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

121536Z May 06

UNCLAS SECTION 01 OF 03 PARIS 003167 
 
SIPDIS 
 
STATE FOR E, EB, AND EUR/WE 
 
E.O. 12958: N/A 
TAGS: ECON PREL FR
SUBJECT: SCENESETTER FOR UNDERSECRETARY SHINER'S VISIT TO 
PARIS 
 
REF: A. PARIS 1876 
 
     ¶B. PARIS 1304 
 
Summary: 
------- 
¶1.  (SBU) Embassy Paris and the U.S. Mission to the OECD 
welcome Undersecretary Shiner's visit to Paris.  The largest 
component of her visit will be with the head of Agence 
Francaise de Developpement, AFD, Jean-Michel Severino to 
discuss UN reform in the areas of development policy and 
humanitarian assistance.  The Embassy has proposed a series 
of bilateral consultations with the French to coordinate our 
activities (and to leverage our own programs) in regions of 
interest such as the Middle East, Africa, and the Caribbean 
Basin.  U/S Shiner may want to gauge Severino's receptiveness 
to such an idea.  U/S Shiner will also be meeting with PM de 
Villepin's chief economic advisor, Alain Demarolle.  U/S 
Shiner's primary message to him should be that we would 
welcome economic policies that increase growth and that keep 
France's investment regime open.  Finally, USOECD 
representatives will accompany you to a meeting with Claude 
Mandil and Ambassador Ramsay at the International Energy 
Agency to discuss energy securit 
y issues. End Summary. 
 
Political Backdrop 
------------------ 
¶2.  (SBU) U/S Shiner's visit to France comes at a time of 
roiled political waters and a weak government.  Prime 
Minister de Villepin is currently at the center of a 
political scandal involving an investment firm called 
Clearstream and an alleged dirty-tricks campaign involving 
political rivals.  President Chirac is said to have been at 
least indirectly involved.  This, coupled with last year's 
referendum rejecting the EU constitution, suburban unrest 
last November, and widespread public rejection of a minor 
youth employment proposal, has resulted in a government that 
has become extremely risk averse.  Moreover, with 
Presidential elections due in 2007, politicians on both the 
left and the right are jockeying for position and are little 
inclined to compromise.   All this means that the appetite 
for pushing through necessary and promised economic reforms 
has all but disappeared, at least until after the election. 
Nevertheless, the general government weakness and 
unpopularity may give the Chirac/de Villepin gove 
rnment a new impetus to cooperate with the USG as it searches 
for elusive policy "successes," especially in foreign policy, 
where Chirac retains his institutional prerogatives. 
 
Development Background 
---------------------- 
¶3.  (U) We will not comment on the UN development reform 
discussions U/S Shiner has been undertaking as we have not 
been party to those ongoing discussions.  We give you below 
background on the French development policy establishment and 
the Embassy's proposal for developing and energizing the 
comparatively dormant bilateral relationship in this area. 
 
¶4.  (U) France is a major actor in international development. 
 In 2004, having spent $8.5 billion, France was the third 
largest contributor of overseas development assistance (ODA), 
putting it only behind Japan ($8.6 bil), and the U.S. ($19 
bil).  France sees itself as having a compelling message to 
developing countries and President Chirac goes out of his way 
to cultivate developing country leaders as he did by inviting 
a large cross section of such leaders to join the 2003 G-8 
summit in Evian. 
 
¶5.  (U) France is a large donor, and one with whom we 
periodically work together bilaterally, although in a largely 
ad hoc fashion.  Cooperation on debt reduction for HIPC 
countries in the Paris Club has generally been good and 
cooperation in other fora such as the DAC in the OECD has 
been productive.  We have also worked well bilaterally on a 
case-by-case basis: our cooperation in Haiti comes to mind as 
perhaps one of the better recent examples. 
 
¶6.  (SBU) However, there is a range of big-picture 
development issues on which we do not agree with the French. 
President Chirac has long pushed in the G-8 and elsewhere for 
an internationally-administered (Tobin) tax on items like 
international air travel or arms sales.  The French have not 
been supportive of our BMENA initiatives, including the 
Foundation and Fund for the Future, important policies for us 
and ones which should have been seen as complementing ongoing 
French efforts in the region. 
 
¶7.  (SBU) The French development policy establishment is 
coming out of a period of some change.  The Ministry of 
Cooperation and Francophonie is in the final throes of being 
absorbed by the MFA.  "Cooperation" is effectively the policy 
branch of the GOF's development bureaucracy, ensuring that 
overall goals are consistent with MFA (and Presidential) 
priorities.  Minister-Delegate, Brigitte Girardin, is a 
junior minister and reports to Foreign Minister Douste-Blazy. 
 Director-General of International Cooperation and 
Development, Philippe Etienne, a career diplomat, serves as 
Girardin's deputy and the chief of the "Cooperation" 
operations of the Ministry of Cooperation and Francophonie. 
Cooperation has been instructed by parliament to focus on 
three priorities: 1) to be the center of development policy 
promulgation and analysis in the GOF; 2) to ensure geographic 
coordination with overseas missions; 3) to enhance the role 
of NGO's to leverage GOF priorities.  Importantly, 
Cooperation has recently created a sub 
-directorate for "democratic governance" which is to put 
increased policy resources behind the GOF's belief that good 
governance is a key to the success of development 
initiatives. 
 
¶8.  (U) AFD is the financing and implementing branch of the 
GOF's development policy apparatus.  AFD finances economic 
and social projects carried out by government authorities, 
parastatal companies as well as private sector and civil 
society groups.  Their focus has been on urban 
infrastructure, rural development, industry, financial 
systems, education and health.  These projects are funded by 
subsidies, guarantees, shareholdings, and assisted and 
commercial loans.  AFD works closely with NGO's and the 
private sector to implement the policies and priorities as 
articulated by Cooperation and the MFA.  Embassy's 
interaction with AFD has until recently been limited. 
Nevertheless, we have found AFD officials to be extremely 
open to suggestions of cooperation with the USG.  They have 
noted their work with U.S. agencies and NGO's in the field 
has traditionally been excellent. 
 
¶9.  (SBU) Given that we pursue many of the same goals in 
developing countries - democracy, rule of law, good 
governance - Embassy believes there is scope for more 
bilateral cooperation and coordination.  There is also 
considerable overlap in terms of geographic priorities with 
the French particularly concerned about and well-represented 
in the Middle East and North Africa, Sub-Saharan Africa and 
the Caribbean Basin.  We have proposed a strategy for 
engaging the GOF in Paris 1876. 
 
Economic Background 
------------------- 
¶10.  (SBU) From our perspective, this is a dangerous time for 
French economic policy-making.  Popular anti-globalization 
sentiment and government weakness due to political 
uncertainly raise the risk of politically-expedient 
protectionist measures.  PM de Villepin's Economic Advisor 
Alain Demarolle has particular responsibility for foreign 
investment issues. 
 
¶11.  (SBU)  Embassy believes the USG should urge GOF action 
to support open markets and recognize the need for continued 
economic reform, particularly on labor market rigidities.  At 
this time when the world is watching France's political 
troubles, the image it projects on economic policy is 
especially important.  "Economic patriotism", including 
government review of foreign investment in strategic sectors, 
and legislation strengthening hostile takeover defenses, can 
send the message that France is not open to foreign capital. 
GOF actions must prove otherwise. 
 
¶12.  (SBU)  Embassy also believes that continued economic 
reform is crucial to long-term growth prospects, and that 
foreign investment -- a major employer in France -- is 
crucial to France's ability to innovate and remain 
competitive in a globalized economy.  With nearly $ 50 
billion in stock investment, the U.S. is a major investor in 
France. 
 
¶13.  (SBU) We suggest that U/S Shiner ask about economic 
reform prospects and growth forecasts for the remainder of 
the Villepin government.  Urging movement on the Doha Round 
would also be a worthwhile point to make. 
 
IEA and Energy Issues 
--------------------- 
¶14.  (SBU)  International Energy Agency Executive Director 
Claude Mandil called his March visit to Washington one of the 
most productive trips he has taken as head of the agency. 
U/S Shiner will recall from her meeting with him at that 
time, Mandil was interested in lobbying G-7 countries to 
deliver a strong signal to Russia on energy security at the 
St. Petersburg Summit.  He clearly received the message that 
a top U.S. priority for the summit this year is a stronger 
bilateral relationship with Russia.  While he and other IEA 
staff have continued to call for reform in Russia's energy 
sector, the tone has been somewhat muted.  Still, it is 
likely that he will take the opportunity to revisit the 
subject during your meeting in Paris. 
¶15.  (SBU) Mandil will also be interested in measures taken 
and contemplated by the U.S. Government in response to the 
recent surge in gasoline and crude prices.  In his comments 
to the International Energy Forum in Qatar in April, Mandil 
identified enhanced energy efficiency as the most viable 
short-term solution for consumer countries and emphasized 
stepped-up investment and a diversity of fuels as key 
medium-term goals.  Mandil has also spoken out in interviews 
to the mainstream media in recent days of the IEA's 
willingness and ability to coordinate the release of stocks 
in case of a disruption of Iranian supplies to the market. 
 
¶16.  (SBU) At the March IEA Governing Board meeting, Mandil 
announced his intention to retire at the conclusion of his 
term at the end of his term.  He is expected to remain in his 
position until August 2007 to ensure a smooth and timely 
transition with his successor.  There is no clear candidate 
to succeed him at this time.  The IEA Deputy Director, Bill 
Ramsay, will join Mandil for the meeting. 
Please visit Paris' Classified Website at: 
http://www.state.sgov.gov/p/eur/paris/index.c fm 
 
Stapleton