FT SPECIAL REPORT Doing Business in

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 trans- car wash. Whether 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 . 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 , 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 had done favours The company cemented its position impresario. for his home region. , the as a world leader in 2013 by beating Colt With no experience of the zoo busi- pugnacious mayor of , 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 is now keen to region’sstrugglingeconomy. byWallonia. in a brutal struggle with Maoist rebels. Wallonia did not seem to be refusing trinkets. “When Eric travels he comes avoid another flare-up. “I don’t want to “The basis of everything [that Wallo- Wallonia’s leaders acknowledge they The government survived a no-confi- more export licences after the decree. back with a lot,” says Mr Moreau, who start a new battle with Antwerp zoo in nia] has done is about keeping the have to walk a difficult tightrope dence vote but a senior minister,Magda While admitting that 23 per cent of laughs as he explains how Pairi Daiza the media,” he says. “We are in contact employment and technology in Bel- between domestic economic interests Aelvoet,resigned. cases in 2013 were sensitive, Wallonia once spent more on investment in one with the Flemish region and trying to gium,”saysMrDuquet. and human rights concerns. Wallonia Partly as a result of the turmoil over refusedonlythreeandgranted1,348.In yearthanitsturnover. findafairsolution.” Wallonia robustly defends its export has more than 30 arms companies, Nepal, export licences became the pre- 2012,itgranted1,361andrejected10. The million-plus stones in its Chinese In any event, it is a reminder of how standards and says it instituted reforms employing — directly and indirectly — serve of regional governments in 2003. Ms Seniora says Wallonia’s grounds garden were shipped from China. Pairi Daiza has managed to succeed in2012toimprovegovernance.Buteth- about 7,600 people. FN is by far the big- In 2009 Wallonia’s export criteria leapt for the rejections remained very nar- When Mr Domb took a fancy to a despitetheodds. ical questions about Europe’s arms gest. It has a global workforce of 2,400, back to the top of the national agenda rowly defined, such as whether buyers particular kind of Indonesian lava, he “We’ve established, without subsi- industry have become more complex as with manufacturing operations in the when FN sold weapons to Libyan forces hadrecentlybeenunderembargo,while brought 250 containers worth to pave dies,aprofitablezoointheleasttouristy western forces face budget cuts. Middle US,UK,Portugal,FinlandandJapan. under Colonel Muammer Gaddafi, Flanders often took a broader ethical the paths of Pairi Daiza. A Balinese placeinBelgium,”MrDombhassaid. Eastern countries are filling that vac- The debate over whether Wallonia is ostensibly for peacekeeping. In the overview. “In Wallonia, they take an temple is so authentic that it has been “If that is possible here, anything is uum, as export data from the Walloon too lenient in relation to gun exports, aftermath of the Libyan scandal, Bel- economicapproachtotheissue.” consecrated. possibleinWallonia.” 2 ★ FINANCIALTIMES Tuesday 3 November 2015 Doing Business in Wallonia ‘Kamikaze coalition’ makes progress against the odds Tough calls for a region

Politics right in its coalitions, nearly always power to sort of punish the regions,”he his path in part eased by being a recog- €300m,saysMrMagnette.Thecutswill leading to a clear link between its says. nisable face. He is the son — and hit the Dutch-speaking region, too, but desperate to Federal government cuts are regional and federal governments. The This leaves Wallonia vulnerable. The startling lookalike — of former Belgian will arguably cause more harm in 2014 election severed this umbilical federal government is dominated by the foreign minister and European Com- Wallonia, where the public sector plays reinvent itself likely to hit francophones cord for Wallonia while Flanders’ tether (NVA), a right- missioner Louis Michel. Mr Michel jun- alargerroleintheeconomy. hard, says Duncan Robinson remainedattached. wing Flemish party that wants an ior emerged as the surprise leader after Although Wallonia has powers over Continuedfrompage1 The prognosis among commentators increasingly independent Flanders. It relatively quick — by Belgian standards everything from energy to agriculture, that the move addressed “the key con- was grim. With the cord between two of alsocontrolstheregionalgovernmentin —negotiationsofjustfivemonths. matters such as taxation are decided by cerns of businesses” looking to invest Ayearago,aquietrevolutiontookplace Belgium’s many governments cut, a the Dutch-speaking part of the country. Joining forces with the NVAwas risky thefederalgovernment. in Wallonia. Near the top of this list is in Belgian politics. After five months of year of strife and strikes — whipped up In total, three of the four governing par- for Mr Michel. Critics questioned the Complaints about the coming cuts Belgium’s total tax wedge, which is the talks, a new coalition emerged in Octo- by a spurned socialist party — was ties are from the Dutch speaking region. legitimacy of a government with only have fallen on deaf ears. “We are in a highest in Europe, when national and ber 2014 containing the usual mish- expected in the country’s southern “Thisfederalgovernmentinfactreflects one francophone party.The supposedly state of complete non co-operation,” local taxes are included alongside social mash of Flemish and francophone par- regionfromMonstoLiège. poor prospects of Mr Michel’sgroup led saysMrMagnette. insurance payments. But Mr Claes cau- ties,butwithoneexception. “Somecommentatorspredictedenor- to the tie-up being dubbed the “Kami- This fiscal blow illustrates a problem tionedthattherewasstilllotstodo:“Itis For the first time in a quarter of a cen- mous schisms, with the Walloons trying kazecoalition”bytheBelgianpress. faced by both of Belgium’sregional gov- averyimportantstep,butitisjustastep tury the Parti Socialiste (PS), which has to block the federal government in any How Brussels and ButMrMichel’sgovernmenthasbeen ernments. They might be increasingly —therearemorestepsneeded.” historicallydominatedWalloonpolitics, waypossible,”saysDaveSinardet,apro- Namur work together abletopushthroughaseriesofreforms. powerful,butthebigdecisionsaremade Economists are confident that the tax would not be part of the federal coali- fessor of political science at the Free These included raising the retirement elsewhere,beitinBrusselsorBeijing. shift — which will cut employer contri- tiongovernment. University of Brussels. But, he says, a ‘remains complicated’ age to 67 and controversial tax reforms The problems they face are increas- butions for social insurance from 33 per The knock-on effect for Wallonia was relativepeacebrokeoutinstead. — the so-called “tax shift” — which ingly global in nature, as Carl Devos, a centofsomeone’ssalaryto25percent— clear: there would be no direct link Bothsidesareintheprocessofadjust- the Flemish government, so it creates aimedtomovethetaxburdencurrently professor of political science at the Uni- will give Wallonia a boost in the long between the new centre-right federal ing, says Paul Magnette, the socialist someimbalances,’saysMrMagnette. onjobstootherpartsoftheeconomy. versityofGhent,pointsout. term, but that it will come at the government in Brussels and Wallonia’s who heads Wallonia’s regional govern- But sitting atop the government is Therehavestillbeensomebigclashes “What [are] the answer[s for] two expense of a short-term hit to the regionalgovernmentinNamur,whichis ment. How Brussels and Namur work Charles Michel, the prime minister and between the federal and regional level, regionalgovernments,withstrongcom- financesoftheregionalgovernment. dominatedbytheleftwingPS. together “remains complicated in a fed- a francophone — albeit one who speaks not least over the tax reforms, which petences in the ancient heart of Europe, Wallonia’s already stretched public Inmostfederalsystems,thiswouldbe eral system that’snot fully mature” and Dutch — who leads the liberal Mouve- will reduce Wallonia’s income — facing all the current shifts in interna- finances face a hole of €250m-€300m the norm. But Belgium, with its tangled, therehavebeenteethingproblems. mentRéformateur. because less funding will be sent from tionaleconomy?”asksMrDevos. following the reforms thanks to a deci- multi-layered, multilingual politics, has “There is some sort of temptation for Belgium’s prime minister was federal government to the regions — by “How capable are they [of facing] the sion taken by Belgium’s federal govern- tended to opt for a morass of left and the federal government to use their bloodedintheworldofWalloonpolitics, at least €250m and perhaps up to future?” ment. “That’s fiscal federalism,” says Paul Magnette, the head of Wallonia’s regional government. “They have the power to change what we call the fiscal base,thetaxationoffiscalrevenues.” Tough choices lie ahead, but the Wal- loon government must become accus- Battle of the tomed to doing more with less, espe- cially now that even more powers have been devolved to a regional level. “The regions have more autonomy and so more responsibility,” points out Peter Bulge museum VandenHoute,INGeconomist. Despite commentators’ dire predic- tions of a year of unrest, the reforms went through without too much strug- to be a rallying gle. Although strikes have occurred — including the first general strike in two decades in December 2014 — they have beenmoremutedthanmanyexpected. The regional government is trying to point for tourists do away with its reputation for being tough on businesses. Senior politicians in Wallonia’s staunchly left-of-centre

11% 18,000 Leisure An €8m project to draw visitors to the Unemployment The number of rate in Wallonia — people directly region has beaten its targets, writes Peter Spiegel about double the employed by level in Flanders biotech industries

he small hamlet of HBO mini series Band of Brothers — will Old guard: stark contrast to the majestic of the Bulge was,” says Mr Billa. government seem willing to welcome Bastogne, which lies in the turnBastogneintoatouristhotspot. Tourists at the Mardasson memorial to US soldiers The museum’s original business plan innovative companies such as Uber, the heart of the vast Ardennes “TheideaistomakeBastognetheBel- Bastogne War erectedjustayearafterthewar’send. envisaged 100,000 visitors for the first carhailingapp—despitecriticismofthe forest near Belgium’s giancentre,thereferencecentre,forthe Museum in the More important is the inside, which year. By March, the end of its first 12 US group from some in Belgium. Even if T border with Luxembourg, secondworldwar,asYpresisforthefirst Ardennes eschewsthetraditionalstaticdisplaysof months in operation, it had received Walloniastrugglestoattractinvestment is not a prominent feature on worldwar,”saysCoralieBonnet,amem- most military museums and instead 165,000 and convinced authorities to in newer industries, its regional touristmaps. ber of the city council and chief aide to uses the semi-fictionalised tales of four shelloutonexpansionplans. strengthswillremain—forgoodandill. But 70 years ago, during a winter so Bastogne’smayor.Shehasbeenworking ofthesiege’sparticipants,aschoolboy,a Under a new €8.5m Wallonian gov- Although Wallonia is good at making coldthatsouthernBelgiumhasnotseen ontheprojectfornearlyadecade. bicycle-riding teacher and resistance ernment grant won in May, the city will guns, it has a blemished record when it itslikesince,thetownof15,000became According to government statistics, member, as well as a German and an buildahallfortemporaryexhibitsanda comes to tracking them. This has politi- one of the handful of places — such as Ypres, the Flemish town synonymous American soldier, to walk visitors research centre, complete with memo- cal ramifications, too: FN Herstal is Antietam, Iwo Jima and Khe Sanh — to with trench warfare and the first use of through Nazi occupation, liberation, rabiliabeingcollectedbyalocalfounda- completely owned by the Walloon gov- besearedintoUSmilitaryhistory. chemical weapons in combat, had more andthebrutalcounter-offensive. tion from families donating battlefield ernment. There were certainly more important than six times the visitors Bastogne For its director, historian and area detritus and other mementos left Controversy over exports comes on crossroads as German forces pushed attracted last year, the 100th anniver- native Mathieu Billa, the museum has behind by their grandparents. It will top of Belgium’s chequered record of north-west in a last-gasp counter- sary of the start of the first world war. retained the most important artefacts, also fund a memorial walk from the gun control, highlighted by a string of offensive to retake Antwerp harbour in This is a tale repeated across Belgium, including Gen Patton’s stars and a uni- town up to the hillside museum, as well Belgian jihadist terror plots over the December 1944, a campaign that where the thriving chocolate-box Flem- form worn by Gen Omar Bradley, com- asanincubatorfortourismstart-ups. past18months. became known as the Battle of the ishtownsofBruges,GhentandAntwerp manderoftheallies’groundoperations. Tourism has also paradoxically bene- By contrast, Wallonia’s pharmaceuti- Bulge.Butacollectionofhistoricalcoin- drawthemostvisitorsoutsideBrussels. But it has also embraced the museum The fited from recent cutbacks in defence cals industry is the jewel in the region’s cidences — the week-long encirclement Southern Wallonia has struggled to sector’s move towards interactivity. In spending, which allowed authorities to crown. “It works and it’s a success story of the 101st Airborne division; its com- keep up. Last year, of the 14.6m tourists one chilly room visitors sit on logs amid audience’s convert a partially-shuttered military which is still not well known,” says mander’s unceremonious typewritten in Belgium, more than 57 per cent went toweringtreesandmistassoldiersretell seats are base — the 101st Airborne’s command MrMagnette.Despitemassiveupheaval reply of “Nuts!” to the German demand to Flanders. Only 18 per cent came to their experiences. In another, the audi- headquarters in 1944 — into the Bas- in the sector, the region’s politicians are for surrender; Gen George Wallonia,therestvisitedBrussels. ence’sseatsarecaféchairswheretowns- magically togne Barracks museum, complete with confidentthatWallonia’spharmasector Patton’s miraculous race across But Bastogne is doing its best to people have gathered for shelter — this transformed the room, barely touched in 70 years, in is there to stay. Already 18,000 are to break the siege — made it the battle’s change that. Last year, it opened the is magically transformed into the cellar which Brig Gen Anthony McAuliffe dic- directly employed by “biotech” indus- mostfamousfight. Bastogne War Museum, an €8m project whenaLuftwaffebombingraidbegins. into a cellar tatedhis“nuts”surrenderresponse. tries, with another 40,000 jobs in the Now, as veterans of the campaign are funded largely by EU and Wallonian “With the old museum, the when a Thus far, about half of the visitors to regionreliantonthesector. dying out, local leaders are hoping its government grants. The museum — target was more collectors and the Bastogne War Museum have been “We have reached a level of what legacy — often depicted in film and tele- with its irregular angles and low-slung, people who knew the history, but bombing foreigners — most from neighbouring economists call an ecosystem,” says Mr vision, including in the Oscar-winning whitewashed exterior that recalls the for the new generation, for families, it raid begins — but almost 25 per cent Magnette.“Biotechisbecomingthenew 1970 film Patton and the more recent snowy cold of the battle — stands in was hard to understand what the Battle havebeenfromtheUS. steelforWallonia.’’

Contributors Uber may have a warm welcome, if it plays by the rules Duncan Robinson Brussels correspondent

Peter Spiegel Regulation picturesque capital Namur and Charle- Mr Magnette says that the priority is region stands in contrast to their role in Brussels bureau chief roi,theoncethrivingbutnowstruggling to bring alternative services within the Brussels, where the socialists have been industrialtowninsouthernBelgium. scope of regulation. Rather than allow amongtheloudestcriticsofUber’sprac- Alex Barker Priority is to make sure all Uberislikelytofacesomeofthesame taxis to operate on the black market, tices in the city.This openness comes as European diplomatic editor companies stay within the problems that it suffered in Brussels as regulators must ensure that all cabs Wallonia attempts to shrug off its repu- law, mayor tells Duncan established taxi groups are reluctant to are safe, efficient and that companies tation as being a place where it is diffi- Christian Oliver allowtheUSgrouptomusclein.Butpol- and owners pay their taxes. “We are culttodobusiness. EU correspondent Robinson and Jim Brunsden iticians and regulators are indicating working on how to regulate it, but it’s In a bid to avoid the legal pitfalls that that the service may be welcomed going to happen whatever we do,” says haveplaguedUberinBrusselsandother Andrew Ward Uber has had a rough time in Belgium providedUberplaysbytherules. MrMagnette. cities across Europe, such as Amster- Pharmaceuticals correspondent sincearrivinginFebruary2014. “In Charleroi, the problem emerged Namurdoesnothaveanairport,butit dam, Paris and Milan, there have For the next year-and-a-half, Uber wellbeforeUberbecauseoftheairport,” does have something found in nearly all already been meetings between Uber Jim Brunsden drivers in Brussels were repeatedly says Paul Magnette, Charleroi’s mayor, Belgiancities:terribletraffic.Locatedat andWallonia’sgovernment. EU correspondent attacked by angry taxi drivers, faced who also heads Wallonia’s regional gov- theconfluenceoftheSambreandMeuse Uber declined to comment for this finesofup€10,000fromzealousregula- ernment. rivers in south-east Belgium, the article beyond confirming that it was Laura Cohn torsandhadtheircarsimpounded. Charleroi is home to an airport opti- regionalcapitalboostsahandsomecita- still planning to launch operations in Freelance writer A protest by the city’s licensed taxis mistically called “Brussels South Charl- del and gorgeous valley views. It also Namur and Charleroi, along with other gridlocked the city centre. Meanwhile, eroi”, which underplays the hour-long suffers from clogged roads, with traffic BelgiancitiessuchasGhentinFlanders. Aban Contractor the company’s staff were even followed travel time between the airport and the often snarling up in the city.Taking cars Wallonia’s transport minister Carlo Commissioning editor homebyaggrievedtaxidrivers. EU hub. Even though cheap flights from offtheroadwouldhelp. Di Antonio met with the US group Steven Bird Then, in September, a judge ordered thelikesofRyanairpourintotheairport But making sure aspiring taxi drivers in September in Brussels to talk Designer that UberPop — a low-cost service that every day, transport links between the pay their taxes and social security con- about its plans. While Walloon politi- Andy Mears let part-time drivers ferry people airportandBrusselsarepoor. tributions is essential, says Mr Mag- cians are offering a cautious welcome Picture editor around cities — had to stop. Uber took Accordingly,longfarestoBrusselsare Waiting game: Brussels taxis protest nette.“Theconcernforthegovernment to the car-hailing service, Uber’s UberPopofftheroadinOctober. a vital and — at €60 per trip — lucrative against the Uber car hailing service is to [allow new companies to operate] reputation for launching first and wor- For advertising details, contact Belgium has, in short, been a difficult partofthetaxitradeinCharleroi,which but within a legal framework,”explains rying about local rules later has pre- Sophy Pierre on +00 331 5376 8255 or market for the San Francisco-based Uberwouldbekeentoundertake. “We had a kind of free Uber situation the charismatic 44-year-old, who has cededit. [email protected], or your usual FT group. Undeterred, however, Uber is But Uber would not be the first to try years ago: a black economy of people headed the regional government on A spokesperson for Mr Di Antonio representative. headingsouth. to take on the city’s established taxis. inventing Uber before Uber, offering behalf of the Parti Socialiste (PS) since says Uber could be an “opportunity” for All editorial content in this report is Despite the setback in Brussels, the Other groups offering unlicensed serv- those services before Uber, and so on,” July2014. Wallonia,butonlyifthecab-hailingapp produced by the FT. Our advertisers app-based car-hailing service has ices have already attempted to do so, saysthemayor.“Thishasbeenapparent The relative willingness of PS politi- respects “the rules that apply for mobil- have no influence over or prior sight plans to launch services in Wallonia’s saysMrMagnette. forquiteanumberofyears.” cians to consider Uber launching in the ity,transportandsociallegislation”. of the articles. Tuesday 3 November 2015 ★ FINANCIALTIMES 3 Doing Business in Wallonia A nation divided Liège feels threat by more than of FedEx takeover

Mergers and acquisitions hub has Belgian officials concerned two languages about what a FedEx/TNT deal might meanforLiège. Dark clouds may be on Liège, despite its lack of international the horizon for the TNT stature, has an airport that is a conven- Express cargo centre, ient,low-trafficfacility.Limitedpassen- Regions The decline of heavy industry widened ger traffic means little congestion. In reports Laura Cohn addition, those who operate from the the gap with Flanders, says Duncan Robinson airport get unlimited night flights and TNT Express has helped Belgium generally favourable weather condi- become the cargo king of Europe. For tions. The roads are also good. Southern namap,Belgiumlooks Thepublicsectorhaspickedupsome nearly two decades, the Dutch express Belgium lies in the middle of what logis- likeonecountrybutisat oftheslack.WalloniaandFlandershave delivery company has poured money tics experts call the “golden triangle” of leasttwo,andarguably roughlythesamenumberofpeople into its hub at the civilian airport in Amsterdam, Frankfurt and Paris; the three,dividedbylanguage, workinginthepublicsector,despite Liège, turning the struggling former city is just four hours by road from 66 O wealthandpolitics. Flanders’muchlargerpopulation. coal and steel town into one of the big- percentoftheEuropeanmarket. French-speakingWalloniamakesup Flanders’moreopen,vibrant gestaircargocentresonthecontinent. Of the more than 400,000 tonnes of justoverhalfthelandmassofBelgium, economydoeshaveadownside—itis After putting an initial €65m into the cargo that passed through Liège airport butonlyathirdofits11mpopulation. morecyclical.“Thatmeansaworldwide facility in the late 1990s, TNT has added between January and August of this PeoplefromFlanders,meanwhile, slowdownwillbefeltmorerapidlyin to its investment every year since, dou- year, TNT accounted for more than accountforhalfofthepopulation,with Flanders,”saysPeterVandenHoute,an blingthesizeofitshubin2007. half. What is more, of the 3,500 jobs at Brussels—thecapital,andaregionitself economistatING,afinancialservices Since 2000 it has invested nearly the airport — just over an hour’s drive —makingupthebalance. group.Wallonia’seconomy,meanwhile, €100m in the Liège centre. The facility from Brussels — TNT accounts for Otherthanfundamentalmattersof hasmorelong-termwoes. is now 75,000 square metres, and the almost2,000. state,suchasincometaxanddefence, eighthlargestdeliverycentreinEurope, nearlyeverythingissplitonaregional Unemployment behind cities such as Paris and Frank- Officially, FedEx levelbetweentheDutch-speaking Thecollapseofmanufacturingcostalot furt. But after two decades of nearly and TNT have north,theFrench-speakingsouthand ofjobsinWallonia.Whileother uninterrupted growth, dark clouds lurk said that Liège Brussels—apredominantlyFrench- industrialcitiessuchasManchesterin onthehorizon. would remain speakingislandinaDutchsea.Butwhat theUKandLilleinFrancehaveevolved, Earlier this year, US giant FedEx a ‘significant arethemaindifferencesbetween LiègeandCharleroihavestruggled. announced a €4.4bn takeover of TNT, operation’ FlandersandWallonia? “Walloniadidhave—andstillhas— Fractured: Wallonia has struggled to cast off its industrial past — Laurent Giraudou/Alamy raising questions as to whether it would troubleconvertingitseconomyinto keep Liège airport as a European hub. TNT’shub,whichisopensevendaysa Economy moremodernindustries,”saysMr communityscoredlowerinmaths, internshipsintomoredegreeshave Officially, FedEx and TNT have said week, sorts 90,000 parcels a night, or Inbluntterms,Flandersisricher.It VandenHoute. readingandsciencethantheirDutch beenfiercelyresisted. Liège would remain a “significant oper- roughly 450 tonnes. It connects Liège to contributesabout60percentof At11percent,unemploymentin peers,accordingtotheOECD. ation” if the European Commission 65 European airports, plus others in the Belgium’sGDPof€530bnanditscities Walloniaisroughlydoublewhat Theonesmallpositiveresultofthis Language approvesthedeal. Asia Pacific and the US, and it operates suchasAntwerp—hometoEurope’s itisinFlanders.Moreworryingly,56per performanceisthatpolicymakersinthe Whilewealthplaysarole,therealdivide Asked how Liège would fit with about 50 aircraft and 140 trucks and third-biggestport—arethebeating centofjobseekersinWalloniaarelong- French-speakingregionsrealise islinguistic.Themajorityofpeoplein FedEx’s plans,aspokespersonsaid:“We vansanight.Fortheairport,losingTNT heartofthecountry’seconomy. termunemployedcomparedwithjusta reformisnecessarytoimproveresults. BelgiumspeakDutchastheirfirst anticipatethatallwillplayanimportant would be like losing more than an Thiswasnotalwaysthecase.Wallonia thirdofFlanders’unemployed, Walloonauthoritiesareseenasmore language.Nearly60percentofDutch role in our network. However, the appendage,oneindustryinsiderquips. wasamongthefirstregionsinnorthern accordingtotheEuropeanCommission. opentochangingteachingtechniques, speakersalsospeakFrench,butbarely details of how our operations will work However, Liège has attracted other Europetoindustrialiseinthe19th Thesituationisevengrimmerinthe saysoneanalystwhodeclinedtobe oneinfiveofBelgium’sfrancophone together will only be determined as our suitors. UPS tried but failed in early century,withindustriessuchasglass region’sfadedindustrialcities.Inboth quotedaseducationispoliticallytoxic. populationcanspeakDutch. integrationplanningprogresses.” 2013 to buy TNT. Back then, the Euro- makingandcoalmining.Bycontrast, LiègeandCharleroi,oneinfourare “[Change]isevenmoredifficultin ThiscarriesoverintoEnglish,crucial But industry insiders point out that pean Commission said it blocked the thelargelyagrarianFlandersfellbehind. unemployed. Flandersastheyscoresowell,”hesays. forbusinessinEurope.Justoverhalfof FedExhasairhubsinParisandCologne. proposed €5.2bn deal because it ButFlandersboomedinthepostwar Butthesefiguresareatleastgoingin AlthoughWalloniahaswell-regarded FlanderscanspeakEnglish,compared The other big players in the European believed the combination would cut the era,attractingmuchforeign therightdirection.Unemploymentin universitiesinLiège,MonsandNamur, withunder20percentoffrancophones, delivery market — Deutsche Post- number of package delivery companies investment.TheWallooneconomy, Walloniahasfallenby1percentage theonesthatareatthetopofglobal accordingtoarecentstudy.Free owned DHL and US delivery company tojusttwoorthreeincertainmarkets. meanwhile,collapsedastheregion’s pointsinceAugustlastyear,according rankings—suchasLeuvenandGhent— languagelessonsformedpartofthe UPS — each have one airport hub, Leip- This time things could be different. mainheavyindustriesfaltered. toWallonia’sstatisticsagency. areinFlanders. MarshallPlan—nicknamedaftertheUS zig in , and Cologne respec- The companies suggested last month Between1980and2010,thenumberof Reform,however,isnotalways postwaraidprogrammeforEurope—a tively, which many view as essential to that Brussels would clear the deal, say- jobsinmanufacturinghalvedfromone Education welcomedbytheeducationsector. seriesofreformssince2005aimedat runninganefficientcargooperation. ing the Commission had assured them infourtojustonein10. StudentsfromtheFrench-speaking Callsbybusinesstoincorporate kick-startingWallonia’seconomy. The high cost of maintaining an air therewouldbenoseriousobjections. Blood cell therapy puts the region ahead in biotech race

Science One business is making a name for itself in a promising area of medicine, writes Andrew Ward

A technology called Car-T therapy — which involves re-engineering a patient’s disease-fighting white blood cells so that they can detect and destroy tumours — is one of the hottest areas of drugdevelopment. At the forefront of this innovation have been two much-hyped US biotech companies, Juno Therapeutics and Kite Pharma, as well as Novartis, the big Swisspharmaceuticalscompany. But could a much smaller company fromtheWalloniaregionofBelgiumend upstealingtheshow? Thriving: Celyad raised $100m in a Nasdaq initial public offering Celyad raised $100m in a Nasdaq initialpublicoffering(IPO)inJune,with known as Cardio3 in recognition of its cells are designed to embark on a hunt- much of the proceeds earmarked for focus on cardiovascular disorders, but and-destroymissionagainstthedisease. development of the chimeric antigen changed its name after acquiring the Juno, Kite, Novartis and others have receptor T-cell (Car-T) therapies that cancer assets from Celdara Medical of reported data showing some patients have been creating excitement among theUSinJanuary. treated with Car-T therapy living scientistsandinvestors. Christian Homsy, Celyad chief execu- for months or years longer than would The company is part of a thriving bio- tive,saysthecompanyisasenthusiastic otherwisehavebeenexpected. technology scene in Wallonia, sup- as ever about its heart drug, called Celyad’s OnCyte product entered its ported by a range of tax breaks and sub- C-Cure, but wanted a broader identity. first trials in humans earlier this year, sidiesfromaregionalgovernmenteager “Wedonotwanttobereliantonjustone leaving it lagging behind rivals. But Mr to foster new sources of growth in place programme,”hesays.“Wewanttobuild Homsy says its focus on acute myeloid ofdecliningheavyindustries. acompanytolast.Inordertodothatwe leukaemiaandmultiplemyelomacould The region is hardly alone in trying to needtohavearangeofassets.” give it a niche. Moreover, promising become a force in biotech. Neighbour- Byaddingcancerproductstoitsexist- animal tests in solid tumours could ing region Flanders is active in the ing strength in heart disease, he says, point to an advantage over other Car-T sector and rival clusters exist across Celyad is exposed to two of the greatest therapies, whose benefits have so far Europe,fromScandinaviaandtheUKto areas of medical need. Car-T is part of a onlybeenclearlyseeninbloodcancers. and France, not to mention wider wave of so-called cancer immu- The Nasdaq IPO was designed to the US powerhouses of New England notherapies, which aim to harness the thrust Celyad into the centre of the andCalifornia. Car-T race. The fact that the company Yet Celyad is helping Wallonia make a chose to cross the Atlantic to raise the name for itself in regenerative medi- money highlights the greater depth of cine, one of the most promising areas of ‘We want to build a capital available to biotech companies medical science. This involves the company to last. In order intheUScomparedwithEurope. repair or replacement of cells, tissues or However, Celyad has kept its Euron- organs to overcome disease. After years to do that we need to have ext listings in Brussels and Paris and Mr offalsedawns,thefirstcelltherapiesare a range of assets’ Homsy insists the company remains nearing market with Celyad and rooted in Wallonia. “We are still a Bel- another Walloon company called Bone immune system to fight tumours. They gian company. But we are operating in Therapeuticsamongthepioneers. dothisbyremovingthecamouflagethat international markets so want to As well as its Car-T cancer pro- cancer cells use to avoid detection from developaninternationalbusiness.” gramme, Celyad also has a cell therapy thebody’snaturaldefencesystem. Celyad is open to deals with industry for heart disease at a more advanced Car-T is an especially sophisticated partnerstohelpproductstomarket.But stageofdevelopment. type of immunotherapy that involves Mr Homsy says it wants to stay inde- Results from a phase III study — the removing T-cells from the patient’s pendentandbecomethekindofbiotech final step before seeking regulatory body and modifying them in a way that success story Europe has long struggled approval — are due by the middle of helps them identify cancer. Once rein- to create. “We want to build something, next year. The company was previously fusedintothebloodstream,theseCar-T wedon’twanttobeacquired.” 4 ★ FINANCIALTIMES Tuesday 3 November 2015 Doing Business in Wallonia

Wallonia in numbers GDP per capita Economic sectors Unemployment rates Proportion of population Purchasing power standards per Gross value added, 2013 (%) Aged 15 years and over (%) with tertiary education inhabitant, % of EU average (2013) Brussels Flanders Wallonia 20 25-64 years, 2014 (%) NETHERLANDS 0 50 100 150 200 250 0102030 Brussels Brussels Public admin, 43.5 North Luxembourg 15 education, health Flanders Sea Euro Brussels Wallonia Trade, transport, area* 37.2 Antwerp Hamburg hospitality 10 Wallonia Bruges London EU Manufacturing 33.9 FLANDERS Île-de-France 5 EU (28 countries)

Brussels GERMANY Flanders Real estate Flanders 29.3 activities Euro area* BELGIUM Berlin 0 Professionals & 28.5 Liège Scotland administrative 2002 04 06 08 10 12 14 Mons Charleroi West Midlands (UK) Construction Nights spent by non-residents in hotel and holiday accomodation Wallonia Rebased FRANCE WALLONIA East Midlands Financial & 150 (UK) insurance 140 Brandenburg GDP by region Information & communication 130 €bn, 2013 East of France Brussels 120 North east Arts, entertainment Flanders 229.8 of Spain & other service Flanders 110 Northern

Wallonia 93.5 LUXEMBOURG Ireland Agriculture, Wallonia 100 South of Italy forestry & fishing Brussels 71.7 1995 2000 05 10 13 50 km FT graphic Source: Eurostat * 19 countries City turns to the arts in its efforts to boost urban reinvention

Charleroi to discover, lots of energy, and lots of potential’.’ While it is impossible to say how far Mayor says culture can help an influx on young creative talent can to drive economic success, play a role in Charleroi’sepic long-term reports Jim Brunsden effort to turn its economy around, the city’sauthoritiesaretakingitspotential seriously. A key part of their regenera- As I set off to explore Charleroi, tion plan is to push Charleroi’s reputa- oneofBelgium’syoungestcitiesandone tionasacentreofcutting-edgearts. sometimes labelled as northern Italreadyhasstrongrootsinthisarea. Europe’sanswertoDetroit,afriendgave Charleroi is home to Belgium’s most me some helpful advice: “You’ll see important centre of contemporary when you get to the centre, it’s just a dance and a municipal art collection of hole,anenormoushole.” 6,000 pieces, including a number by I nodded sagely.It is not an unreason- René Magritte, the surrealist artist, who able way to describe the plight that has spentmuchofhisearlylifeinthecity. befallen Charleroi in recent decades, as Pascal Verhulst, cultural attaché in its traditional coal mining industry dis- Mr Magnette’s team, helps oversee a appeared,steelproductionsufferedand €40m cultural investment programme. unemploymenthasrisen. Part of those funds will help convert a I realised a while later that something former regional branch of the national hadbeenlostintranslationwhenIstood bank of Belgium into a cinema. Nearby next to an enormous crater destined to is Le Vecteur, a multipurpose cultural bethelocationofashoppingmall. centrepaintedblack-and-white. It is one of several large projects that Other key locations are L’Ancre thea- collectivelyamounttosomeserioussur- tre, which offers residencies to actors gery on the city centre. According to the whohavejustfinishedtheirstudies,and city’s 2015-2025 strategic plan, the task BPS22, a modern art museum. They are isnothinglessthanto“restoreatastefor allashortwalkawayfromeachother. living, working and having fun in the One reason for the potential of the cityforthepeopleofCharleroi’’. creative scene to develop further, Mr Away from the construction cranes, there are signs that the city may be beginning to change in other ways — ones that are less superficially striking Addressing the ‘divorce butwhichmatterina21stcenturyecon- between social geography omy.Thesignsaretentative,butCharle- roiisstartingtogetacoolerreputation. and economic geography’ This was explained to me in an arts and crafts market being held in a bright Magnettesays,isthefactthatthecentre greenformercarwash.NicolasBelayew, oftownisnotthatbig.“InMontrealthey a 33-year-old graphic designer, and his have what they call the artistic quar- partner Corinne Clarysse, organisers of ter . . . toanextentthecentreofCharle- the market, are exactly the kind of new- roi is an artistic quarter itself. We will comers — and returnees — that Charle- have a quite impressive concentration roiislookingfor. of art, culture . . . everything is in walk- They met while they were studying in ingdistance.Youhaveahighconcentra- Brussels and the couple ended up mov- tionthatshouldhaveahighimpact.” ing to the city, Nicolas’s home, when Mr Magnette says the arts have a role they realised they could afford four to play in addressing a challenge that he timesasmuchspacetolivein.Thisgave describes as a “divorce between social enoughroomtosetupanartstudio. geographyandeconomicgeography’’. Theyarealsothefoundersoftheasso- Charleroi had an unemployment rate ciation linked to the market, “6001 is of 25.9 per cent in August, compared thenew1060’’,apostcode-basedpunon with 16 per cent in Wallonia as a whole. how their quarter is set to become as The city has 21,000 jobseekers, 8 per trendy as St Gilles, one of Brussels’ up- cent of the claimants in Wallonia, the and-coming neighbourhoods. “Our region’s statistics office says. The city starting point is that there are a lot of has about 200,000 inhabitants and activities that we like that are lacking under25percentareover60yearsold. here. So when they don’t exist, we try to While there are about the same create them,’’ says Mr Belayew. “That number of jobs in the Charleroi area as seems to be something about Charleroi therearemembersoftheactivepopula- —thisspirittotrythings.’’ tion, two-thirds are held by people who Paul Magnette, the city’s energetic live outside the city, he 44-year-old mayor and the minis- says. And improving ter-president of Wallonia, says he the wider cultural got a kick out of a recent newspa- scene will help to per article describing the city as boost its attractive- “a little Berlin’’ — an improve- ness as a place to mentontheDetroitcomparison. live. Hesaystheacresofspaceoffered by former industrial sites is one Energetic: reason why artists and musicians Paul Magnette, from Belgium and northern France Charleroi’s mayor have been attracted to Charleroi in recentyears. Ironically, another is the city’s “bad reputation’’. Mr Magnette gives the exam- ple of Brooklyn and notes that with the reputation comes the idea that there are “lots of things