BELGIAN STEWPOT: June 5, 2007

UNCLAS BRUSSELS 001843

SIPDIS

SIPDIS

STATE FOR EB/OIA, EB/TPP/IPE AND EUR/UBI
TREASURY FOR OASIA/ICN - ATUKORALA
USDOC FOR 4212/OECA/JLEVINE
RABAT for W. BUSH

E.O. 12958: N/A
TAGS: ECON EFIN EINT EINV SENV BE
SUBJECT: BELGIAN STEWPOT: June 5, 2007

Ref: Brussels 00790

1-2. PM Outlines Pro-Investor Strategy

3. Google Finds a Home in Belgium
4-5. "I am Googled, Therefore I am"
6-7. IV Grantees Bring Home Ideas

8. Baxter Pharma Invests in Wallonia

9. Zero-Emissions Belgian Bus

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PM Outlines Pro-Investor Strategy
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1. (U) On May 22, Prime Minister Guy Verhofstadt
detailed his strategy to improve Belgium's
investment climate over the past eight years, and
his plans for the coming years in a talk to
AmCham members. In addition to prudent
macroeconomic fiscal management (balanced
budgets, paying down the federal debt),
Verhofstadt touted a reduction in the real
corporate tax rate from 41% to 34%, introduction
of the notional interest rate deduction, revision
of Belgium's double tax treaty with the US in
2006, and a variety of measures to promote R&D.
Future policy, he said, should focus on reducing
the nominal corporate tax rate from 34% to under
30%, which would allow the real effective rate to
decline to under 20% (competitive with some flat-
tax EU venues). Another goal would be to further
reduce personal income tax brackets from five to
only two or three rates in the 25 to 50% range;
the 55% top income bracket has already been
dropped. According to Verhofstadt, reducing
taxes paid by R&D personnel puts Belgium on the
forefront of innovation, ensuring high-value job
creation and investment. Questions from U.S.
companies focused on improving education to
produce the skilled personnel industry needs, and
how to build Belgian entrepreneurial spirit.
(Note: Whether Verhofstadt will have a chance to
pursue additional reforms depends on how his
party fares in Belgian Federal Elections June 10.
End note.)


2. (U) One program in which Verhofstadt has
invested his personal effort is structuring
Belgium to be the most competitive venue for pan-
European pension fund headquarters. As cross-
border, EU-wide business expands, EU-wide pension
funds are growing rapidly, and Belgium wants to
capture this profitable business niche, offering
a tax-free corporate status and easy
establishment procedures. Belgium features
strong financial services regulation, and is
already home to major financial infrastructure
players such as the Euronext stock exchange,
Euroclear (bank clearing center),and SWIFT (the
financial transactions router). Belgium
presently hosts 267 private and public sector
pension funds. In May, Verhofstadt co-hosted a
seminar with Boston's State Street Bank lauding
Belgium's virtues as a Pan-European Pension Fund
management center. Netherlands is reportedly the
leading competitor in this niche field.

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Google Finds a Home in Belgium
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3. (U) In mid-May, the world?s leading internet
search engine Google announced it will invest 250
million Euros (US$340 million) in Saint-Ghislain
in French-speaking Wallonia?s Hainaut province.
Google had been prospecting for a site for a
major data center in Europe for nearly two years,
and chose the Belgian venue over options in
Sweden and France. The search engine giant found
an 210-acre site with plenty of electricity and
canal access for water to help keep all the
Google computers cool in an environmentally
friendly design. Walloon authorities had
additional power lines brought in to guarantee
150 megawatts to the high-tech company. The
Walloon regional government also offered 12
million Euros assistance to clinch the investment
for Belgium. The new facility should create 120
positions during its initial phase, and Google
claims it may eventually employ 500.

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"I am Googled, therefore I am"
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4. (U) The French language daily La Libre
Belgique (circ. 46,900) reports that Belgian
French-language newspapers are back on Google
after agreeing that the search engine can link to
their Web sites, signs of thaw in a bitter
copyright dispute. Copiepresse, a group
representing 17 Belgian newspapers including Le
Soir and La Libre Belgique, accused Google of
violating copyright, particularly through cached
story links that allowed "googlers" to see older
material without having to pay for access to
publisher web archives. (See reftel for
details.) Google has stated all along that it
honors any and all requests by publishers to
exclude their sites from this automated archival
process. Nonetheless, in response to a February
ruling by a Belgian court, Google removed all
links to the Belgian papers. It appears
Copiepresse thought the better of its complaint
once commercial reality dawned. La Libre admits
in its coverage that its internet site
www.lalibre.be, lost 30 percent of its visitors
after Google stopped linking to it.

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International Visitor Grantees Bring Home Ideas
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6. (U) Two newly returned International Visitor
grantees were profiled in the leading Belgian
business weekly Trends/Tendances May 10. The
article about Rudy Aernoudt, Secretary General of
Economics, Sciences & Innovation of the Flemish
Government, and Karel Van Eetvelt, Managing
Director of employers association UNIZO,
highlighted five good ideas from the United
States they believed Belgium should copy. These
ideas were: "401K" supplementary retirement plans
to decrease the burden on government pensions;
facilitating volunteer work by retired senior
entrepreneurs who want to put their experience at
the disposal of younger ones; encouraging public
authorities to promote innovation by simplifying
requirements that small companies/individuals
need to fulfill to get government support and by
purchasing innovative products; trade unions that
impose training and aptitude tests for membership
and become sought-after sources of workers (would
require "a drastic change of mentality"); and
promoting Belgium rather than its regions,
similarly to how the USG promotes America as a
whole, not individual States, overseas.


7. (U) While both men saw negatives in the
American work place such as the cost of health
insurance to entrepreneurs, they were favorably
impressed by their American experience. Both
remarked on the U.S. public administration
positive view of entrepreneurs. "Entrepreneurs
are considered heroes who create value added and
should be helped, supported, and given advice,"
Van Eetvelt said. "It is quite different from
Belgium, since according to a Delta Lloyd study,
63 percent of civil servants in Belgium have a
negative opinion of entrepreneurs," Aernoudt
added.

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Baxter Pharma Invests in Wallonia
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8. (U) U.S. pharmaceutical and healthcare product
manufacturer Baxter announced plans to invest 83
million euros (US$120 million) in new production
facilities in southwestern Belgium. Products to
be manufactured include human plasma transfusion
products, such as immunoglobuline used in immune
system therapies. The company, present in
Belgium since 1954, has invested US$ 136 million
since 1996, and already produces at three sites
and employs over 1700 persons. The new
investment will add 150 more positions, and take
four years to fully implement. Incentive aid
totaling 7.35 million Euros (US$10 million) from
the Walloon regional government helped attract
the investment.

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Zero-Emissions Belgian Bus
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9. (U) One of Europe?s leading bus manufacturers,
Van Hool of Lier, Belgium, near Antwerp, is now
producing a zero-emission public transport
vehicle ? with help from U.S. technology. The
43-foot hybrid electric bus uses a fuel cell
power system from Connecticut-based United
Technologies Corp. The experimental vehicle will
be used by Belgium?s largest transit system for
six months before orders will be accepted from
other transit systems for the vehicle. The bus
can hold 104 passengers, rides on three axels,
and produces practically no noise. Van Hool
claims the vehicle is two times more fuel
efficient than standard diesel-powered buses,
which should appeal to European transit companies
who confront the highest fuel prices in the
world.

FOX