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FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4711
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C O N F I D E N T I A L SECTION 01 OF 05 WELLINGTON 000686 
 
SIPDIS 
 
SIPDIS 
 
FOR EAP, EAP/ANP 
NSC FOR D. WILDER 
STATE PASS USTR 
DOD/OSD FOR JESSICA POWERS 
 
E.O. 12958: DECL: 09/17/2027 
TAGS: PREL PGOV ETRD PARM KNNP NZ XV AF KN FJ TT
BP, CH, IR, CVIS 
SUBJECT: NEW ZEALAND:  ASSISTANT SECRETARY HILL'S MEETINGS 
WITH NEW ZEALAND OFFICIALS IN AUCKLAND, SEPTEMBER 10, 2007 
 
Classified By: Consul General John Desrocher for reasons 1.4 (b) and (d 
). 
 
¶1.  (U) Assistant Secretary Hill has cleared this message, 
which was drafted by ConGen Auckland and approved by Embassy 
Wellington. 
 
------- 
Summary 
------- 
 
¶2.  (C) Assistant Secretary Hill's New Zealand interlocutors 
emphasized the need to ensure that, as New Zealand approaches 
national elections, the recent improvement in relations is 
not undermined by political posturing.  With that in mind, 
New Zealand officials expressed caution about high-profile 
visits, but said a visit by the Secretary early in the year 
would be welcome.  GNZ officials understood the difficulty of 
opening bilateral FTA discussions and expressed great 
interest in a regional trade arrangement should the Doha 
round collapse.  All of Hill's interlocutors emphasized the 
GNZ's determination to "stick with Afghanistan."  On Fiji, 
GNZ representatives expressed hope that the Fiji 
establishment will eventually turn on Bainimarama.  End 
summary. 
 
¶3.  (SBU) During the U.S.-New Zealand Partnership Forum in 
Auckland, EAP Assistant Secretary Hill met separately with 
New Zealand Trade and Defence Minister Phil Goff, Ministry of 
Foreign Affairs and Trade CEO Simon Murdoch, and opposition 
leader John Key.  Full participant lists are at the end of 
this message. 
 
------------------- 
Bilateral Relations 
------------------- 
 
¶4.  (C) Hill's interlocutors expressed considerable 
satisfaction with the improvement in U.S.-New Zealand 
relations over the preceding year.  Murdoch noted that both 
countries were moving into election mode, describing Kiwis as 
facing a "watershed, generational" election.  He stressed 
that the two sides need to handle the next year carefully in 
order to avoid suffering any setbacks.  Murdoch proposed to 
avoid the most high-profile bilateral issues during this 
period ("the 20% of the iceberg that's above the waterline") 
while working away on the other 80%, "so that we're well 
poised when new governments take over in 2009." 
 
¶5.  (C) Murdoch expressed a general reluctance to see any 
high-level visits during 2008, especially later in the year, 
fearing New Zealand's elections would so politicize such 
visits that they risked doing more harm than good.  It was 
noted that Secretary Chertoff was planning to make a trip to 
New Zealand, and it was agreed that a visit by USTR Schwab 
would be useful.  Hill encouraged his counterparts to 
consider a visit by Secretary Rice, who already had two more 
Asia visits planned in the year ahead.  Murdoch said that 
such a visit, especially early in the year, would be welcome. 
 
¶6.  (C) Key noted that his opposition National Party had 
gained the support of roughly half of New Zealand's voters in 
recent polls, compared to Labour's 35%.  New Zealanders were 
tired of Labour, Key said, and projected GDP growth next year 
of barely 1% would make them even more "grumpy."  If the 
polls held true, Key said the U.S. would find a National 
government to be a friendly as well as "pragmatic, realistic" 
partner.  For example, Key said, National would never change 
NZ's anti-nuclear policy but it also would not press other 
nations to eschew nuclear power.  Key endorsed the wisdom of 
keeping the bilateral relationship out of New Zealand's 
upcoming elections. 
 
¶7.  (C) Shadow Foreign Minister McCully noted that National 
is finishing a white paper on foreign and defense policies. 
 
WELLINGTON 00000686  002 OF 005 
 
 
On the defense side, the paper would focus on niche 
capabilities.  McCully said that National is also 
"considering further investment" on the defense side - 
National is sensitive to Australian complaints of New Zealand 
freeloading and "we know that Washington thinks this (more 
defense spending) is important." 
 
----- 
Trade 
----- 
 
¶8.  (C) Murdoch expressed appreciation for Hill's public 
remarks to the Forum supporting, in general terms, a U.S.-NZ 
FTA.  The NZG is increasingly alarmed at the situation in the 
Doha round; Murdoch noted that "failure of Doha would hurt 
New Zealand a lot."  So much so, Murdoch continued, that the 
GNZ is very interested in discussing next steps if Doha does 
indeed fail.  NSC Senior Director Dennis Wilder said that the 
USG is very interested in multilateral options, noting that 
the concept of a Free Trade Agreement of the Pacific (FTAP) 
was gaining acceptance, even with China. 
 
¶9.  (C) Murdoch expressed frustration with NZ's own FTA 
negotiations with Beijing.  China was "very risk averse" on 
tariff elimination, Murdoch said, initially putting products 
covering 80% of New Zealand's trade with China on a 
"sensitive" list.  On services, he continued, China has "low 
ambitions" with discussions on education services 
(particularly important to New Zealand) going badly.  The 
outcome could still be positive, Murdoch concluded, but the 
pace is slow. 
 
¶10.  (C) Opposition leader Key noted that his National Party 
hoped to "get in (power) and stay in" after next year's 
elections.  He expressed hope that a bilateral FTA would be 
possible during the lifetime of a National government, 
possibly in its second or third three-year term, a timeframe 
Hill called "realistic."  The Australia-U.S. FTA made a New 
Zealand deal all the more important, Key stressed.  New 
Zealand already loses 35,000 people to Australia every year, 
and the Australia FTA will only encourage more companies to 
shift operations across the Tasman. 
 
¶11.  (U) When asked by a reporter in his subsequent press 
conference whether a U.S.-NZ free trade agreement was 
"inevitable," Hill responded that he considered such an FTA 
"logical," something which could happen "eventually."  It 
made sense given the way our relationship is developing, but 
would require hard work and negotiations by both sides. 
 
----------- 
Afghanistan 
----------- 
 
¶12.  (C) Murdoch emphasized that New Zealand remains firm in 
its support of coalition operations in Afghanistan.  There is 
"no question of the criticality of sticking with 
Afghanistan," he said.  While authorization of New Zealand's 
PRT deployment must be renewed from time to time, McKinnon 
said "withdrawal is not on the table."  New Zealand's 
Afghanistan deployment stirred little controversy in New 
Zealand, he added, describing the degree of public support as 
"reasonable," no doubt because New Zealand troops have not 
suffered significant casualties.  Opposition leader Key made 
the same point in a later meeting.  Both Murdoch and Key 
noted that the only recent attention New Zealand's deployment 
had received was a result of the awarding of a Victoria Cross 
to SAS Corporal Willy Apiata for heroism under fire in 2004, 
the first VC awarded to a New Zealander since World War Two. 
 
----------- 
North Korea 
----------- 
 
¶13.  (C) Discussion of recent progress in Hill's talks with 
 
WELLINGTON 00000686  003 OF 005 
 
 
the DPRK dominated the Goff and Key meetings.  Hill explained 
how recent meetings in Geneva resulted in a DPRK commitment, 
by the end of 2007, to provide a complete and correct 
declaration of all its nuclear programs and to disable its 
existing nuclear facilities.  In parallel with the completion 
of these steps, the DPRK would continue to receive energy 
assistance and the U.S. will consider terminating application 
of the Trading with the Enemy Act and removing the 
designation of the DPRK as a state sponsor of terrorism. 
Hill also related that he stressed to the DPRK the importance 
of progress on the Japanese abductions issue.  Hill noted 
that the very day he was meeting with the New Zealanders, a 
joint U.S.-Russian-Chinese technical team was traveling to 
Yongbyon to determine how to disable the reactor. 
 
---- 
Fiji 
---- 
 
¶14.  (C) Goff complained that Commodore Bainimarama had been 
spooked by former PM Qarase's return to Suva and had "gone 
off the deep end" with his recent declaration of a state of 
emergency; Murdoch suggested that Bainimarama might have 
declared the state of emergency to secure his position before 
visiting the MFO in the Sinai.  Goff described Bainimarama as 
"just a tool of the Muslim Indian population" and concerned 
with self-preservation above all. 
 
¶15.  (C) Noting how sensitive the issue was in Washington, 
Hill asked how great an impact termination of Fiji's 
participation in multilateral deployments like the Sinai MFO 
would have on the Fijian economy and support for the interim 
regime.  Goff said the impact would be considerable, as would 
an end to UK recruitment of Fijians into the British 
military.  Murdoch later said that the NZG appreciated the 
steps the USG has taken for far regarding Fiji and, when Hill 
asked if the USG should "step it up," Murdoch replied, "not 
necessarily."  Regarding the UK, Murdoch said that New 
Zealand understood that British armed forces could not stop 
recruiting Fijians altogether.  Nonetheless, the GNZ was 
pushing the UK to "do less" recruiting and, just as 
important, tell the Fijian government that they are doing 
less, which New Zealand calculates would have a significant 
impact on attitudes within the Fijian military. 
 
¶16.  (C) Murdoch emphasized that criticism of the interim 
government is growing and that only "30-40 members of the 
military back" the Commodore.  The ultimate goal is to have 
the "Fiji establishment" turn on Bainimarama.  The opprobium 
of other Pacific Island leaders was key to this, Murdoch 
said, noting that Australian and New Zealand opposition to 
Bainimarama was often perceived by other regional leaders as 
overbearing and too direct. 
 
¶17.  (C) Murdoch described the upcoming Pacific Islands Forum 
(PIF) as "a defensive operation for us."  The NZG worries 
that Pacific leaders, out of a mistaken sense of solidarity 
with Bainimarama, will "clam up" on the situation in Fiji. 
The Samoans and Tongans are firm, but Murdoch expressed 
concerns that the Tongans, as hosts, would waver rather than 
be embarrassed by divisions at the PIF.  The Solomons Murdoch 
described as "a wildcard" regarding Fiji.  Hill said that he 
had no plans to meet with Bainimarama at the PIF, but that 
DAS Davies might meet Bainimarama during the U.N. General 
Assembly. 
 
----------- 
Timor Leste 
----------- 
 
¶18.  (C) Goff expressed satisfaction that FRETILIN was out of 
power, but noted that the new ruling alliance was 
inexperienced and "lacked clout."  Goff described PM Guzmao 
as having integrity, but also unfocussed and surrounded by an 
unhelpful "old crowd."  Timor-Leste faced a "big rebuilding 
 
WELLINGTON 00000686  004 OF 005 
 
 
job," Goff warned.  NZ would continue to work with Australia 
to improve police-army coordination in Timor-Leste.  A sound 
security review, with capacity building, "is the path to the 
exit for Australia and New Zealand," Goff said.  Murdoch 
emphasized that "it's time to stop thinking about Timor-Leste 
as a cause and start thinking about it as a strategic issue." 
 
-------- 
Solomons 
-------- 
 
¶19.  (C) New Zealand "will hang in" in the Solomons, Goff 
confirmed, and will hope for a leadership change.  RAMSI has 
great popular support but cannot go on if its authorities and 
immunities are removed.  Goff added that, while many "bad 
guys" are in jail, they are simply replaced by others.  More 
positively, he said that civil society is starting to develop 
and popular pressure is beginning to have an impact on the 
government. 
 
----- 
China 
----- 
 
¶20.  (C) Hill expressed hope that fruitful cooperation on 
North Korea would help build "a sense of community" in 
northeast Asia, particularly between Beijing, Tokyo, and 
Seoul.  At the same time, he voiced frustration that Beijing 
does not understand how concerned the U.S. is by China's 
weapons trade with Iran.  Were Chinese arms shipped to Iran 
to end up in the hands of Iraqi insurgents and used to kill 
U.S. troops, consequences for the U.S.-China relationship 
would be severe, Hill noted. 
 
---- 
Iran 
---- 
 
¶21.  (C) In response to a question from Goff, Wilder said 
that under Ahmedinejad Iran is playing games with the EU and 
IAEA rather than engaging seriously.  In response, the U.S. 
was looking for "new pressure points" in hopes of changing 
Iran's internal dynamics.  Ahmedinejad is overplaying his 
hand, Hill argued, leaving average Iranians feeling anxious 
and isolated.  He expressed hope that improved cooperation 
with China resulting from work together on the DPRK nuclear 
program would have a beneficial spinoff on Iran.  He noted 
that Beijing "is not defending Ahmedinejad as it once did." 
Nonetheless, he continued, the USG is frustrated that Beijing 
is so vigorously protecting its Iran trade, which accounts 
for only one per cent of China's total trade. 
 
------------------------------------------- 
Partnership Forum and Work/Travel Agreement 
------------------------------------------- 
 
¶22.  (C) These meetings took place during the second 
"U.S.-New Zealand Partnership Forum," a gathering of 
prominent figures from the public and private sector who meet 
to seek ways to improve the bilateral relationship.  The 
highlights were speeches by PM Clark and opposition leader 
Key, as well as A/S Hill.  All noted the significant 
improvement in the tone of the relationship over the past few 
years.  His Partnership Forum speech was Key's first major 
foreign policy address as opposition leader.  The text was 
balanced and supportive of our bilateral relationship, but he 
came across as uncharacteristically tentative.  National's 
shadow trade minister, Tim Groser, said to Auckland CG at a 
post-Forum event that Key was "nervous as hell" about his 
first foray into an area - foreign policy - considered one of 
PM Clark's great strengths.  Above all, Key did not want to 
put a foot wrong, and in the end he did not. 
 
¶23.  (SBU) Participants called the Forum a considerable 
success, particularly since participation of many significant 
 
WELLINGTON 00000686  005 OF 005 
 
 
players remained so uncertain right up to a few weeks before 
the event that the organizers considered pulling the plug. 
Despite the success, there was general agreement that it was 
time for the Forum to move beyond the talking stage and, at 
its next meeting in 18 months time, consider producing 
concrete proposals for policymakers.  Many participants also 
agreed with former Deputy Secretary Armitage's suggestion 
that Forum delegations, a rather grey-haired crowd 
(particularly on the U.S. side), needed to draw in younger 
participants and also put the bilateral security relationship 
on the agenda. 
 
¶24.  (SBU) Hill and Murdoch signed an agreement during the 
Forum that will permit young New Zealanders to travel and 
work in the U.S. for up to 12 months during their college 
years, an extension beyond the current four-month limit. 
Such an "overseas experience," or "OE," is an iconic right of 
passage for young Kiwis, many of whom currently spend it in 
the UK or Canada where work rules are friendlier.  Judging by 
the flood of inquiries to our press and consular operations 
in the hours after the announcement of the signing, the new 
agreement will prove popular. 
 
------------ 
Participants 
------------ 
 
¶25.  (SBU) Assistant Secretary Hill was joined in all his 
meetings by Ambassador McCormick, NSC Senior Director Wilder, 
DCM Keegan, EAP/ANP Director McGann, Auckland CG Desrocher 
(notetaker) and EAP Special Assistant Klein. 
 
¶26.  (SBU) New Zealand participation was as follows: 
 
Murdoch Meeting 
--------------- 
MFAT CEO Simon Murdoch 
MOD Secretary John McKinnon 
Ambassador Roy Ferguson 
MFAT John McArthur 
MFAT Carl Worker 
MFAT Elizabeth Halliday 
Goff Special Assistant Taha McPherson 
MFAT James Waite 
 
Goff Meeting 
------------ 
Same as above plus Trade and Defence Minister Goff. 
 
Key Meeting 
----------- 
National Party leader John Key 
Shadow Foreign Minister MP Martin McCully 
Key Chief of Staff Wayne Eagleson 
MCCORMICK