Doing Business in Wallonia
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FT SPECIAL REPORT Doing Business in Wallonia Tuesday November 3 2015 www.ft.com/reports | @ftreports Inside Tough choices National-versus-local clash of powers Federal government cuts are likely to hit for a region francophones hard Page 2 Military success desperate to Battle of the Bulge museum draws new visitors to the region reinvent itself Page 2 Medical engineering Blood cell therapy puts the region ahead in biotechnology race Page 3 A nation divided The decline of heavy industries has widened the gap with Flanders Page 3 Duncan Robinson finds a mixed economy, on a diet Liège feels threat of of bullets and pills that is not entirely healthy FedEx takeover Dark clouds may be on allonia has a knack for grewrichfromsteel,butsincetheendof Pharma prize: abidtoturn thecityintoaculturalhub. see TNT forced to scrap its Liège hub — the horizon for the TNT both killing and curing the second world war it has suffered as the industry is But it is not all good news. More than taking2,000jobswithit. people. the bottom fell out of the heavy manu- the jewel in the one in four people are still unemployed More unemployment is the last thing Express cargo centre Guns and drugs play facturinguponwhichitrelied. region’s crown and they cannot all work in a converted Wallonia needs. Its unemployment rate Page 3 W a surprisingly promi- Neighbouring Luxembourg trans- car wash. Whether Charleroi remains of11percentisaboutdoublethelevelin nent role in the French-speaking region formed itself into a financial hub, while Europe’s Detroit or becomes its new neighbouring Flanders — although it is Charleroi aims for an of Belgium. Pharmaceutical companies Flanders—theDutchspeakingregionof Berlinremainstobeseen. ‘[Tax lower than in Brussels, a deeply divided such as GSK and the maker of the M4 Belgium — became one of the richest While Charleroi rises, an axe hangs citywhereoneinfivearejobless. artistic renaissance assault rifle, FN Herstal, call the region parts of Europe thanks to its rapid post- over Liège. Wallonia’s biggest city is a reform] is As Brussels’ woes attest, it is not just Mayor says home. war industrialisation. By contrast, cities crucial hub for logistics giant TNT a very Wallonia that suffers from high unem- culture can In short, Wallonia’s economy is quite in southern Belgium, such as Charleroi, Express,whichhaspumped€100minto ployment in Belgium. In a bid to get the help diverse. But with a diet of bullets and which relied heavily on the region’snow thesitesince2000.Butthousandscould important Belgian economy firing again, the fed- pills, it is not altogether healthy. While defunct coal-mining and steelmaking lose their jobs following the Dutch step, but it is eral government earlier this year struggling growth has picked up at 1.1 per cent for industries,struggledtoadjust. group’s €4.4bn takeover by US rival pushed through a €7.2bn “tax shift” — a city to 2015—roughlyinlinewiththeeurozone There is some cause for optimism. FedEx. The threat stems not from cor- just a step fiscally neutral package of tax cuts and economic as a whole — high unemployment and Charleroi,forinstance,isenjoyingahip- porate raiders but from another Belgian — there are tax increases — aimed at making it even higher taxes continue to dog the ster renaissance. A car wash has been city: Brussels. Officials at the European cheaper to hire people. Marcel Claes, revival region,whichaccountsforaboutaquar- convertedintoanartsandcraftmarket, Commission are mulling what demands more steps chief executive of Belgium’s American Page 4 terofBelgium’sGDP. as a wave of gentrification grips the city. to make — if any — in order to allow the needed’ Chamber of Commerce, AmCham, says Thesearenotnewproblems.Wallonia Moneyisbeingpumpedin—€40m—in deal to go ahead. One option would Continuedonpage2 Leadership accused of putting the Flamboyant business sale of small arms before ethics pair give life to zoo Defence This is not the usual approach of a Visitor attractions company listed on the stock market. Exporting guns to the Middle ThisisonereasonMrDombhasdecided Pandas and entrepreneurs tobackadealtotakePairiDaizaprivate, East is one of the most have become added — and buying out minority shareholders with contentious issues in Belgian controversial — draws in the a €23m investment from Marc Coucke, politics, reports Christian Oliver awellknownFlemishentrepreneur. region, writes Alex Barker Together the two will become per- haps the most flamboyant pairing in Thelongstandingeconomicimportance Belgian business. To quell fears over of gunmaker FN Herstal to Wallonia When pandas Hao Hao and Xing Hui Pairi Daiza turning into a profit centre, poses some uncomfortable questions were loaned to Belgium it was not just a the two men have stressed the deal is to about the region’s dependence on small gesture of friendship from China, but protect bold investments that no share- armssalestotheMiddleEast. the climax to Wallonia’s most eccentric holderwouldaccept. Based in the greater Liège area, FN andimprobablebusinessbet. The Walloon-Fleming double act also Herstal is an undisputed giant in the Their arrival last year at Pairi Daiza brings some closure to some extraordi- arms market. The FN FAL rifle is an zoo came little more than two decades naryPanda-relatedtensions. iconic weapon among armies the world after Eric Domb found a dilapidated Flemish politicians cried foul over, occupying a status similar to the abbey in the Walloon outback and when China chose Pairi Daiza for the American M16 and the Russian decided to give up being a lawyer to pandas’ loan, saying prime minister Kalashnikov. become a zoo-maker and wildlife Elio Di Rupo had done favours The company cemented its position impresario. for his home region. Bart De Wever, the as a world leader in 2013 by beating Colt With no experience of the zoo busi- pugnacious mayor of Antwerp, made andRemingtontoanall-importantcon- Military favourite: the M4 carbine rifle, an iconic weapon among armies the world over — Getty Images ness, poor public transport links, lim- his point by arriving at a gala awards tracttosupplytheUSarmywithM4and ited funds, no subsidies, no experience ceremony dressed in a panda costume. M4A1 carbines, standard infantry government show. While Walloon com- meanwhile,hasexposedbitterFlemish- gium drew up decrees in 2012 aimed at of working in the theme park arena and weapons. “FN has always been the panies sold €69m worth of firearms to Walloonfaultlines. making weapons export licensing more a mountain of Walloon bureaucracy to motor of the Belgian defence industry,” the US in 2013, Saudi Arabia bought In broad terms, Flemish lawmakers accountable. overcome,thiswasalong-shotatbest. says Nils Duquet, a researcher at the €77m-worth.TheUnitedArabEmirates and activist groups have suggested that Walloniasaysithasinstituted“amore It initially went so badly Mr Domb ‘We’ve established, without FlemishPeaceInstitute. and Oman were also important buyers, Wallonia prioritises contracts over ethi- modern licensing mechanism guaran- was giving tickets away. Now, some 20 subsidies, a profitable But the question of where 126-year- with €15m and €8m of purchases cal concerns. But Walloons say they are teeing the respect of ethical principles years on — and a few snow leopards, old FN sells guns is one of the most con- respectively. The Middle Eastern mar- simply an easy target because they while still securing maximum legal meerkats and elephants later — it has zoo in the least touristy tentious arguments in Belgian politics. ketsareespeciallysensitiveasolderBel- make more traditional small arms. security and predictability for Walloon become one of Belgium’s top attrac- place in Belgium’ The company is 100 per cent owned by gian rifles have been photographed in Flanders, by contrast, specialises in companiesactiveinthedefencesector”. tions, attracting 1.4m visitors last year the Walloon government and there has the hands of rebels in Syria and Libya, high-tech equipment and components However, Jihan Seniora, a researcher andgenerating€41m. Pairi Daiza’s response was to hit back been a long-running debate over how andcampaignersarecallingforEUarms forsectorssuchasaerospace. with the Brussels-based Group for “I can’t tell you if it is a miracle,”says with claims that Flanders had cosseted Walloniaishandlingwhatwouldappear makers only to export to certain coun- The political maelstrom over Bel- Research and Information on Peace and Yvan Moreau, finance director of Pairi itsowntwozoos—AntwerpandPlanck- tobeaglaringconflictofinterest. tries if they receive old weapons in gium’s arms exports exploded in 2002, Security, says that the Walloon govern- Daiza. “But our main concern is to be endael — with €100m in questionable To human rights groups, Wallonia is returntostopregionalproliferation. when the country was split over mentmadeagreatshowofthedecreeto different — people say differentiate or statesubsidies. insufficiently critical about the issuance FN Herstal refused to answer ques- whether to send a large consignment of appear to act. “The practice did not die.Andwebelieveinthat.” At the time there were threats of a of export licences because of the impor- tions about its sales or the broader con- FN weapons to Nepal. This deal raised reallychange,”shesays. This is no exaggeration. Mr Domb is a complaint to the European Commis- tance of the arms industry to the flictofinterestconcerningitsownership concernsasNepaleseforceswerelocked When asked, Mr Duquet agreed that dreamer with a magpie’s eye for foreign sion, but Mr Moreau