VZCZCXRO6224
RR RUEHAG RUEHDF RUEHIK RUEHLZ
DE RUEHBS #2926/01 2411504
ZNR UUUUU ZZH
R 291504Z AUG 06
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC 2934
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 02 BRUSSELS 002926 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/ESC, EUR/ERA AND EUR/UBI 
TREASURY FOR OASIA/ICN - ATUKORALA 
USDOC FOR 3133/USFCS/OIO/EUR 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ENRG EWWT EIND BE
SUBJECT:  BELGIAN STEWPOT: August 29, 2006 
 
 
1-2. U.S. Investment in Belgium Rises 
¶3. Energy Prices Hit Belgian Trade Surplus 
¶4.   Suez Spies Against Itself in Belgium? 
¶5. Belgian Risk Capital Lags Behind EU Average 
6-7. Delhaize (Food Lion) Expands Its U.S. Presence 
¶8.   Chinese Port Operator Interested in Belgium 
¶9.   No Ceiling for Wallonia's Glass Industry 
¶10. Putting Money Where the Market Is 
 
------------------------------ 
Value of U.S. Investment Rises 
------------------------------ 
¶1.  (U) According to statistics issued in July by the Survey of 
Current Business, the value of the stock of U.S. Foreign Direct 
Investment in Belgium rose by over $6 billion in 2005.  U.S. 
investment in Belgium reached $36.73 billion in value, ranking 
Belgium ninth within the EU-25.  The increase is attributed both to 
new investment and to changes in the exchange rate that revalued 
existing investments.  While statistics do not break out investment 
by sector, post credits the chemical, pharmaceutical and vehicle 
manufacturing sectors with the bulk of the increase. 
 
¶2. (U) Luxembourg continues its tradition of outranking Belgium with 
a $61.61 billion stock of U.S. investment, a phenomenon that 
specialists ascribe to cross-border leasing and the preeminence of 
the Luxembourg banking system. 
 
--------------------------------------- 
Energy Prices Hit Belgian Trade Surplus 
--------------------------------------- 
¶3. (U) The Belgian Institute for National Accounts published Belgian 
trade data for June, showing a 1.28 billion euro surplus for the 
month, the highest surplus figure since June 2003.  Despite the June 
figures, Belgium's trade surplus for the first half of 2006 is only 
770 million euro, compared to 3.3 billion euro for the same period 
one year ago.  Higher energy prices are seen as the main reason for 
this deterioration in Belgium's trade balance.  Although Belgian 
petroleum and gas consumption is marginally down, higher global 
prices for importing them resulted in a net trade deficit for the 
first third of 2006 (for which full data are available), and the 
Belgian National Bank reports a deterioration in the terms of trade 
for Belgian exports. 
 
------------------------------------- 
Suez Spies Against Itself in Belgium? 
------------------------------------- 
¶4. (U) Belgium's criminal court accepted a case from the state 
prosecutor charging that Suez, the French utility giant, pursued 
industrial espionage against Belgium's major electricity supplier 
Electrabel.  At the time of the alleged espionage in 2004, Suez was 
the majority shareholder of Electrabel; it merged with and took over 
the Belgian power company in 2005.  At the time, Electrabel filed a 
complaint when it appeared that its computer and telephone systems 
integrity had been compromised.  After two years of investigation, 
Suez finds itself defending itself against... itself.  The 
Electrabel complaint cannot be withdrawn under Belgian law, even 
though the two companies are now one.  (Comments:  While the logical 
thing for the GOB to do is drop the case, the tacit lesson will be 
that only unsuccessful industrial spying gets punished.  It appears 
likely that the insider knowledge gained by Suez via espionage 
probably contributed to its creation of an attractive takeover offer 
for Electrabel.) 
 
------------------------------------ 
Belgian Risk Capital Lags EU Average 
------------------------------------ 
¶5. (U) Belgian business analysts asking why Belgium is not spawning 
more start-ups and job creation may have found part of the answer. 
Despite a level of capital investment on par with other EU advanced 
economies, Belgium lags in the percentage of risk capital invested 
in new enterprises.  As a percent of GDP, the EU averages 0.113 
percent invested in new technology, high risk ventures.  The Belgian 
figure is one third that amount, 0.038 percent.  EU leaders on this 
score are Denmark (0.401 percent) and the UK (0.292 percent of GDP) 
- both of which coincidentally have lower unemployment rates than 
Belgium.  "Business angels" reportedly funded only 49 new companies 
in Belgium in 2005, for a total of 5 million euros.  While clearly 
only one among many factors, weak venture capital resources 
undoubtedly hurt Belgian entrepreneurs and job creation potential. 
 
--------------------------------------------- --- 
Delhaize (Food Lion) Expands Its U.S. Presence 
--------------------------------------------- --- 
¶6. (U) One of Belgium's more visible investments in the U.S. is 
having a banner year.  Food retailer Delhaize recorded 3.4 percent 
growth in U.S. sales in the first quarter of 2006, and for the first 
half of 2006 saw its global turnover expand by 9 percent, to 9.7 
 
BRUSSELS 00002926  002 OF 002 
 
 
billion euros.  Further Delhaize investment in the U.S. is assured, 
as American stores accounted for 80 percent of profits last year. 
Total Delhaize capital investment in the U.S. is expected to rise by 
$150 million, to $700 million over the coming year. 
 
¶7. (U) Delhaize retails food in the U.S. through its Food Lion, 
Hannaford, Bloom, Harveys, Bottom Dollar, and Kash n'Karry 
supermarket chains.  It opened the first U.S. Food Lion store in 
1974, and now operates 1,537 stores covering the entire eastern 
seaboard, employing over 104,000 people.  Belgium's biggest food 
retailer hopes to rival Wal-Mart in the Washington area.  This year 
Delhaize will remodel 15 Food Lions in the Washington area into 
"Bottom Dollar" stores featuring lower prices through lower overhead 
and stocking costs, having customers bag their own groceries, 
selling packaged foods in bulk, replacing fresh bakery and deli 
products with prepackaged, and limiting fresh meats and vegetables 
to the most popular items. 
 
------------------------------------------- 
Chinese Port Operator Interested in Belgium 
------------------------------------------- 
¶8.  (U) China's largest port operator, Shanghai International Port 
Co., may invest in Belgium's port of Zeebruges.  According to media 
reports, Shanghai Port wants to invest in European shipping 
terminals in the Mediterranean and on the Atlantic coast to further 
its network, and may take a stake in Zeebruges' Moeller-Maersk 
terminal.  Reportedly, an investment by Shanghai Port would be the 
first by a Chinese port operator abroad.  Zeebruges is already the 
world's largest roll-on, roll-off port for new cars, a major hub for 
LNG shipments, and a growing container handler (1.41 million in 
2005).  It remains a distant second port, however, compared to 
Antwerp's 4.48 million containers handled in 2005. 
 
-------------------------------------- 
No Ceiling for Wallonia's Glass Industry 
-------------------------------------- 
¶9.  (U) One of Wallonia's dominant economic sectors, the glass 
industry, appears to be recovering after several years of flat 
production and revenue.  Belgium produces glassware, industrial 
glass, fiber optics, and fiberglass insulation, recording over 2.1 
billion euros in sales last year.  Hollow glass (bottles and 
stemware) and technical glass, in particular, increased in 
production by almost ten percent in 2005.  This burst in 
productivity mainly comes from investment in the latest machinery 
and techniques, lowering costs and improving efficiency.  The 
American glass producer Owens-Corning, and French giant 
Saint-Gobain, both make glass in Wallonia. There is, however, a fly 
in the wineglass; glassmakers' improved manufacturing methods have 
reduced their need for labor, allowing 450 jobs to be eliminated in 
¶2005. 
 
--------------------------------- 
Putting Money Where the Market Is 
--------------------------------- 
¶10. (U) Good news for visitors:  Belgian banks will install the 
country's first stand-alone ATMs in high-traffic locations such as 
shopping malls, theme parks, train stations and airports.  Fortis, 
Dexia, KBC and ING are all negotiating contracts to install 
stand-alone ATMs; Fortis alone plans to add 34 such "cash points" by 
the end of 2006.  The banks hope to use the new ATMs to increase 
their visibility to banking customers, and also to increase revenues 
from fees levied on customers of other banks who use their cash 
machines.  (Before now you could find ATMs only attached to 
full-service banks and often out of cash!) 
 
Imbrie