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Belgium has been a federal state since the constitutional reform of 1970. The long process of federalization has been the result of a divorce between the French and Dutch-speaking communities, whose regions and communities have been granted wide-ranging decentralized powers in their areas of competence. The Belgian regions have achieved an ever higher degree of regional autonomy. But these same regions and communities are faced with the reality of self-governing during a period of aggravated economic crisis and enhanced European budgetary constraint. The analysis here revolves around a paradox: one of a decentralization dynamic co-existing with a narrowing of substantive outcomes in terms of regional public policy. The hollowing out of the Belgian state, together with the increasingly direct effect of EU-level policy, has given a new turn to Belgium’s multilevel governance, whereby communities and regions are confronted with the practical consequences of multilevel developments (within Belgium’s regions, at a federal government and an EU level) that partially escape their control.