After tensions led to the division of the still bilingual University of Louvain into a Flemish-speaking campus on Flemish territory and a French-speaking campus on Walloon territory in 1969–70, a slow but definitive process of federalization got under way. The parliament accorded cultural autonomy to the Flemish and Walloon regions in 1971. A revision of the constitution nine years later allowed for the creation of an independent administration within each region. Another revision of the constitution in 1988–89 extended regional autonomy to encompass the economy and education. It also gave the bilingual metropolitan area of Brussels the status of a third independent region with its own administration and changed Belgium explicitly into a federal state. This transformation was finalized with the St. Michael’s Agreement (September 1992), which also called for the division of Brabant into two provinces (Flemish Brabant and Walloon Brabant).

The acceleration of the federalization process during the 1980s was influenced to a large extent by economic factors. The oil crises of 1973 and 1979–80 and the ensuing world recession stunned Belgium’s decidedly open economy. A coalition government formed in 1981 by the Liberals and the Social Christians pursued a program of restrictive monetarism and structural reform: the Belgian franc was devalued (1982), and the increase in the money supply was brought under control by cutting public services and by ending governmental subsidies to the old industries. Within three years Belgian industry had regained its competitiveness, owing to a combination of government policy, improvement in the world economy, and the dynamism of Europe as it moved toward a more complete economic unification.

King Baudouin, who played a role in maintaining national unity by pacifying the contentious Flemish- and French-speaking communities, died on July 31, 1993. He was succeeded by his brother, Albert II. During the 1990s, Belgium continued to struggle with its so-called language problem. Struggles over the nature and form of power devolution to language regions and communities attracted significant attention, and the federalization of so many aspects of Belgian political and social life promoted linguistic regionalism. Some even began to question whether Belgium can or should remain a single state.

At the same time, Belgium’s immigrant population grew during the 1990s—bolstered by an influx of refugees, first from unrest in Bosnia and then from that in Kosovo. There was evidence of growing social tension related to this influx, and during the early 1990s anti-immigrant groups gained greater support—only to see that support fade somewhat by the end of the decade. Indeed, in 2000 the Belgian government offered an amnesty to illegal immigrants who had resided in Belgium for a minimum number of years. Moreover, in 2006 a large demonstration against racism in Antwerp, prompted by the murder in May of a Malian nanny and a Belgian toddler, revealed the dedication of many Belgians to a multicultural society.

Several laws passed in the early 21st century further reflected reformist attitudes. Gay marriage became legal; same-sex couples were permitted to adopt children; the private use of cannabis was decriminalized; and euthanasia was legalized.

The central role of Belgium (particularly Brussels) in the European unity project became more apparent, with massive urban renewal projects initiated in Brussels to make room for the expanding EU administrative corps. Brussels increasingly has assumed the role of administrative “Capital of Europe,” giving that city a special role in international affairs and providing an antidote to the growing internal fragmentation of Belgium itself. In the process, Belgians tended to define their interests increasingly in international terms.

In 2007 the continued existence of a federalized Belgium was called into question after the Flemish Christian Democrats, victors in the June parliamentary elections, failed to form a governing coalition. After six months of political deadlock that threatened to end in the breakup of the country, King Albert II asked caretaker prime minister Guy Verhofstadt, head of the defeated Flemish Liberals and Democrats, to form an interim government. A new coalition government, made up of five French- and Flemish-speaking parties and led by the Flemish Christian Democrat Yves Leterme, finally took power in March 2008.

Leterme pledged to increase the governmental powers of the country’s regions but was met with resistance from French-speaking parties, who saw the reforms as more beneficial to Flanders than to Wallonia. In July of that year Leterme offered to step down as prime minister, but the king rejected the resignation. Political turmoil—fueled by allegations of the government’s questionable involvement in the bailout and sale of the Belgian portion of a financial firm—continued through the end of 2008.

In December Leterme resigned, and Herman Van Rompuy, a fellow Flemish Christian Democrat respected for his skills as a mediator, replaced him as prime minister. Van Rompuy’s term was short-lived; in November 2009 he was named the first president of the EU’s European Council. Compelled to fill the post of prime minister yet again, King Albert nominated Leterme, who began his second term—what some called a second chance—on November 25, 2009. Not five months later, on April 22, 2010, Leterme tendered his resignation once again, following the withdrawal of the Flemish Liberals and Democrats from the governing coalition.

In the election that followed in June 2010, the big winners were the separatist New Flemish Alliance, which finished first with 27 seats (a gain of 19 seats), and the French-speaking Socialists, who added 6 seats to reach a total of 26 seats. The various parties were unable to come to an agreement as coalition talks continued for more than a year while Leterme oversaw a caretaker administration. In the meantime, some Belgians wryly took solace in their country’s capture of the modern world record for the number of days spent without a formal government. Despite having no formal government, in July 2011 Belgium became the second country in the EU to approve legislation that outlawed face coverings such as the Islamic veil.

After some 530 days without a government, Belgium was drawn into the debt crisis that had plagued other parts of Europe since 2009. In November 2011 the ratings agency Standard & Poor’s downgraded Belgium’s credit and confirmed a negative economic outlook for the country. Given the length of the political deadlock, lawmakers responded with surprising haste to that development. During a week of intense negotiations, a grand coalition of Christian Democrats, Liberals, and Socialists took shape, with Socialist Elio Di Rupo at its head. A career politician, Di Rupo had built a reputation as a talented negotiator. He was sworn in on December 6, 2011, becoming Belgium’s first Socialist prime minister since 1974, its first Francophone prime minister in more than three decades, and the EU’s first openly gay head of government. Later that month, the country was stunned when an ex-convict launched an attack on a crowded city square in Liège. Using grenades and an assault rifle, he killed at least three people and wounded dozens of others before taking his own life.

Di Rupo presided over a period of relative stability, as Belgium weathered the euro-zone debt crisis far better than a number of its fellow EU member countries. The tension between the country’s north and south remained, however, and the New Flemish Alliance polled strongly in local elections in Flanders in October 2012, with party leader Bart De Wever becoming mayor of Antwerp. In July 2013 Albert II, who had represented a significant unifying force throughout his reign, abdicated in favour of his son Philippe.