he is seated next to another cabinet minister, Freya Van den Bossche, who was elected a municipal councillor as well. He even postponed a visit to the Russian President Vladimir Putin to be able to go to the first session of the newly elected council.
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