BRUSSELS BILAT BREW: JANUARY 4, 2008

UNCLAS SECTION 01 OF 02 BRUSSELS 000011

SIPDIS

SIPDIS

STATE FOR EB/OIA, EB/TPP/IPE AND EUR/WE
TREASURY FOR OASIA/ICN - ATUKORALA
USDOC FOR 4212/OECA/JLEVINE

E.O. 12958: N/A
TAGS: EAID ECON EFIN EINV EMIN BE CH
SUBJECT: BRUSSELS BILAT BREW: JANUARY 4, 2008


(U) Summary: The Brussels Bilat Brew gives an overview of
the most recent Belgian economic issues. This issue looks
ahead at development goals, the new double taxation treaty
with the U.S. and expectations for 2008. Diamond and arms
exports are increasing, and banks remain wary of releasing
their savings information while Fortis profits from
investment in China. End Summary.

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Development Minister Michel Sets Goals
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1. (U) Charles Michel, newly named Minister of Development
Cooperation, laid out his priorities for revitalizing and
reestablishing Belgian development assistance after a
six-month hiatus in federal leadership. While much
development aid comes from the regions of Belgium, the
federal government still has a role to play. In an interview
with the Belgian newspaper, La Libre, Michel asserted that
his ministry must set goals and priorities for the
medium-term, at least to 2011, no matter how long he will be
at the helm of the development ministry.


2. (U) Michel will ask his ministry to look carefully at the
current list of 18 priority countries with a view to reducing
the list to 12 key ones. This process could help achieve a
larger goal of more quality for aid money. On the practical
level, Michel wants Belgian economic assistance to come from
a process of close consultation with recipient countries,
NGO's and academics. He seeks to cut the time between
project approval and project implementation and to factor in
environmental and climate change concerns. Comment. We could
see more cooperation between Belgium and the European Union
since Charles is the son of Louis Michel, European
Commisioner responsible for Development and Humanitarian Aid.
End comment.


3. (U) The new minister affirmed Belgium's goal to increase
overall development aid to 0.7 percent of GNP by 2010, but he
noted that some aid comes with conditions that have not yet
been fulfilled. A prime example is debt relief for the
Congo. Congo has not met conditions for 2008, and Michel
sees 2009 as the earliest that such relief could be made
available.


4. (U) Michel's first visit as minister will be to Darfar
and Uganda and will focus on the plight of child soldiers.

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Double Taxation Treaty Hailed in Belgian Press
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5. (U) The double taxation treaty with Belgium had nice play
in the local economic press. Reports stressed the efforts of
then and once again Prime Minister Verhofstadt and President
Bush that got the treaty process moving. Delhaize, with its
Food Lion stores in the U.S., was listed as one of the main
immediate beneficiaries of the treaty.

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Belgian Bank Invests in Chinese Clean Energy
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6. (U) Belgium's Fortis Fund Management, a partner in the
China-Belgium Direct Equity Investment Fund, profited from a
recent IPO on the Shenzhen stock exchange. The fund held 7.2
percent of Xinjiang Goldwind Science & Technology Co, a
manufacturer of wind turbines before the IPO. Goldwind sold
10 percent of its expanded share capital in its initial
public offer on December 26, 2007. Shares increased 264
percent in value on the first day of trading, rising to 131
yuan per share. Market watchers anticipate that Goldwind's
net profits might hit 868 million yuan in 2008. The IPO
represents a stronger interest in China in investing in clean
energy, and reflects growing Belgian interest in investment
in China.

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Belgians More Pessimistic About 2008
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7. (U) One-third of Belgians polled by TNS Dimarso believe
2008 will be a worse year than 2007. This figure is up from
one-quarter at the same time last year. At least half of
those polled foresee more economic difficulties in 2008,
largely due to higher oil prices and a strong euro. Most are

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not worried about their own jobs, however, with three-fourths
of the respondents claiming strong job security. Younger
people are optimistic about finding a new job should they
lose their current one.

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Average Belgian Pension on the Rise
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8. (U) Belgians continue to see a comeback in pension income
after declines in the 1980's and 90's. The national planning
office estimates that Belgian pensioners will receive 32.3
percent of the average gross salary in 2008. The planning
office calculates this figure each year. In 1980 Belgians
saw a record 35.5 percent of the average salary. After
declines, pension payments rose to 30.7 in 2000 and to 31.8
percent in 2007. It pays to be a civil servant. The average
civil servant's pension is over 2,000 euros per month, while
the self-employed receive 493 euros, and private sector
pensioners see 925 euros per month on average.

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Flemish Arms Exports on the Rise
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9. (U) Flemish arms exports continue their upward trend,
according to Flemish Minister Patricia Ceyssens. In 2007,
Belgium's northern region exported 213 million euros in arms,
against 199 million in 2006 and 155 million in 2005.
Flanders' largest export markets for arms are the U.S. (24
percent),Switzerland (19 percent) ad India (17 percent).
The lion share of th Flemish defense products comes from two
compnies: Barco (avionics displays) and OIP (night vision
goggles). In 2007, seven export requestswere denied by the
Flemish authorities, for a total value of 5.6 million euros.

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Belgian Banks Withhold Information
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10. (U) Victory has many fathers, but defeat is an orphan
Belgium's four largest banks - Fortis, KBC, Dexia and ING -
have refused to release 2007 figures for their savings
accounts. Although the banks cited commercial reasons, some
suspect they tried to avert negative publicity. After losing
some 2 billion euro worth on deposits in 2006, they lost
another 12 billion by mid-2007, according to statistics
released by the National Bank of Belgium. It appears that
Belgian investors in search of higher returns took their
savings to smaller banks such as AXA or Argenta, but mainly
to Deutsche Bank. Deutsche bank waged an aggressive campaign
and has now announced a 21 percent increase of its Belgian
savings deposits in 2007. Within the Belgian banking
community, Deutsche Bank is seen as an outsider, but this
relative newcomer to Belgian banking has targetted and
profited from niche markets here.

BUSH
.