Identifier
Created
Classification
Origin
09BRUSSELS1488
2009-11-03 06:00:00
CONFIDENTIAL
Embassy Brussels
Cable title:
BELGIUM'S FINANCE MINISTER ON FINANCIAL RECOVERY,
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C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 001488
SIPDIS
STATE FOR EB/OMA, EUR/ERA, EUR/WE, IO
TREASURY FOR OASIA/OIC
E.O. 12958: DECL: 11/01/2029
TAGS: EFIN ECON PGOV UNGA SENV BE
SUBJECT: BELGIUM'S FINANCE MINISTER ON FINANCIAL RECOVERY,
G-20 MEMBERSHIP, CLIMATE CHANGE, BELGIUM'S ROLE ON THE
WORLD STAGE AND LOUIS MICHEL'S CANDIDACY AS UNGA PRESIDENT
Classified By: AMBASSADOR HOWARD GUTMAN, REASONS 1.4 (b) and (d).
C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 001488
SIPDIS
STATE FOR EB/OMA, EUR/ERA, EUR/WE, IO
TREASURY FOR OASIA/OIC
E.O. 12958: DECL: 11/01/2029
TAGS: EFIN ECON PGOV UNGA SENV BE
SUBJECT: BELGIUM'S FINANCE MINISTER ON FINANCIAL RECOVERY,
G-20 MEMBERSHIP, CLIMATE CHANGE, BELGIUM'S ROLE ON THE
WORLD STAGE AND LOUIS MICHEL'S CANDIDACY AS UNGA PRESIDENT
Classified By: AMBASSADOR HOWARD GUTMAN, REASONS 1.4 (b) and (d).
1. (C) SUMMARY: Belgian Finance Minister Didier Reynders
said Belgium is establishing a new supervisory system for
banks in Belgium which would differentiate between systemic
(too big to fail) banks and other, smaller institutions,. He
attributed the near collapse of Belgian banks a year ago to a
turning-away from more traditional banking to taking on too
many risks, including to finance Fortis' involvement in the
break-up of ABN-AMRO. On the G-20, Reynders called for more
participation by others in this, citing the size of Belgium's
economy (18th in terms of GDP globally) and its heading of a
large grouping of countries in the IMF, including seven EU
member countries. On climate change, he expects the meeting
in Copenhagen to be "tough" for Europe, with the differing
levels of development of EU members making implementation
difficult for the EU. Reynders agreed that Belgium could
perhaps carve a greater role on the international stage but
believed doing more in Afghanistan would be difficult. On
Louis Michel's candidacy for UNGA President, he said Michel
was the best candidate for the job and that he was supported
by many in Europe. END SUMMARY.
--------------
BELGIUM AND THE FINANCIAL CRISIS
--------------
2. (C). In his initial courtesy call with the Ambassador
and A/DCM on October 23, Deputy Prime Minister and Finance
Minister Didier Reynders reviewed the effect of last year's
financial crisis on Belgium. The Belgian government was now
the number one shareholder in BNP-Paribas/Fortis. The
government is establishing a committee to organize systemic
banks (ones too big to fail) and insurance companies (also
hit hard by last year's crisis) with smaller banks and other
companies related to the finance sector, such as SWIFT, to be
regulated by the National Bank of Belgium, the central bank.
In looking at the ways the financial crisis manifested itself
in other countries, Reynders observed that the number of
regulators seemed to make no difference on the severity of
the crisis. He said Belgium is looking at the German model
of banking supervision and would focus on enhancing the
supervision of the systemic banks first and then begin
working on the second-tier institutions.
3. (C) The Finance Ministry is seeing signs of recovery
from Belgium's banks, despite the huge financial hit they all
took in the crisis and major transformation each of them went
through. Until recently, Reynders said, Belgian banks had
been very traditional. However, the temptations to seek
higher returns lead them to other ventures that proved nearly
fatal. Fortis, the number one bank in the country for
decades, attempted to use very risky financing to pay for its
share of the take-over of ABN-AMRO. Dexia, traditionally
focused on financing for localities, purchased a monoline FSA
in the U.S., unaware of the risky exposure that eventually
entailed.
4. (C) At one point during the crisis, the Belgian
government had had to offer 100 billion euros in guarantees,
equivalent to one-third of the country's GDP. Reynders
feared the situation could have worsened significantly and
led to the bankruptcy of the state. Dexia still enjoys 90
billion euros in guarantees but the situation is now stable
and manageable.
--------------
CLIMATE CHANGE
--------------
5. (C) Reynders said that the Belgian government is heavily
focused on energy and climate change and is working on it at
all levels of government. He sees the politics of
alternative energy as a huge growth field. Looking ahead to
Copenhagen, Reynders thinks that implementation of whatever
is agreed to by the EU will be very hard. A major part of
the problem is the relatively low level of economic
development of many of the new members of the EU.
Nevertheless, he believes there is a will in Europe to reach
an agreement in Copenhagen.
6. (C) Reynders said he works very closely with Energy and
Environment Minister Paul Magnette on trying to find ways to
finance the environmental goals being developed in the
climate change talks. However, the economic development
levels of the new EU member states remain a problem and
BRUSSELS 00001488 002 OF 003
Belgium itself has a similar problem, with a number of old
industries with high energy consumption in several regions of
the country. Many are located in the port of Antwerp. He is
preoccupied with their energy demands but well aware of their
key role in the Belgian economy. Assessing carbon emissions
in these industries will be a big challenge.
--------------
G-20
--------------
7. (C) Reynders said that Belgium's exclusion from the G-20
has been a problem. He stressed that Belgium is not merely
representing itself but also heads a contingency in the IMF,
representing seven EU members and other countries such as
Turkey and Kazakhstan. It is also a major creditor and is
ready to put seven billion euros on the table for the IMF
replenishment. He suggests that the G-20 could either become
a G-24 or G-25 or that it establish some mechanism whereby
countries around the table also represent other countries, in
the same way that Belgium does in the IMF.
8. (C) Belgium also supports reorganizing the IMF board.
He asserted that Spain enjoys its strong position because it
is boosted by its representation of South American countries.
The main problem in the IMF is the need to adjust voting
shares; they must be rebalanced. However, it will inevitably
take time to implement any agreements.
9. (C) Reynders concluded this part of the discussion by
noting that Belgium hosts the capital of Europe, has strong
links with many countries in central and eastern Europe, and
that a "real G" grouping must represent other areas not
currently around the table, including most of Africa, where
Belgium has many close links.
-------------- --------------
SEEKING A STRONGER ROLE FOR BELGIUM ON THE INTERNATIONAL STAGE
-------------- --------------
10. (C) Ambassador Gutman then noted that with the right
strategy, Belgium could play a bigger role on the world
stage. On Guantanamo, Reynders said that the Europeans had
criticized the facility there for years and that Europe now
has to help close it. Europe also needs to help keep
Afghanistan together.
11. (C) The Ambassador agreed and said that nothing should
prevent European countries from getting together and agreeing
to take the remaining prisoners so that the camp could be
closed within two months. Belgian leaders could also stress
publicly that saving Afghanistan needed everyone's
commitment. Belgium could take similar steps on climate
change.
12. (C) Reynders said that European countries had had many
discussions on both climate change and Guantanamo.
Afghanistan, however, is a very difficult issue. The key
problem is that continual rise in the number of deaths among
the coalition troops. Even in the internal discussions in
Belgium on sending F-16s to Afghanistan, some in the
government had expressed great fears about the risks. The
Ambassador, however, stressed that from Belgian leaders could
deliver speeches supporting the mission there without
increasing the physical risk.
--------------
LOUIS MICHEL FOR UNGA PRESIDENT
--------------
13. (C) Regarding the candidacy of Louis Michel for
President of the UN General Assembly, Reynders said his
candidacy had been the result of long discussions within
Belgium. Michel had been President of the francophone
liberals and was 62 years old, so "Why not?," asked Reynders.
Reynders sees Michel as the best candidate from Belgium and
believed he was supported by many in Europe. He also has
extensive contacts in Africa. Belgium had held the UNGA
Presidency before, in 1946 with Paul-Henri Spaak. Michel
would be a good candidate and good for Belgium. Reynders
acknowledged that, since Michel had been leading a campaign
of criticism against Reynders within the francophone liberal
party, it would certainly not be inconvenient for Reynders if
Michel were to leave the country.
14. (C) Foreign Minister Leterme and Michel had earlier
discussed Michel's candidacy. They had also looked at Senate
BRUSSELS 00001488 003 OF 003
President Armand Dedecker and he had been viewed as a better
choice for gaining U.S. support for the candidacy. However,
Michel had been the clear consensus choice in the subsequent
Council of Ministers meeting to select Belgium's candidate.
.
SIPDIS
STATE FOR EB/OMA, EUR/ERA, EUR/WE, IO
TREASURY FOR OASIA/OIC
E.O. 12958: DECL: 11/01/2029
TAGS: EFIN ECON PGOV UNGA SENV BE
SUBJECT: BELGIUM'S FINANCE MINISTER ON FINANCIAL RECOVERY,
G-20 MEMBERSHIP, CLIMATE CHANGE, BELGIUM'S ROLE ON THE
WORLD STAGE AND LOUIS MICHEL'S CANDIDACY AS UNGA PRESIDENT
Classified By: AMBASSADOR HOWARD GUTMAN, REASONS 1.4 (b) and (d).
1. (C) SUMMARY: Belgian Finance Minister Didier Reynders
said Belgium is establishing a new supervisory system for
banks in Belgium which would differentiate between systemic
(too big to fail) banks and other, smaller institutions,. He
attributed the near collapse of Belgian banks a year ago to a
turning-away from more traditional banking to taking on too
many risks, including to finance Fortis' involvement in the
break-up of ABN-AMRO. On the G-20, Reynders called for more
participation by others in this, citing the size of Belgium's
economy (18th in terms of GDP globally) and its heading of a
large grouping of countries in the IMF, including seven EU
member countries. On climate change, he expects the meeting
in Copenhagen to be "tough" for Europe, with the differing
levels of development of EU members making implementation
difficult for the EU. Reynders agreed that Belgium could
perhaps carve a greater role on the international stage but
believed doing more in Afghanistan would be difficult. On
Louis Michel's candidacy for UNGA President, he said Michel
was the best candidate for the job and that he was supported
by many in Europe. END SUMMARY.
--------------
BELGIUM AND THE FINANCIAL CRISIS
--------------
2. (C). In his initial courtesy call with the Ambassador
and A/DCM on October 23, Deputy Prime Minister and Finance
Minister Didier Reynders reviewed the effect of last year's
financial crisis on Belgium. The Belgian government was now
the number one shareholder in BNP-Paribas/Fortis. The
government is establishing a committee to organize systemic
banks (ones too big to fail) and insurance companies (also
hit hard by last year's crisis) with smaller banks and other
companies related to the finance sector, such as SWIFT, to be
regulated by the National Bank of Belgium, the central bank.
In looking at the ways the financial crisis manifested itself
in other countries, Reynders observed that the number of
regulators seemed to make no difference on the severity of
the crisis. He said Belgium is looking at the German model
of banking supervision and would focus on enhancing the
supervision of the systemic banks first and then begin
working on the second-tier institutions.
3. (C) The Finance Ministry is seeing signs of recovery
from Belgium's banks, despite the huge financial hit they all
took in the crisis and major transformation each of them went
through. Until recently, Reynders said, Belgian banks had
been very traditional. However, the temptations to seek
higher returns lead them to other ventures that proved nearly
fatal. Fortis, the number one bank in the country for
decades, attempted to use very risky financing to pay for its
share of the take-over of ABN-AMRO. Dexia, traditionally
focused on financing for localities, purchased a monoline FSA
in the U.S., unaware of the risky exposure that eventually
entailed.
4. (C) At one point during the crisis, the Belgian
government had had to offer 100 billion euros in guarantees,
equivalent to one-third of the country's GDP. Reynders
feared the situation could have worsened significantly and
led to the bankruptcy of the state. Dexia still enjoys 90
billion euros in guarantees but the situation is now stable
and manageable.
--------------
CLIMATE CHANGE
--------------
5. (C) Reynders said that the Belgian government is heavily
focused on energy and climate change and is working on it at
all levels of government. He sees the politics of
alternative energy as a huge growth field. Looking ahead to
Copenhagen, Reynders thinks that implementation of whatever
is agreed to by the EU will be very hard. A major part of
the problem is the relatively low level of economic
development of many of the new members of the EU.
Nevertheless, he believes there is a will in Europe to reach
an agreement in Copenhagen.
6. (C) Reynders said he works very closely with Energy and
Environment Minister Paul Magnette on trying to find ways to
finance the environmental goals being developed in the
climate change talks. However, the economic development
levels of the new EU member states remain a problem and
BRUSSELS 00001488 002 OF 003
Belgium itself has a similar problem, with a number of old
industries with high energy consumption in several regions of
the country. Many are located in the port of Antwerp. He is
preoccupied with their energy demands but well aware of their
key role in the Belgian economy. Assessing carbon emissions
in these industries will be a big challenge.
--------------
G-20
--------------
7. (C) Reynders said that Belgium's exclusion from the G-20
has been a problem. He stressed that Belgium is not merely
representing itself but also heads a contingency in the IMF,
representing seven EU members and other countries such as
Turkey and Kazakhstan. It is also a major creditor and is
ready to put seven billion euros on the table for the IMF
replenishment. He suggests that the G-20 could either become
a G-24 or G-25 or that it establish some mechanism whereby
countries around the table also represent other countries, in
the same way that Belgium does in the IMF.
8. (C) Belgium also supports reorganizing the IMF board.
He asserted that Spain enjoys its strong position because it
is boosted by its representation of South American countries.
The main problem in the IMF is the need to adjust voting
shares; they must be rebalanced. However, it will inevitably
take time to implement any agreements.
9. (C) Reynders concluded this part of the discussion by
noting that Belgium hosts the capital of Europe, has strong
links with many countries in central and eastern Europe, and
that a "real G" grouping must represent other areas not
currently around the table, including most of Africa, where
Belgium has many close links.
-------------- --------------
SEEKING A STRONGER ROLE FOR BELGIUM ON THE INTERNATIONAL STAGE
-------------- --------------
10. (C) Ambassador Gutman then noted that with the right
strategy, Belgium could play a bigger role on the world
stage. On Guantanamo, Reynders said that the Europeans had
criticized the facility there for years and that Europe now
has to help close it. Europe also needs to help keep
Afghanistan together.
11. (C) The Ambassador agreed and said that nothing should
prevent European countries from getting together and agreeing
to take the remaining prisoners so that the camp could be
closed within two months. Belgian leaders could also stress
publicly that saving Afghanistan needed everyone's
commitment. Belgium could take similar steps on climate
change.
12. (C) Reynders said that European countries had had many
discussions on both climate change and Guantanamo.
Afghanistan, however, is a very difficult issue. The key
problem is that continual rise in the number of deaths among
the coalition troops. Even in the internal discussions in
Belgium on sending F-16s to Afghanistan, some in the
government had expressed great fears about the risks. The
Ambassador, however, stressed that from Belgian leaders could
deliver speeches supporting the mission there without
increasing the physical risk.
--------------
LOUIS MICHEL FOR UNGA PRESIDENT
--------------
13. (C) Regarding the candidacy of Louis Michel for
President of the UN General Assembly, Reynders said his
candidacy had been the result of long discussions within
Belgium. Michel had been President of the francophone
liberals and was 62 years old, so "Why not?," asked Reynders.
Reynders sees Michel as the best candidate from Belgium and
believed he was supported by many in Europe. He also has
extensive contacts in Africa. Belgium had held the UNGA
Presidency before, in 1946 with Paul-Henri Spaak. Michel
would be a good candidate and good for Belgium. Reynders
acknowledged that, since Michel had been leading a campaign
of criticism against Reynders within the francophone liberal
party, it would certainly not be inconvenient for Reynders if
Michel were to leave the country.
14. (C) Foreign Minister Leterme and Michel had earlier
discussed Michel's candidacy. They had also looked at Senate
BRUSSELS 00001488 003 OF 003
President Armand Dedecker and he had been viewed as a better
choice for gaining U.S. support for the candidacy. However,
Michel had been the clear consensus choice in the subsequent
Council of Ministers meeting to select Belgium's candidate.
.