This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 04 BUCHAREST 000836 
 
SIPDIS 
 
STATE DEPT FOR EUR/NCE - WILLIAM SILKWORTH 
 
E.O. 12958: DECL: 04/05/2015 
TAGS: PREL PGOV IZ RO
SUBJECT: THE DEPUTY SECRETARY'S MARCH 30 MEETING WITH ROMANIAN PRIME MINISTER CALIN POPESCU-TARICEANU

Classified By: POLITICAL SECTION CHIEF ROBERT S. GILCHRIST FOR REASONS 1.4 B AND D

¶1. (C) Summary: In his March 30 meeting in Bucharest with Deputy Secretary Zoellick, Romanian Prime Minister Calin Popescu-Tariceanu underscored the central importance the new Romanian government ascribes to strong bilateral relations with the U.S. Tariceanu requested as much information sharing and coordination as possible on the kidnapping of three Romanian journalists and their American citizen guide in Baghdad. He urged the U.S. to encourage Turkish participation in the development of a long-term Black Sea regional strategy and sought U.S. support for increased Romanian engagement on Moldova/Transnistria. The Deputy Secretary encouraged Romanian progress towards resolving outstanding international adoption cases, a more rapid effort to revoke an award given to an outspoken extremist politician, and care in making a final decision on proceeding with a major highway project undertaken by U.S. firm Bechtel so as to ensure the right signals are sent to potential U.S. investors and business partners. The Deputy Secretary congratulated the GOR on economic growth and anticipated EU accession in 2007. End Summary.

¶2. (C) The Deputy Secretary began his March 30 meeting withPM Tariceanu by relating that he had traveled to European capitals to gain a sense of priorities in the region. He expressed strong appreciation for the important role Romania has played in Iraq and for the productive partnership we have developed with Romania as a new NATO ally. PM Tariceanu underscored the importance the new Romanian government ascribes to strong bilateral relations with the U.S. He said he felt comfortable that relations were improving and noted Romanian President Traian Basescu's "delight" with the productive dialogue during his March 9-11 trip to Washington.

Tariceanu stated firmly that the U.S. can "count on Romania to fulfill its commitments."

¶3. (C) At the same time, Tariceanu said the GOR was taking steps at home that it believed would make Romania an even more valuable partner. This included aggressively fighting corruption and implementing a new strategy for reform of Romania's judiciary. Such steps were also critical for meeting requirements for EU entry in 2007, addressing the concerns of the business community, and - more fundamentally - reassuring the Romanian public of the preeminence of the rule of law. He singled out the implementation of a 16 percent flat tax on personal income and corporate revenue as an important incentive for encouraging long-term investment from abroad. The Deputy Secretary agreed that these are important undertakings that could only make our relationship stronger.

Iraq and Romanian Hostages

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¶4. (C) The Deputy Secretary and PM Tariceanu discussed the March 28 kidnapping of three Romanian journalists and an accompanying American citizen in Iraq. The Deputy Secretary emphasized that the U.S. would provide information to the Romanian government as fast and efficiently as possible. He underscored a commitment to do all we can to work with Romania on this difficult situation. At the same time, he noted events can move quickly and expressed hope there would be freedom to act rapidly when and if opportunities present themselves to deal with the situation.

¶5. (C) Tariceanu replied that the situation was complicated and requested as much information as possible from the U.S., thereby better permitting the GOR to make the difficult decisions as they arise, including the potential deployment of forces. He reiterated that he, President Basescu, and the entire security team were seized with the issue, suggesting that it was not clear that the motivation for the kidnapping was entirely political. Tariceanu committed to ensure information flows both ways and to coordinating closely in

Bucharest and Baghdad.

¶6. (C) More broadly on Iraq, the Deputy Secretary noted that as the security situation becomes more stable, it is now incumbent on the international community to help the new Iraqi government address the economic and political issues that will, together with security steps, help to defeat the insurgency. He recognized that Romania's capabilities for playing a role may be limited, but that its voice with other Europeans will be helpful.

Romania's Regional Role

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¶7. (C) Tariceanu then turned to Romania's interests in its own region, particularly the Black Sea Basin, which Romania views as critical for its security and economic well-being. He said Romania seeks a NATO presence in the Black Sea and would like to see an Active Endeavor-type operation carried out there at some point. He said U.S. support would be important in helping convince Turkey of such an expanded role for NATO. The Deputy Secretary noted that he had discussed the issue more extensively in an earlier one-on-one meeting with FM Ungureanu. He commended Ungureanu's proposal to focus initially on common environmental concerns as a practical way to engage Turkey and other littoral states. A step-by-step approach would likely be the most effective in convincing Turkey of the value of more coordinated policies.

¶8. (C) With regard to Moldova, Tariceanu emphasized that Romania continues a strategy of drawing Moldova westward. He described Moldova and Romania as having a common historical, cultural, and linguistic heritage. The end goal would be Moldovan membership in the EU such that the divisions between Moldova and Romania disappear. The GOR is also planning a more active approach on Transnistria. Although providing no specifics, Tariceanu expressed hope that the U.S. would support Romania in that effort.

Romania and Europe

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¶9. (C) The Deputy Secretary said that EU accession will be a big boost for Romania but will also come with a heavy load of responsibilities. One of the biggest challenges will be to ensure Romania gets benefits from participation in a large single market, but also does not become over-burdened by EU regulations and social-welfare structures of richer countries; these would crush economic development in Romania.

He pointed to Ireland as a good example of a EU member that took the right steps to bring in investment and create an environment for strong economic growth. The Deputy Secretary encouraged Romania to bring its perspectives to both NATO and, later, EU councils, suggesting that these perspectives will be useful on regional issues (the Balkans, Moldova) as well as economic ones (regulations, etc.).

10.(C) Tariceanu reiterated that EU accession in 2007 remains a top priority for his government. He marveled at what he characterized as retrograde ideas he had found in Paris and Berlin about the strong regulatory role of government. He characterized himself as a true liberal at heart, in the economic sense of the word, and expressed hope that Romania could be a liberalizing force within the EU after accession. He expressed satisfaction that the Foreign Affairs Commission of the EU Parliament had just approved Romania's application for 2007 and Romania looked forward to signing its accession agreement in late April. He noted that the government has much work ahead, including on justice and home affairs, corruption, and press freedom.

The Economy, Investment, Bechtel

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¶11. (C) The Deputy Secretary congratulated Tariceanu on the economic growth Romania continues to enjoy and other positive economic signs. PM Tariceanu acknowledged that his government had broadly inherited a good economic situation, with 8 percent growth in 2004, and a projected 5.5 to 6 percent growth in 2005. At the same time, he noted, the current account deficit had increased and the government would have to be careful to prevent overheating. He related that the IMF continues to emphasize the importance of reducing the deficit. He lamented, however, that this does not take into consideration the importance of public spending on infrastructure needs. Tariceanu expressed hope that the GOR and IMF reach a solution and asked if the U.S. could help in encouraging the IMF to be more flexible. The Deputy Secretary said he would follow up on this request with U.S.

Treasury and the IMF.

¶12. (C-Business Proprietary) PM Tariceanu noted that U.S. investment in Romania had increased over time, but that Romania continues to seek investment from a flagship U.S. firm such as Ford or General Motors. In this regard, Tariceanu noted that both GM and Ford had expressed serious interest in the Daewoo factory in Craiova. The Deputy Secretary spoke positively of this and emphasized that creating an environment of transparency and openness can go a long way toward attracting investors.

13.(C) The Deputy Secretary encouraged particular care with Romania's contract with Bechtel to construct a nearly 3 billion USD highway through Transylvania, which continues to face opposition from the EU. How Romania handles this will impact its reputation among potential U.S. investors and business partners. Tariceanu described the Bechtel deal as a "good contract" negotiated by the "dirty hands" of the previous government. Because the contract was announced without a competitive tender, it is not eligible for European Investment Bank (EIB) financing. In addition, the previous government ignored EU plans for a highway transversing Romania to the south of the Bechtel route, so-called Corridor 4. Tariceanu said the World Bank had done a study on the Bechtel highway and that on a cost basis the project makes sense. Nonetheless, he was worried that Romania would not be able to obtain financing for both the Bechtel and EU routes. Tariceanu said that as a future EU state, Romania has to take EU priorities into account. He expressed hope that the GOR would be able to work out a plan to continue with the Bechtel project, but remained unsure.

Star of Romania, Adoptions, Visas, Restitution, UNHRC --------------- ---

14.(C) The Deputy Secretary noted the importance of people-to-people issues that can produce a negative impression if they are not addressed. He expressed hope that the GOR would make progress towards revoking Star of Romania medal awarded to xenophobic politician Corneliu Vadim Tudor. He urged action to resolve the hundreds of pending international adoption cases filed before Romania's implementation of a ban on international adoptions, underscoring the importance of placing these children in permanent, loving families as soon as possible. He also urged adoption of legislation more in keeping with that of many European countries that allows for international adoptions. Tariceanu said he "understood fully" U.S. concern on adoptions, noted that it was shared by some other European countries such as France, and that he was "paying close attention" to the issue and would try to find a solution.

15.(C) Tariceanu reiterated President Basescu's request to President Bush that Romania be included among those working toward the visa waiver program on the basis of a workplan. The Deputy Secretary explained that Congress had set strict legal requirements before any country could be admitted into the Visa Waiver Program. He noted that there was very little flexibility, but that a U.S.-Romania Consular Working Group would be a good format for discussing the issue and that we want to work constructively with the Romanian government on this.

16.(C) Tariceanu also informed the Deputy Secretary that Romania is taking initial steps toward speeding up the restitution of personal and religious properties seized during the communist period. He expressed concern that the previous government had dragged its feet on the issue and underscored a firm belief that the GOR has a moral obligation to ensure properties are returned. The Deputy Secretary commended Tariceanu on these initial steps.

17.(C) The Deputy Secretary expressed appreciation for Romanian support for this year's UN Human Rights Commission resolution on Cuba, and expressed hope that Romania would encourage Ukraine to support the measure. Tariceanu did not provide a response. (Note. The Romanian MFA subsequently confirmed that Romania would approach Ukraine in Geneva. End Note.)

18.(C) The Deputy Secretary reiterated the U.S. interest in the use of facilities in Romania as part of the realignment of its forces under the Global Force Posture Review. He indicated the U.S. hoped to have further discussions with Romania in April.

Governing with a Slim Majority

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19.(C) The Deputy Secretary asked PM Tariceanu if the GOR faced difficulties with such a narrow majority in the Parliament. PM Tariceanu conceded that there were potential problems, particularly in the Senate where the majority is smallest. Nonetheless, he claimed that "none of the parties" want early elections, particularly given important EU accession benchmarks to be achieved in coming months. The Deputy Secretary commented that it is often the case that smaller majorities lead to more parliamentary discipline within the ranks of a governing party or coalition.

¶20. (C) In sum, the Deputy Secretary and PM Tariceanu agreed bilateral relations between the U.S. and Romania remain strong, with the prospects for even greater cooperation as the new government undertakes its aggressive program of reform.

21.(U) Minimize considered.

DELARE