BRUSSELS BILAT BREW: FEBRUARY 1

UNCLAS SECTION 01 OF 02 BRUSSELS 000170

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: ECON EFIN SENV BE
SUBJECT: BRUSSELS BILAT BREW: FEBRUARY 1

(U) Summary: This issue of the Bilat Brew looks at the local
impact due to subprime troubles of the US, blood diamond
smuggling in the region, federal budget struggles, the
possibility of a national cancer plan, and excessive mercury
levels polluting the air. End Summary.

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Fortis Continues to Suffer from Subprime Fallout
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1. (U) Persistent rumors that Fortis faces additional
write-offs on its subprime exposure has caused its share
price to fall by as much as 10 percent during one day of
trading (January 22),alarming the Belgian financial watchdog
CBFA to the extent that it forced Fortis to issue a statement
alleging that rumors of its subprime exposure were greatly
exaggerated. Fortis' share price subsequently recovered,
only to be hit again by an announcement from Standard and
Poors that it might give a negative, instead of a stable,
appraisal of the Belgian bank. Most observers agree that
while Fortis may be not itself have trouble with subprime
issues, there is still a lot of uncertainty regarding the
exposure of ABN Amro, the Dutch bank that Fortis, Banco
Santander and Royal Bank of Scotland bought last summer.

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Blood Diamonds
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2. (U) The Antwerp Judicial police are have four different
diamond trading firms in Antwerp under investigation. They
are accused of trading up to 60 million dollars in blood
diamonds from Angola, in violation of the UN embargo. Up to
December 2002 (when the embargo was lifted),these companies
allegedly smuggled Angolan diamonds via Guinea and South
Africa to Antwerp. They are accused of deliberately
revaluing the stock of other - legal - diamonds so that the
conflict diamonds could pass under the radar screen. As a
result, their entire accounting system up to 2003 had to be
fraudulent. Six years ago, when the news of this case first
broke, Belgian authorities asserted that the allegations were
mere slander and part of a plan to give the Antwerp diamond
trading center a bad name.

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Budget Minister Struggles with 2008 Budget
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3. (U) Budget minister (and PM hopeful) Yves Leterme has
begun a round of so-called budget controls, as a series of
yearly assessments to see whether the 2008 budget is still on
track. In order to have a break-even result at the end of
this year, he will have to find nearly 3.5 billion euros in
savings and /or extra revenues. He claims to have already
found 2 billion euros, but the remaining 1.5 billion seems to
be the real challenge. Leterme has already hinted that the
regions should take on some of the pension burden of the
federal government, but has not found a sympathetic ear so
far. It does appear, however, that the notional interest
deduction will be made more restrictive. Many sources claim
that this fiscal incentive is too costly to the GOB in the
short term.

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National Cancer Plan - A Health Policy Priority
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4. (U) Minister for Health and Social Affairs, Laurette
Onkelinx, announces a cancer plan - almost. Onkelinx
announced that she will hold a three-day debate in February
among cancer experts to determine the best national cancer
plan for Belgium. A national cancer plan had been part of
the French-speaking Socialist party plank, but Onkelinx will
not just take the PS plan as it stands. By March 10 she
hopes to announce a far-reaching plan that will include
federal leadership on cancer research, prevention, screening,
and patient care, including longer-term patient studies. She
will seek federal government and parliamentary approval
before the current government ends on March 23.


5. (U) Onkelinx stressed at a recent press conference that
she seeks a national plan, with participation from regions
and communities. Onkelinx anticipates having one central
coordinating hospital in each region, the Bordet Institute in
Wallonia, and the University Hospital of Leuven in Flanders.
She already has been in touch with regional ministers of
health to start discussion of her plan.

BRUSSELS 00000170 002 OF 002



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Mercury Levels High in the Brussels Region
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6. (U) Starting January 24, the Interregional Environment
Unit measured high concentrations of mercury, especially in
the air in the north Brussels suburb of Neder-Over-Hembeek.
Levels of mercury concentrations reached 250 nannograms per
cubic meter, ten times more than the normal levels of between
two and six nannograms per cubic meter. Officials
downplayed the possible effect on public health, while at the
same time searching for the source of the mercury emissions.


7. (U) By the end of January, Brussels environmental
officials had checked factories in the region and pointed the
finger at FMM, a company that reprocesses old automobile
batteries. The case is now with the environmental crimes
unit of Brussels. Investigators are making a thorough search
of administrative records, batteries not yet processed, and
waste at the FMM factory site, including taking soil samples.
The Brussels region asserts that combating environmental
crime is a priority for its legal system. Brussels had asked
for assistance from Flemish and Walloon authorities to
examine the cause of the pollution, leading many to question
again why environmental issues are a regional responsibility
in Belgium and not under the full purview of the federal
government.

FOX
.