DUTCH water and energy companies, Belgian contractors, Luxembourg bankers, and agricultural producers from all three countries are familiar actors on the Middle East stage.
Yet most are niche players who are keen to play a fuller role.
Belgium is a major exporting nation, with four per cent of world trade, but its sales to Arab countries have fallen by 25 per cent to around $3,000 million over the past three years and account for only two per cent of its total exports.
‘Our economic relations with the Arab world are too modest, too discontinuous, and too sporadic,’ says Marc Servotte, managing director of the Office Belge du Commerce Exterieur (OBCE). ‘The leading Arab trading partner, Saudi Arabia, occupies only 23rd place as a client of the Belgian-Luxembourg Economic Union.’ Algeria. Tunisia and Egypt are the only other Arab countries among BLEU’s top 40 export markets. Says Servotte, ‘To me it seems quite obvious that for geopolitical, as well as economic reasons we have to reexamine and redefine our position (and) increase our efforts to make our larger companies more aware of this key region of the world.’ In January, the Arab Belgium Luxembourg Chamber of Commerce (ABLCC) organised a mission to Tunisia and Libya. This year it will send teams to Saudi Arabia, Egypt, Yemen and Algeria. Missions to the smaller African markets of Mauritania, Somalia and Djibouti are also planned. The OBCE is planning a business exhibition in Jeddah and missions to the UAE and Oman.
Regional trade delegations from the Walloon, Flemish and Brussels regions have their own trade promotion activities, with representatives attached to Belgian embassies in Casablanca, Beirut and Jeddah (MEED 3:3:95, Special Report Belgium & Luxembourg).
Servotte says there are sectors in which ‘advanced Belgian technology coincides with the priorities of most development plans in the Arab world.’ Potential growth areas include agroindustry, public health, harbour management, water treatment, telecommunications and mass transport systems. In some markets this expertise can be supported with export credits to give a competitive edge to Belgian firms or the BLEU-based subsidiaries of multinational companies.
One example is telecoms company Siemens Atea, which has used Belgian export credits to support contracts in Morocco, Tunisia and elsewhere. The Belgian arm of the German company has been upgraded to serve as headquarters for the entire Siemens private telecoms group.
Siemens Atea reports developing business in Kuwait, Saudi Arabia, Oman and the UAE.
In Morocco, Atea has secured orders from the state railway company and the royal palace.
It also secured the contract to supply telecoms equipment for the Maghreb-Europe gas pipeline, running from Algeria to Spain.
Companies are now waiting for Middle East peace to yield dividends. The Netherlands Middle East Business Council and Confederation of Netherlands Industry & Employers (VNO NCW) is organising a conference in May to mark the halfway point between the Amman summit in October 1995 and the summit planned for Cairo in October of this year.
Belgian firms are still waiting for the peace process to lead to a build up of business.
‘For Gaza/Jericho we waited a long time to start operations because we were waiting for a banking authority,’ a Brussels banker says.
‘Now we have opened for short-term business and letters of credit but there is no big demand.’ The bank was also expecting a boom in Lebanon. ‘But this has not been as quick as expected.’ Belgian companies have been keen to see Syria as a market with potential. Societe d’Epuration & dEntreprises (SEE) have managed to secure water work, while Centre d’Etudes & de Recherches d’Architecture & dUrbanisme (Cerau) is to design the new Damascus art museum.
Business prospects in Jordan may be limited but the Netherlands is examining a range of potential projects following a midJanuary visit by Prime Minister Wim Kok.
Belgium’s Smits Engineering won a Jordanian contract to design and supervise construction of two poultry units and meatprocessing plants at Mafraq and Qatranech.
Transurb Consult has a contract to work on the restructuring of Aqaba Railway Corporation and the potential private development of its Maan-Aqaba line.
For Belgium, Tunisia and Morocco remain relatively large and buoyant markets where perceptions of risk and credit terms are improving. There are now 140 Belgian companies in Tunisia, for example, mainly in the textiles sector. ABN AMRO Bank reports that large Moroccan transactions may now be financed on terms of five years’ repayment or more. This is a radical departure for a country which spent the 1980s mired in rescheduling problems.
Following the clarification of Belgium’s sanctions legislation, Libyan business has returned to an even keel. Belgian firms involved in the country include Basse Sambre-ERI, which counts the engineering of glass plant among its recent projects.
ING Bank maintains business with Iran despite a lack of export credit support for the Islamic republic. It has close relations with the National Iranian Oil Company, and is involved in talks with Kazakhstan and Iran to establish a sea link to the Central Asian republic. ING is also following a project to upgrade the rail link. Its interest is based on a long-term projection of major oil flows westwards out of the region.
Other specialists are staying in the Iranian market despite the frequency of long payment delays. The Luxembourg steel maker Arbed reports lower sales than in recent years, and has put plans to open a Tebran office on hold. However, business with Iran continues through its Dubai office. ‘We are seeing a normalisation in Iranian business and it is possible to obtain letters of credit, but you need to find banks which maintain good relations with Iranian banks which have money,’ says Trade Arbed.
Arbed sees exports as a means to overcome the challenge posed by a harsh business environment in the EU. Trade Arbed’s market drive led to the creation of the Dubai office and business in Saudi Arabia, the UAE and Kuwait is growing well. ‘Local industries can produce basic steel, but there is strong demand for specialised products: through our sales record we are seeing growth in Gulf industries, including automotive manufacturers,’ says a spokesman.