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DE RUEHBS #1315/01 1091006
ZNR UUUUU ZZH(CCY TEXT AND CAPTION ADAB5701 MSI0276)
R 191006Z APR 07
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC 5140
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/USDOC WASHDC

UNCLAS BRUSSELS 001315 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
STATE FOR EUR/UBI AND PM 
USDOC FOR 4212/OECA/JLEVINE 
 
C O R R E C T E D  C O P Y  (TEXT AND CAPTION) 
 
E.O. 12958: N/A 
TAGS: ETTC PARM PGOV BE
SUBJECT: Belgian Regions Mastering Export Control 
Responsibilities 
 
 
¶1. (SBU) Summary.  In 2003, the Belgian federal 
government handed over the responsibility and final 
authority of licensing arms exports to the regional 
governments of Wallonia, Flanders, and Brussels 
Capital.  Wallonia and Flanders, which together 
account for 95 percent of Belgium's exports, have 
implemented procedures that are quite extensive and 
more restrictive than the European average.  Despite 
early concerns about regional capabilities, 
regionalization of licensing appears to have led to 
increased attention and scrutiny following a 
training and transition period.  A loophole in 
Belgian regulation that the regions inherited from 
federal level oversight, however, may allow brokers 
to circumvent arms embargoes or encourage venue 
shopping by arms and dual use technology exporters. 
End Summary. 
------------------------------------- 
Transfer of Responsibility to Regions 
------------------------------------- 
¶2. (U) In 2003 Belgium transferred the 
responsibility of licensing arms exports to the 
three regional governments.  This reflected 
Belgium's ongoing devolution of power to the 
regions, part of a political compromise to remain a 
federal state comprised of two strong linguistic 
groups (French and Dutch speaking) inhabiting three 
regions (Wallonia, Flanders, and Brussels Capital 
Region).  The federal government retained 
responsibility for arms trade relating to police and 
armed forces, as well as sales of equipment 
purchased from the U.S. government and equipment 
requiring end-use certification.  Each region has 
final authority to grant export licenses for 
commercial sales of military and dual use equipment 
by companies located in their region.  Of course, 
the regions are bound by Belgium's international 
obligations, including multilateral export control 
regimes governing arms and dual-use technologies. 
Because the federal government retains primacy in 
international relations, close cooperation between 
the regional governments and federal agencies 
(primarily the Foreign Ministry) is necessary to 
provide guidance and intelligence to the regions 
about how certain arms exports may affect Belgian 
national security interests.  The federal government 
is responsible for all export control enforcement, 
through Belgian Customs and Federal Prosecutors, 
because customs and law enforcement remain federal 
purviews. 
 
¶3. (U) Due to its EU membership and other binding 
political and economic treaty commitments, Belgium 
must take into account many restrictions in terms of 
arms exports.  Belgium is a member of the Benelux 
Union Treaty and Benelux Agreements, which state 
that licensing systems for import, export, and 
transit of arms must be equal among the three member 
states (Belgium, Netherlands and Luxembourg), and 
grants union-wide validity to licenses issued by any 
of the members.  Trading of arms or dual use goods 
within the Benelux Union requires no license. 
Belgium is also a member of the Belgian-Luxembourg 
Economic Union.  This union requires shared 
regulations and even shared documentation for filing 
export license requests.  Belgium's trade 
commitments under European Union treaties are even 
more comprehensive.  Belgium adheres to an EU Code 
of Conduct specifying which items are restricted or 
require a license.  This EU Code includes a common 
list of restricted goods, details EU regulation of 
dual use products, and includes "catch all" denials 
of exports to proliferation-risk countries of items 
not specifically on international control lists. 
 
---------------------------- 
Flanders regional procedures 
---------------------------- 
¶4. (U) On March 26, 2007, the Flemish parliament 
hosted a presentation by the Flemish Peace Institute 
(FPI) on the Flemish arms export regime.  In 
attendance were representatives from the diplomatic 
community, EU institutions, some private sector 
manufacturers, and academics.  The FPI presented its 
findings in regard to the 2003 regionalization of 
arms export and review function in Flanders. 
 
 
¶5. (U) According to regional data, 181 licenses were 
granted in Flanders in 2006, valued at nearly 200 
million Euros.  The high point of Flemish regional 
arms exports came in 2004, when total value reached 
about 480 million Euros.  The largest export 
destination for such Flemish exports is the EU (45 
percent), followed by the U.S. (36.6 percent). 
Compared to the other regions in Belgium, licensed 
exports from Flanders are generally in the high tech 
fields such as display screens and software.  By 
value, Walloon arms exports account for 70 percent 
of total Belgian exports, Flemish exports for 25 
percent, and Brussels exports about 5 percent.  The 
nature of arms exports, with large one-time deals, 
leads to a pattern of great variance in value across 
years. 
¶6. (U) While the Belgian federal government and all 
regional governments adhere to regional trade rules 
as well as international codes of conduct, Flanders 
has voluntarily added four extra classifications to 
the EU common military list.  These extra groups 
further restrict the export of certain rifles, law 
enforcement materials, and other catch-all goods 
that have a military end-use function, such as 
airport security supplies, software, and vehicle 
parts.  The most significant addition, however, is 
the Flemish restriction on display and visualization 
screens.  While these items are not seen as 
armaments, they are restricted because of their 
inherent application in military settings.  One 
company, BARCO, headquartered in Kortrijk, Belgium, 
is almost exclusively responsible for exports of 
screens from Flanders.  FPI participants discussed 
how the inclusion of screens on the military list 
could act as an anticompetitive obstacle to their 
sale and distribution, but also exempts them from EU 
common market regulation. 
 
--------------------------- 
Ensuring Credible End Users 
--------------------------- 
¶7. (U) When issuing export licenses, Flanders 
employs two methods to ensure that the end user of a 
Belgian product (or product created with Belgian 
content) is appropriate.  First, a country that is 
included on the Flemish "Befriended Nations" list is 
allowed to re-export goods that were exported under 
a Flemish license, without any additional consent of 
the Flemish government.  These countries, such as EU 
member states, the United States, Canada, and many 
western nations, are thus delegated the 
responsibility of confirming a qualified end user. 
This enables military products containing Flemish 
content to reach countries that could not have 
secured a license.  An example is that U.S. defense 
companies are allowed by the USG to export military 
goods to Israel and Saudi Arabia; however, these 
nations would most likely not be granted export 
licenses by the Flemish.  Befriended nations exports 
account for 76.8 percent of exports. 
 
¶8. (U) Another form of restriction addresses arms 
shipments that pass through the Belgian region. 
Transit licenses are required by both Flanders and 
Wallonia when sensitive goods on the restricted list 
pass through their territory.  Whether or not a 
license is granted or even required largely has to 
do with the sensitivity of what is being 
transferred, how long it will be on the region's 
soil, and the specific exporter and recipient of the 
shipment.  Transport licenses are less sensitive, as 
evidenced by the fact that regions may deny an 
export license to a certain country listed as an end 
user, but will allow a shipment through Belgium for 
goods destined for the same country. 
 
---------------------------- 
Walloon Licensing Procedures 
---------------------------- 
¶9. (U) Wallonia has traditionally been the major 
arms exporting region in Belgium, accounting for 70- 
75 percent of the nation's exports.  It is home to 
well known firms such as FN Herstal and Mecar that 
have supplied the USG, among others.  Both companies 
are manufacturers of arms, ammunition, and weapons 
 
systems for military and police forces.  In 2006, 
Wallonia issued 767 arms export licenses with a 
value of 760.4 million euros.  The main customers, 
by value, were the United States and Saudi Arabia. 
(Detailed statistics are not currently available for 
Wallonia past 2005.) 
 
------------------------ 
Layers of Responsibility 
------------------------ 
¶10. (U) Since the 2003 regionalization of 
responsibility to license arms exports, the regional 
governments adopted their own review mechanisms, in 
part mirroring the previous federal system.  In 2004 
a reconfigured system was implemented.  Multiple 
regional groups were created to ensure proper 
oversight and adequate expertise used in the 
evaluation process.  The main group includes a 
director, a chemical engineer experienced in dual 
use technology, and several other agents experienced 
in arms export licensing.  The new structures 
emphasize the integration of information sharing and 
gathering mechanisms, with the goal of increasing 
the transparency and traceability of exports, and 
enhancing regional appraisal expertise.  Regional 
committees were assembled specifically to analyze 
issues like human rights records of end-use 
countries, as well as international law and 
political considerations.  A larger advisory council 
was also formed in each region, to met several 
times during the year to evaluate te most sensitive 
export licenses.  Each regio also now has a 
procedure to forward particulrly sensitive 
applications to the regional minister responsible 
for export control for his or her personal review 
and decision.  In 2004 the Walloon government, under 
pressure from human rights groups, reversed an 
earlier decision and denied export licenses for 
technology transfers to Tanzania for the 
construction of an ammunition factory, citing 
overall unrest in the Great Lakes region.  Walloon 
officials have since been tougher on cases involving 
states with internal turmoil and potential use of 
Belgian-made arms for human rights abuses. 
 
¶11. (U) Walloon, Flemish and Brussels officials take 
into consideration the same criteria in deciding 
whether or not to grant an export license.  They 
adhere to the European Code of Conduct, obey EU and 
UN arms embargos and international treaties 
regarding arms, and evaluate the trustworthiness of 
the recipient nation.  The regions maintain a list 
of nations for which they do not require end-user 
certification, trusting them to ensure the end user 
is reputable; these are generally other EU nations 
and NATO member states.  For all other countries, 
the end-user certificate must be detailed as well as 
verified by the Belgian ambassador to whichever 
country is listed as the end user, or by another 
Belgian ambassador who is assigned jurisdiction for 
these purposes over that country. 
 
-------------------------------- 
The Bottom Line: Denied Licenses 
-------------------------------- 
¶12. (U) In 2006, Flemish authorities denied five 
licenses, or 2.69 percent of all export requests 
filed.  Four of them were denied for unspecified 
reasons or political reasons, and one (with Austria) 
was declined temporarily because of a paperwork 
error that was later resolved.  Licenses were denied 
for China, Venezuela, and Thailand for political 
reasons, and in the case of China, because of the EU 
arms embargo.  Although these licenses were denied, 
the FPI questioned several other licenses granted to 
what they deemed suspicious countries and end users, 
among them Pakistan, India, Colombia, Nigeria, 
Angola, Israel, Russia, and Turkey.  The FPI 
questioned them as end users, citing internal 
tensions, civil war, human rights records, and 
regional conflicts.  Most of the goods shipped to 
these countries were catch-all category goods, such 
as visualization screens and armored transport 
vehicles, rather than actual weapons. 
 
¶13. (U) In Wallonia in 2005, 14 licenses or just 
over 2 percent of all export applications were 
 
denied.  The denied licenses all had end users in 
the Middle East, Africa, or the Indian sub- 
continent.  Approved licenses for Middle Eastern 
customers totaled 101.5 million Euros in value that 
year.  Flemish and Walloon government review 
procedures appear more restrictive than the European 
average of less than 1 percent of export licenses 
denied. 
 
-------------------------- 
Brokering Loophole Concern 
-------------------------- 
¶14. (U) One issue of concern is brokering by a 
Flemish arms dealer between two third parties. 
Currently Flanders requires only that Flemish arm 
brokers be registered and granted a license to 
broker arms sales, a requirement Belgian federal 
government previously enforced.  Flanders does not 
require that specific deals brokered between third 
parties by Flemish nationals or companies be issued 
a license.  Reportedly, this practice runs contrary 
to EU Common Position 2003/468 CFSP, which states 
that specific brokering transactions should be 
investigated and licensed to prevent broker 
circumvention of international agreements and 
embargoes regarding military goods.  Because 
Wallonia, like Flanders, inherited much of its 
regulatory framework from pre-existing federal 
export regulation, Wallonia too appears to require 
brokers to register but not to request licenses for 
individual brokered sales between third countries. 
 
-------- 
Comments 
-------- 
¶15. (SBU) The regionalization of Belgian arms and 
dual use export licensing authority has advantages 
and disadvantages.  Regional governments are closer 
to the exporting companies, and therefore may be 
better suited for communicating with the exporter, 
researching the transaction, and adjudicating the 
license application.  Early fears of weak regional 
expertise to adjudicate applications have been 
quelled, and the procedures of Flanders and 
Wallonia, based on present data, appear demanding, 
thorough, and more restrictive than the EU average. 
The proximity between reviewer and applicant, 
however, could potentially lead to increased 
collusion between business and government in order 
exclude goods from EU common market regulations, 
boost regional export sales, or foster local 
economic interests (such as employment). 
Regionalization of adjudication in Belgium also 
permits companies to "shop" for the most favorable 
venue in which to process its export requests.  That 
is, if a company has facilities in more than one 
region, it can choose from which region to request a 
license.  This raises the potential for anti- 
competitive behaviors by regional governments 
seeking to attract transactions, production 
facilities and headquarters of arms manufacturers 
and sensitive technologies away from other regions. 
The end result could be an inappropriately close 
relationship between arms dealers and licensing 
officials leading to sales that might be unwise or 
even illegal.  At present, we have observed no such 
cases; the greater concern is the broker loophole 
cited para 14.  Post will continue to monitor 
regional export controls for further data on their 
operation and effectiveness. 
 
FOX