Identifier
Created
Classification
Origin
06BRUSSELS2926
2006-08-29 15:04:00
UNCLASSIFIED
Embassy Brussels
Cable title:  

BELGIAN STEWPOT: August 29, 2006

Tags:  ECON EFIN EINV ENRG EWWT EIND BE 
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VZCZCXRO6224
RR RUEHAG RUEHDF RUEHIK RUEHLZ
DE RUEHBS #2926/01 2411504
ZNR UUUUU ZZH
R 291504Z AUG 06
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC 2934
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNMEM/EU MEMBER STATES
UNCLAS SECTION 01 OF 02 BRUSSELS 002926 

SIPDIS

SIPDIS

STATE FOR EB/ESC, EUR/ERA AND EUR/UBI
TREASURY FOR OASIA/ICN - ATUKORALA
USDOC FOR 3133/USFCS/OIO/EUR

E.O. 12958: N/A
TAGS: ECON EFIN EINV ENRG EWWT EIND BE
SUBJECT: BELGIAN STEWPOT: August 29, 2006


1-2. U.S. Investment in Belgium Rises

3. Energy Prices Hit Belgian Trade Surplus

4. Suez Spies Against Itself in Belgium?

5. Belgian Risk Capital Lags Behind EU Average
6-7. Delhaize (Food Lion) Expands Its U.S. Presence

8. Chinese Port Operator Interested in Belgium

9. No Ceiling for Wallonia's Glass Industry

10. Putting Money Where the Market Is

------------------------------
Value of U.S. Investment Rises
------------------------------
UNCLAS SECTION 01 OF 02 BRUSSELS 002926

SIPDIS

SIPDIS

STATE FOR EB/ESC, EUR/ERA AND EUR/UBI
TREASURY FOR OASIA/ICN - ATUKORALA
USDOC FOR 3133/USFCS/OIO/EUR

E.O. 12958: N/A
TAGS: ECON EFIN EINV ENRG EWWT EIND BE
SUBJECT: BELGIAN STEWPOT: August 29, 2006


1-2. U.S. Investment in Belgium Rises

3. Energy Prices Hit Belgian Trade Surplus

4. Suez Spies Against Itself in Belgium?

5. Belgian Risk Capital Lags Behind EU Average
6-7. Delhaize (Food Lion) Expands Its U.S. Presence

8. Chinese Port Operator Interested in Belgium

9. No Ceiling for Wallonia's Glass Industry

10. Putting Money Where the Market Is

--------------
Value of U.S. Investment Rises
--------------

1. (U) According to statistics issued in July by the Survey of
Current Business, the value of the stock of U.S. Foreign Direct
Investment in Belgium rose by over $6 billion in 2005. U.S.
investment in Belgium reached $36.73 billion in value, ranking
Belgium ninth within the EU-25. The increase is attributed both to
new investment and to changes in the exchange rate that revalued
existing investments. While statistics do not break out investment
by sector, post credits the chemical, pharmaceutical and vehicle
manufacturing sectors with the bulk of the increase.


2. (U) Luxembourg continues its tradition of outranking Belgium with
a $61.61 billion stock of U.S. investment, a phenomenon that
specialists ascribe to cross-border leasing and the preeminence of
the Luxembourg banking system.

--------------
Energy Prices Hit Belgian Trade Surplus
--------------

3. (U) The Belgian Institute for National Accounts published Belgian
trade data for June, showing a 1.28 billion euro surplus for the
month, the highest surplus figure since June 2003. Despite the June
figures, Belgium's trade surplus for the first half of 2006 is only
770 million euro, compared to 3.3 billion euro for the same period
one year ago. Higher energy prices are seen as the main reason for
this deterioration in Belgium's trade balance. Although Belgian
petroleum and gas consumption is marginally down, higher global
prices for importing them resulted in a net trade deficit for the

first third of 2006 (for which full data are available),and the
Belgian National Bank reports a deterioration in the terms of trade
for Belgian exports.

--------------
Suez Spies Against Itself in Belgium?
--------------

4. (U) Belgium's criminal court accepted a case from the state
prosecutor charging that Suez, the French utility giant, pursued
industrial espionage against Belgium's major electricity supplier
Electrabel. At the time of the alleged espionage in 2004, Suez was
the majority shareholder of Electrabel; it merged with and took over
the Belgian power company in 2005. At the time, Electrabel filed a
complaint when it appeared that its computer and telephone systems
integrity had been compromised. After two years of investigation,
Suez finds itself defending itself against... itself. The
Electrabel complaint cannot be withdrawn under Belgian law, even
though the two companies are now one. (Comments: While the logical
thing for the GOB to do is drop the case, the tacit lesson will be
that only unsuccessful industrial spying gets punished. It appears
likely that the insider knowledge gained by Suez via espionage
probably contributed to its creation of an attractive takeover offer
for Electrabel.)

--------------
Belgian Risk Capital Lags EU Average
--------------

5. (U) Belgian business analysts asking why Belgium is not spawning
more start-ups and job creation may have found part of the answer.
Despite a level of capital investment on par with other EU advanced
economies, Belgium lags in the percentage of risk capital invested
in new enterprises. As a percent of GDP, the EU averages 0.113
percent invested in new technology, high risk ventures. The Belgian
figure is one third that amount, 0.038 percent. EU leaders on this
score are Denmark (0.401 percent) and the UK (0.292 percent of GDP)
- both of which coincidentally have lower unemployment rates than
Belgium. "Business angels" reportedly funded only 49 new companies
in Belgium in 2005, for a total of 5 million euros. While clearly
only one among many factors, weak venture capital resources
undoubtedly hurt Belgian entrepreneurs and job creation potential.

-------------- ---
Delhaize (Food Lion) Expands Its U.S. Presence
-------------- ---

6. (U) One of Belgium's more visible investments in the U.S. is
having a banner year. Food retailer Delhaize recorded 3.4 percent
growth in U.S. sales in the first quarter of 2006, and for the first
half of 2006 saw its global turnover expand by 9 percent, to 9.7

BRUSSELS 00002926 002 OF 002


billion euros. Further Delhaize investment in the U.S. is assured,
as American stores accounted for 80 percent of profits last year.
Total Delhaize capital investment in the U.S. is expected to rise by
$150 million, to $700 million over the coming year.


7. (U) Delhaize retails food in the U.S. through its Food Lion,
Hannaford, Bloom, Harveys, Bottom Dollar, and Kash n'Karry
supermarket chains. It opened the first U.S. Food Lion store in
1974, and now operates 1,537 stores covering the entire eastern
seaboard, employing over 104,000 people. Belgium's biggest food
retailer hopes to rival Wal-Mart in the Washington area. This year
Delhaize will remodel 15 Food Lions in the Washington area into
"Bottom Dollar" stores featuring lower prices through lower overhead
and stocking costs, having customers bag their own groceries,
selling packaged foods in bulk, replacing fresh bakery and deli
products with prepackaged, and limiting fresh meats and vegetables
to the most popular items.

--------------
Chinese Port Operator Interested in Belgium
--------------

8. (U) China's largest port operator, Shanghai International Port
Co., may invest in Belgium's port of Zeebruges. According to media
reports, Shanghai Port wants to invest in European shipping
terminals in the Mediterranean and on the Atlantic coast to further
its network, and may take a stake in Zeebruges' Moeller-Maersk
terminal. Reportedly, an investment by Shanghai Port would be the
first by a Chinese port operator abroad. Zeebruges is already the
world's largest roll-on, roll-off port for new cars, a major hub for
LNG shipments, and a growing container handler (1.41 million in
2005). It remains a distant second port, however, compared to
Antwerp's 4.48 million containers handled in 2005.

--------------
No Ceiling for Wallonia's Glass Industry
--------------

9. (U) One of Wallonia's dominant economic sectors, the glass
industry, appears to be recovering after several years of flat
production and revenue. Belgium produces glassware, industrial
glass, fiber optics, and fiberglass insulation, recording over 2.1
billion euros in sales last year. Hollow glass (bottles and
stemware) and technical glass, in particular, increased in
production by almost ten percent in 2005. This burst in
productivity mainly comes from investment in the latest machinery
and techniques, lowering costs and improving efficiency. The
American glass producer Owens-Corning, and French giant
Saint-Gobain, both make glass in Wallonia. There is, however, a fly
in the wineglass; glassmakers' improved manufacturing methods have
reduced their need for labor, allowing 450 jobs to be eliminated in

2005.

--------------
Putting Money Where the Market Is
--------------

10. (U) Good news for visitors: Belgian banks will install the
country's first stand-alone ATMs in high-traffic locations such as
shopping malls, theme parks, train stations and airports. Fortis,
Dexia, KBC and ING are all negotiating contracts to install
stand-alone ATMs; Fortis alone plans to add 34 such "cash points" by
the end of 2006. The banks hope to use the new ATMs to increase
their visibility to banking customers, and also to increase revenues
from fees levied on customers of other banks who use their cash
machines. (Before now you could find ATMs only attached to
full-service banks and often out of cash!)

Imbrie