BELGIAN FOREIGN MINISTER DE GUCHT ENDURES TOUGH

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 001772 SIPDIS STATE FOR EUR/WE AND AF/C E.O. 12958: DECL: 11/21/2018 TAGS: PGOV PREL BE CG SUBJECT: BELGIAN FOREIGN MINISTER DE GUCHT ENDURES TOUGH POLITICAL PERIOD REF: BRUSSELS 1749 Classified By: Political-Economic Counselor Richard Eason, reason 1.4(b ) and (d). ¶1. (C) Summary: Foreign Minister Karel De Gucht (Open VLD) is living through one of the rockiest periods of his political life, but he is generally expected to survive and see it through to the June 2009 parliamentary elections. He is accused of passing inside information to his wife, who benefited by selling shares of the bank Fortis before they crashed in value in October. De Gucht is also locked in a contest for control of Belgium's Congo policy that is weakening his influence. End Summary. ¶2. (C) De Gucht's most recent troubles began November 4 when nearly all Belgian media reported that his wife had sold 2000 shares of the Belgian bank Fortis belonging to her mother. The sale took place on October 3, hours before the government announced that it would sell the bank to the Dutch government, an announcement that caused the value of Fortis shares to drop sharply. The shares have continued to fall since then, even though the sale to the Dutch government fell through and Fortis's shares were ultimately sold to the French bank BNP Paribas. The assumption is that De Gucht warned his wife of the coming government action and caused her to sell her mother's shares. ¶3. (C) On November 9, prosecutors in Ghent and Brussels opened investigations of the transaction and De Gucht's relationship to it. The investigations were begun on the basis of complaints filed by the chairman of the radical rightist Vlaams Belang party, and are still ongoing. De Gucht's colleagues in the Open VLD have expressed confidence to Embassy poloffs that the courts will find no actionable wrongdoing. De Gucht vigorously denies having warned his wife to sell the shares, saying that he in fact had told her not to sell them, which, he said, only proves "she often doesn't listen to me". De Gucht's brother in law has told the press that in fact it was he who told his sister to sell the shares. On November 12, De Gucht had to undergo questioning on the matter in the parliament, before he was allowed to pass on to other issues such as the crisis in the Congo. After that, De Gucht told reporters that it was an experience he would not wish upon his worst political enemy. De Gucht has said that he has no intention to quit and can still function as foreign minister perfectly well, even though the investigations could take a long time to complete and will continue to be a thorn in his side for a while yet. ¶4. (C) The other major problem De Gucht is facing is his bitter non-relationship with Congolese President Laurent Kabila, which stems from De Gucht's outspoken criticism of Congo's Army and the Kabila government's competence and honesty, dating back to the fall of 2007. He laid many of the problems in Eastern Congo on the unprofessional and uncontrolled activities of the Congolese army, whose training the GOB has paid for. With De Gucht persona non grata in Kinshasa, the situation has created an opening for Development Minister Charles Michel (MR) and Michel's father, former Foreign Minister and current EU Commissioner for Development and Humanitarian Aid Louis Michel (also MR),to take the reins of Belgium's Congo policy (reftel). Charles and Louis Michel have been able to parlay their access to Kabila into a more prominent role in Belgium's foreign policy. Louis Michel has not been shy about criticizing De Gucht's directness about the Congolese government's failings and he has expressed interest in returning to the post of Foreign Minister if De Gucht is shunted aside. For his part, De Gucht accuses Louis Michel of being "disloyal" when he discounts De Gucht's ability to handle Congo issues and asks whether Michel's style of personal diplomacy with Kabila ever got results in the past. ¶5. (C) Comment: For the moment, De Gucht does not seem to be on the way out. Prime Minister Leterme said on November 21 that when diplomatic relations with Congo are renewed, he expects both De Gucht and Charles Michel to be in the government. Although the Michels are appealing to francophone voters concerned about the Congo situation, and much of the criticism of De Gucht has come from that side of the linguistic divide, De Gucht's forthrightness about Kabila suits the Flemish side much better. The allegations about insider trading in Fortis shares will likely be difficult to prove, given that they involve communications between husband and wife. Assuming the criminal investigations into that BRUSSELS 00001772 002 OF 002 matter peter out, De Gucht will probably survive as foreign minister. He has, however, had desires to replace Michel as Belgium's next EU Commissioner, just as Michel has designs on a return to the Foreign Minister post. De Gucht's problems with the insider trading allegations and with Congo policy may yet harm his chances in that regard. .