VZCZCXYZ0003
RR RUEHWEB

DE RUEHBS #3487/01 3460741
ZNR UUUUU ZZH
R 120741Z DEC 07
FM AMEMBASSY BRUSSELS
TO RUEHC/SECSTATE WASHDC 6799
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNMEN/EU MEMBER STATES
RUEHBJ/AMEMBASSY BEIJING 1727
RUEHRL/AMEMBASSY BERLIN 1604
RUEHFR/AMEMBASSY PARIS 2040
RUEHTC/AMEMBASSY THE HAGUE 8576
RUEHLE/AMEMBASSY LUXEMBOURG 8377

UNCLAS BRUSSELS 003487 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/OIA, EB/TPP/IPE AND EUR/UE 
TREASURY FOR OASIA/ICN - ATUKORALA 
USDOC FOR 4212/OECA/JLEVINE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINT EINV SENV BE CH
SUBJECT: BRUSSELS BILAT BREW: December 12, 2007 
 
(U)  Summary:  The Brussels Bilat Brew gives an overview of the most 
recent Belgian economic issues.  The latest: Belgium has two 'Smart 
Cities'; Chinese insurance firm invests heavily in Fortis; the 
rising cost of government bonds; Wallonia's economy may be catching 
up; and company numbers for each region.  End Summary. 
 
------------------------ 
Belgium's 'Smart Cities' 
------------------------ 
 
¶1. (U) A study published in October by the Vienna University of 
Technology ranked Ghent (16) and Brugge (20) as two among the top 20 
of European 'Smart Cities'.  The survey ranked medium-sized 
(100,000-500,000 inhabitants) cities in Europe, using a system that 
evaluated the economy, people, governance, mobility, and environment 
and living circumstances, all of which were based on certain 'smart' 
characteristics.  For example, the characteristics considered for a 
'smart economy' were the levels of innovative spirit, 
entrepreneurship, economic image and trademarks, productivity, 
flexibility of labor markets and international recognition.  Both 
cities received their highest ratings in the categories of smart 
living and smart mobility, identifying the high quality of life and 
accessibility in Belgium as a whole.  Overall, the study has the 
potential to serve as a useful and comprehensive resource for 
individuals and businesses for investment and relocation purposes in 
Europe.  More information can be found at www.smart-cities.eu. 
 
 
---------------------------- 
Chinese Investment in FORTIS 
---------------------------- 
 
¶2. (U) The Chinese Insurance Firm, Ping An Insurance (Group), has 
announced a $2.7 billion investment in the Dutch-Belgian bank Fortis 
NV.  Fortis was a member of the three bank consortium which 
successfully took over the Dutch Bank ABN-AMRO, the largest bank 
take-over in history.   The Ping An investment will give the Chinese 
firm a 4.2% stake in Fortis.  Press reports state that the 
investment is part of Ping An's strategy to expand its insurance 
business in its home market in China.  It intends to tap Fortis' 
expertise in selling insurance through its bank branches.  For 
Fortis' part, the Ping An investment helps Fortis recover from its 
financial exertions in the long, hard-fought ABN-AMRO takeover. 
Markets agreed, at least initially, driving up the value of Fortis 
shares by 2% the day the deal was announced. 
 
------------------------------------------ 
Government Crisis Raising Borrowing Costs? 
------------------------------------------ 
 
¶3. (U) Luc Coene, currently vice-governor of the National Bank of 
Belgium, claims that Belgium is paying an economic price for its 
prolonged political crisis.  Coene - in another life chief of staff 
to PM Verhofstadt - points out that Belgian government bonds are 
currently priced 25 basic points above similar German bonds (known 
as bunds), and that this higher interest rate of 6.25 percent costs 
the Belgian treasury at least 10 million euros per year.  However, 
an inquiry by the Belgian financial press revealed that there is 
always a higher spread of at least 10 basic points on GOB bonds 
compared to the German bonds, and that London banks are now even 
pointing out this difference to prospective buyers, urging them to 
buy the Belgian bonds, considering the fact that the GOB 'will never 
go bankrupt'.  Additionally, the rating agency Fitch maintains its 
AA plus rating for the Kingdom of Belgium, adding it sees no reason 
why Belgium all of a sudden would be unable to repay its outstanding 
debt. 
 
------------------------- 
Is Wallonia Catching Up? 
------------------------- 
 
¶4. (U) Since 2000, Wallonia's economy has grown on average 1.8 
percent per year.  This is slightly higher than that of wealthier 
Flanders, whose economy grew on average 1.7 percent per year over 
the same period.  Analysts do not attribute Wallonia's growth to the 
"Marshall Plan" for the region introduced in 2005.  Wallonia still 
lags behind Flanders in overall regional GDP and employment. 
Average unemployment in Wallonia is cited at 12 percent, compared to 
an average of six percent in Flanders.  (COMMENT: Wallonian growth, 
however, begins from a lower base.  END COMMENT.) 
-------------------------------------- 
Regional statistics on Company Numbers 
-------------------------------------- 
 
¶5. (U) According to Marc Verwilghen, Federal Minister of Economics 
in the Belgian Parliament, Flanders is the location of 512,580 
companies (58% of the total number of companies in Belgium), 
compared to the Brussels region which has 120,198 (14%) and 
Wallonia, where there are 240,952 companies (28%).  The number of 
companies that have subsidiaries in more than one region amounts to 
9,339 (11%). 
 
FOX