Identifier
Created
Classification
Origin
07BRUSSELS785
2007-03-08 16:56:00
CONFIDENTIAL
Embassy Brussels
Cable title:  

VERHOFSTADT STUMPS FOR RUSSIAN TRADE AND INVESTMENT

Tags:  ETRD EINV ENRG EMIN BE RU 
pdf how-to read a cable
VZCZCXRO9991
OO RUEHAG RUEHROV
DE RUEHBS #0785/01 0671656
ZNY CCCCC ZZH
O 081656Z MAR 07
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4607
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 000785 

SIPDIS

SIPDIS

DEPARTMENT FOR EEB/ESC, EUR/UBI AND EUR/RUS

E.O. 12958: DECL: 03/09/2012
TAGS: ETRD EINV ENRG EMIN BE RU
SUBJECT: VERHOFSTADT STUMPS FOR RUSSIAN TRADE AND INVESTMENT


C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 000785

SIPDIS

SIPDIS

DEPARTMENT FOR EEB/ESC, EUR/UBI AND EUR/RUS

E.O. 12958: DECL: 03/09/2012
TAGS: ETRD EINV ENRG EMIN BE RU
SUBJECT: VERHOFSTADT STUMPS FOR RUSSIAN TRADE AND INVESTMENT



1. (C) Summary: Prime Minister Verhofstadt met with Russian
President Putin and leading private sector energy figures
March 1-2. The trip focussed chiefly on economic issues:
building ties in energy and diamond markets, promoting
bilateral investment, and facilitating contact between the
two countries. No major deals were signed, but Belgium
remains deeply interested in helping market Russia's natural
gas and diamond wealth. Verhofstadt raised political issues
such as Iran and human rights, but got little new response.
End Summary.


2. (C) During a two-day trip to Moscow, Belgian Prime
Minister Guy Verhofstadt met with Russian officials and
business figures in the hopes of strengthening and expanding
economic cooperation between the two countries. PM
Verhofstadt was accompanied by Minister of Foreign Affairs
Karel De Gucht, Vice Prime Minister and Finance Minister
Didier Reynders. Representatives from the private sector
included Antwerp diamond traders and representatives from
Belgian gas companies Electrabel, Fluxys, and Distrigaz.
Agreements were initialed regarding bilateral travel and tax
relations, however no major energy deals were concluded.
Increasing the flow of Russian natural gas and diamonds
through Belgium, negotiating a business investment treaty,
and promoting Belgium's new notional tax deduction were they
key business issues discussed.


3. (SBU) Regarding energy, Belgium proposed a three part
proposal to the Russian government and Russian gas company
Gazprom. First, Verhostadt pressed for a Russian project to
build an underground storage facility near the port of
Antwerp to house Russian gas reserves. Second, Belgium
proposed a partnership to transfer Russian gas throughout
Europe and most notably to the UK via an expanded Fluxys pipe
network and the port of Zeebrugge. (Note: Fluxys manages
Belgium's distribution grid, now split off from Distrigas
retailing operations.) Third, Belgium proposed an increase
in the amount of gas it buys from Russia, in the hopes of

diversifying its national supply, currently dominated by
Qatar. Belgium currently purchases only five percent of its
gas from Russia. Reports claim progress was made on these
fronts, but no agreement was signed. The presence of
Electrabel CEO and Suez COO, Jean-Pierre Hansen, sparked
rumors of a possible sale of Belgian gas company Distrigaz to
the Russian gas firm Gazprom. These rumors were denied by
officials from both sides.


4. (SBU) Diamond marketing dominated several meetings.
Belgian diamond traders worked to persuade Russia,s partly
state-owned ALROSA to channel more of its diamonds through
Antwerp. ALROSA is currently the second biggest rough
diamond seller worldwide. While Antwerp already buys seventy
percent of ALROSA diamonds, Belgium is seeking an expanded
agreement, anticipating increased competition from other
trading venues. Because the European Commission has put an
end to the exclusive contract with De Beers through which
ALROSA previously marketed its output, ALROSA diamonds are
being courted by Hong Kong, Geneva, Tel Aviv, and Dubai, as
well as Antwerp. As global diamond sales expand, Belgium is
keenly to retain the diamond traffic to the benefit of the
Antwerp economy and banking network.


5. (SBU) The issues that yielded actual Agreements were
transportation and taxation. The two nations signed a new
motor traffic agreement intended to facilitate increased
private and commercial transportation between the two
countries. Another agreement will increase the number of air
flights between the two parties. A treaty regarding double
taxation will also be revised to help ease the minds of
potential foreign investors. Additionally, the Belgian
Ministry of Foreign Affairs announced it will open a
Consulate in St. Petersburg to facilitate the issuing of
Belgian visas.

--------------
Political Issues
--------------

6. (U) According to Belgian press reports, Verhofstadt used
Belgium's new position as a non-permanent member on the UN
Security Council to encourage Russia to refrain from blocking
important resolutions brought before the body. Issues such
as Iran, Kosovo, and Lebanon were raised, with both countries
agreeing that increased pressure must be placed on Tehran.
The issue of Russia,s human rights record was broached, and
the press claims Verhofstadt received reassurances from
President Putin that the murder of Russian journalist and
Kremlin critic Anna Politkovskaya would be fully
investigated.


7. (C) Willy De Buck, MFA Director for Central and Eastern
Europe, who accompanied Verhofstadt and De Gucht, outlined

BRUSSELS 00000785 002 OF 002


the political discussions for Poloff. De Buck said
Verhofstadt tried to raise Kosovo, Iran, Congo, the Middle
East and Lebanon with Putin, but Putin had little desire to
discuss foreign policy during a visit focused on economic and
trade issues. Verhofstadt asked about Russian support for
Special Envoy Ahtisaari's plan, to which Putin responded "we
don't want to be more Serbian than the Serbs." The Belgians
interpreted this comment as foreshadowing a "possible
flexibility" by Russia on Kosovo, although support for the
Serbs remained strong. Moscow would still look at how the
Serbs behave. On Iran, Verhofstadt reiterated Belgium's
strong nonproliferation position and the need to stand firm.
De Buck said Putin "agreed," although he noted that a
confrontation with Iran should be avoided. Verhofstadt tried
to get Putin to engage on the Middle East and Lebanon, urging
Moscow to influence Syria in order to promote stability in
Lebanon and in the region. He also urged Russia "not to
forget" the Congo, where international attention needed to
remain focused to keep the Congo on track. De Buck said
Putin had no reaction on the Middle East and Congo.

IMBRIE
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