Monday, 08 Oct 2012
Overseas Business Risk - Belgium
Political and Economic
The Kingdom of Belgium, which gained its independence from the Netherlands in 1830, is a founding member of both NATO and the European Union and one of the first-wave countries to adopt the euro. Belgium also hosts the headquarters of the Council and Commission of the EU, NATO, and many other international organisations.
Often referred to as the crossroads of Europe, Belgium consists of two very distinct cultural regions, Flanders (Dutch speaking northern half, around 6,200,000 inhabitants) and Wallonia (French speaking southern half, with a population of around 3,500,000), and an officially bilingual capital, Brussels (over 1,000,000 inhabitants). There is also a small German-speaking community (70,000) in the south-east of Wallonia. The country’s population of about 10.8 million now includes nearly one million people of foreign origin. Within ten years, 30% of the Belgian population will have immigrant roots, according to a recent study by a sociologist of the Catholic University of Leuven.
Belgium is a constitutional monarchy governed by a multi-party coalition, comprised of both Flemish and francophone parties. Following a number of state reforms, Belgium is now a federal state divided into three regions (Flanders, Wallonia and the Brussels Capital Region) and three Communities (Flemish, French and German). There are also 10 provinces and almost 600 local authorities. Belgians do not have a strong connection to a national culture, but rather to the language or region they were raised in.
The Federal Government is responsible for some major issues like defence, foreign affairs, justice, the national budget, including setting and collecting most taxes, and social security.
Responsibility for education and culture rests with the language communities, while the regions' responsibilities include environment, transport, energy, agriculture and public works. Some issues are divided between the different levels, e.g. health.
Regional and community governments are entirely autonomous and their ministers have equal status with federal ones. Their powers are not therefore devolved as in the UK model.
This complex model can lead to complications when working with the public sector.
Federal elections are held every 4 years; regional and community elections every five years and local elections every 6 years. Voting is compulsory at all levels. All the major political parties split along linguistic lines in the 1970s. No party presents candidates across the country as a whole.
The latest general elections were held in June 2010, and led to a very fragmented political landscape with a landslide win for the Flemish-nationalist party N-VA in Flanders, and the Socialist Party (PS) in the Francophone part. A government coalition was only sworn in in December 2011 after a world record total of 541 days of negotiations and formation with Elio Di Rupo, leader of the Francophone socialists PS, named Prime Minister of the Di Rupo I Government.
Belgium is a peaceful democratic country. Political tensions exist between the Flemish and French speakers but those tensions are addressed in democratic institutions and played out in socially acceptable venues. There are also some tensions with the immigrant communities which sometimes result in violence. There have been some attacks against immigrants or Roma by neo-Nazis or other extremist youth, primarily in Antwerp. There has also been some violence caused by North African youth in response to perceived police abuse of a North African in police custody. The Brussels incident resulted in several nights of sporadic violence perpetrated by small groups of marauding North African youth near the Brussels Midi train station.
Belgium is faced with an increase in crime and new phenomena, which require specific solutions:
increased organized crime (Eastern European origin) in major cities
petty crime, often drugs-related, mainly in urban areas
Moreover, security and immigration have become very sensitive political issue.
Problem areas in Belgium include:
Drugs trafficking: Antwerp is Europe’s second largest seaport
Human trafficking, illegal immigration and prostitution;
Cross-border crime: due to its small size and open borders, there are many instances where crimes are committed in Belgium by criminals based across the national border, or suspects are intercepted whilst in transit through Belgium.
Belgium is a developed, modern, private-enterprise economy which has capitalised on its central geographic location, highly developed transport network, and diversified industrial and commercial base.
Belgium's main imports are raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals, foodstuffs, transportation equipment, oil products. Its main exports are machinery and equipment, chemicals, finished diamonds, metals and metal products, foodstuffs. Industry is concentrated mainly in the populous Flemish area in the north. With few natural resources, Belgium must import substantial quantities of raw materials and export a large volume of manufactured goods, making its economy unusually dependent on the state of world markets.
Trade focuses very much on the European market. Half the goods exported by Belgium are sold in neighbouring countries (Germany, France and the Netherlands), while one quarter go to other EU member states. Imports follow more or less the same pattern. This situation reflects Belgium's role as a hub within the EU. It is the UK’s 6th largest market.
Public debt is just under 100% of GDP. The unemployment rate is currently around 7.9%.
More information on political risk, including political demonstrations, is available in FCO Travel Advice.
According to international observers, human rights in Belgium are generally respected and the law and the judiciary provided effective means of addressing individual instances of abuse. However, some concerns have been reported over the treatment of asylum seekers, prison overcrowding and the banning of full face veils. Capital punishment in Belgium is fully abolished and a prohibition on the death penalty included in the Belgian Constitution. Belgium was a founding member of the European Union and the Council of Europe and a signatory to the European Convention on Human Rights.
Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
Belgium is one of the strictest countries in the world when it comes to bribery in their political and legal systems. The act of bribing a foreign official in Belgium is a criminal offense.
In 2011 Belgium was ranked 19 of 182 countries in the Transparency International’s corruption perception index (CPI)
Belgium has taken measures to protect against active and passive bribery. Active bribery being now defined as "the proposal of a promise or benefit in exchange for undertaking a specific action". Up until 1999, Belgium did not have a definition for Passive Bribery. Passive bribery is now defined as "an official requests or accepts a benefit for himself or somebody else in exchange for certain behavior".
On May 4th, 2007 Belgium passed a new law that went into effect that allows the Belgian courts the jurisdiction to take action against Belgian citizens that commit an act of bribery outside the borders of Belgium. This law was passed following a report on the Belgian political system and their levels of corruptness, formulated by the Organization for Economic Cooperation and Development in 2005. Something else this new law did was to simply the definition of "foreign public official". The new definition is "any person carrying out a public function in a foreign state or in a public international law organization."
Corruption done by public officials can result in large fines and / or up to 10 years in prison. Corruption performed by private individuals can result in lesser fines and lesser jail time up to two years. Not only are the individuals held responsible, but the companies that they work for can also be fined and punished. Bribery hearings and punishments are handled by the Belgium Ministry of Justice.
Visit the Business Anti-Corruption portalpage providing advice and guidance about corruption in Belgium and some basic effective procedures you can establish to protect your company from them.
Read the information provided on our Bribery and corruption page.
Although Belgium has not yet been the victim of any major terrorist incident, there is a general threat from terrorism. Since Belgium belongs to the Schengen Agreement on free cross-border movement, its open borders might allow the possibility for terrorist groups to enter/exit the country with anonymity. Attacks could be indiscriminate, including in places frequented by expatriates and foreign travellers. The area around Brussels in particular hosts a number of international institutions (EU, NATO) which are sensitive locations. Other valuable targets are the Port of Antwerp, USA diplomatic buildings and the Jewish community in Antwerp.
The Belgian government passed legislation in 2006 to increase the effectiveness of its counter-terrorism effort. Belgium's Coordinating Body for Threat Analysis (OCAM/OCAD), which facilitates the exchange of information among all governmental counterterrorism bodies and develops common threat analyses on the basis of such information exchanges, has recently said that the general threat level for Belgium remains at 2 (with 4 being the highest level), and at level 3 for US interests and NATO.
However, there is no current, credible threat information indicating terrorist activity in-country beyond recruitment and fund raising. There have been numerous cases of Belgian citizens being involved in terrorist operations abroad. For example, 38 year-old Belgian citizen Muriel Degauque was the first female, Muslim convert, suicide bomber who died in Iraq in December 2005. The two assassins of General Masood in Afghanistan just prior to the 9/11 attacks were also Belgian citizens. Belgian authorities are acutely aware of the threat from within. Since 2003 Belgian courts have convicted a number of individuals on terrorist-related offences; including plans to attack a military facility in Belgium.
The Belgian State Security is closely monitoring the spread of Salafism in Belgium.
There are several anarchist and special interest groups operating in Belgium. They include the extreme neo-Nazi right-wing organizations "Blood & Honor" and "BBET" (Blood/Territory/Honor/Loyalty). The extreme left-wing groups "ELF" (Earth Liberation Front), "ALF" (Animal Liberation Front), and SHAC (Stop Huntington Animal Cruelty) are also present. Most animal rights groups use non-violent techniques, such as protests, letter campaigns, and blocking the entrance to medical companies and laboratories to cause disruption to their targets, but a minority use arson and sabotage attacks to cause economic damage and maximum disruption.
Read the information provided on our Terrorism threat page
Protective Security Advice
The Centre for the Protection of National Infrastructure also provides protective security advice to businesses
Whilst there has not yet been any evidence of the British organisations or businesses being specifically targeted, high profile British organisations operating in Belgium should remain vigilant and regularly review their security measures. There have been no attacks against British tourists or business travellers, nor have dedicated tourist areas been affected.
Read the information provided on our Protective security advice page
Belgium adheres to all EU laws regarding copyright and intellectual property and the local branches of international watchdogs monitor breaches that may occur, including downloading of illegal software which mostly concerns the music/film industry.
Read the information provided on our Intellectual Property page.
The incidence of serious crime is low, however petty crimes such as muggings, bag snatching, and pick pocketing are common. Business travellers should pay very close attention to their personal belongings at major train stations, particularly at Gare du Midi/Zuidstation (South Station). Petty crime is also common around the Grand Place and in the Metro. Thieves also operate at Brussels national airport, and on buses, trams and in shops. You should not leave luggage unattended. Thieves are often professional and work in teams of two or three. Techniques used to distract victims include asking questions, spilling food or drink, or telling travellers someone has spilled something on their
Another growing problem, especially in Brussels, is theft from vehicles, both moving and parked. Do not leave valuables in plain sight where a thief may spot them. Thieves will sometimes position themselves at traffic lights to scan for valuables in stopped cars. If they see a purse or other valuable item, they break the window and steal the item before you have time to react. Expensive car stereos and GPS navigational devices left in plain sight are often stolen from parked cars. Always drive with your windows up and doors locked. During the last year there have been a number of parked cars destroyed by home-made incendiary devices. Whenever possible, park your car in secure areas or parking garages.
Read the information provided on our Organised crime page.
More information is available on overseas business risk in a range of markets.