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S E C R E T SECTION 01 OF 09 CANBERRA 001804 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE FOR EAP/ANP, S/CT, S/I, NEA AND SA 
 
E.O. 12958: DECL: 11/07/2016 
TAGS: PREL MARR MOPS PGOV PINR AS
SUBJECT: PM ASSISTANT SECRETARY HILLEN'S CONSULTATIONS IN 
AUSTRALIA: ARTICLE 98, IRAQ, AFGHANISTAN, IRAN, DPRK, 
COUNTERTERRORISM, PACIFIC ISLANDS, AUSMIN, TSD, JOINT 
STRIKE FIGHTER, GPOI 
 
REF: A. SYDNEY 1432 
     ¶B. CANBERRA 1765 
     ¶C. SYDNEY 1451 
 
Classified By: POLCOUNS James F. Cole, for reasons 1.4 (b) and (d). 
 
SUMMARY 
------- 
¶1. (C/NF) A/S Hillen held productive talks with a wide range 
of Australian Government officials in Canberra November 2-5. 
He secured GOA consent to meet again bilaterally to consider 
 an Article 98 agreement before the December 12 
Australia-United States Ministerial (AUSMIN) consultations. 
Australia reconfirmed its commitment to keep its troops in 
Iraq without deadline, and agreed to help persuade the UK to 
support poppy eradication in Afghanistan.  The two sides 
discussed Iran, counterterrorism, MANPADS, and security 
issues in North Asia and the Pacific, as well as possible 
increased U.S. engagement with New Zealand.  The GOA proposed 
several new agenda items for AUSMIN and urged an early 
rescheduling of the Trilateral Strategic Dialogue (TSD) 
Ministerial, originally proposed for January 2007.  Defense 
officials voiced continued concern about the ultimate cost 
and production schedule of the Joint Strike Fighter, and 
discussed contingencies in the event of a gap in Australia's 
air capability.  A/S Hillen signed a Memorandum of 
Understanding on the Global Peace Operations Initiative 
(GPOI) that will advance cooperation and assign an Australian 
officer to the PM Bureau by December 2006.  End Summary. 
 
----- 
INDEX 
----- 
¶2. (SBU) Following is an index of topics covered in this 
message: 
 
Article 98......................para 3 
Iraq............................para 5 
Afghanistan.....................para 7 
Iran............................para 9 
Counterterrorism................para 11 
MANPADS.........................para 14 
North Korea, China, Japan.......para 16 
Pacific Islands.................para 17 
East Timor......................para 18 
AUSMIN..........................para 19 
Trilateral Strategic Dialogue...para 21 
Australian Defense Capability...para 22 
New Zealand.....................para 23 
Joint Strike Fighter............para 24 
GPOI............................para 25 
 
---------- 
ARTICLE 98 
---------- 
¶3. (SBU) During a November 3 roundtable at the Department of 
Foreign Affairs and Trade (DFAT), Assistant Secretary Hillen 
pressed Australian legal representatives from DFAT and the 
Office of the Attorney General (AG) for a resolution of the 
Article 98 issue in advance of the December 12 
U.S.-Australian Ministerial (AUSMIN) consultations, noting 
continued strong U.S. interest, especially from Defense 
Secretary Rumsfeld.  He cited successful U.S. negotiation of 
 
SIPDIS 
101 Article 98 agreements to date, noting that most countries 
were able to reach policy decisions that obviated the need 
for protracted negotiations to arrive at customized 
agreements.  He stressed that a firm decision by the GOA was 
preferable to a "polite slow roll."  Hillen suggested that 
lawyers from both countries meet for one more "muscular" 
exchange on the issue before the AUSMIN with a view to making 
a final determination on the prospect of achieving agreement, 
observing that the issue would be raised by the American side 
 
CANBERRA 00001804  002 OF 009 
 
 
at AUSMIN whether or not it was explicitly included on the 
agenda. 
 
¶4. (SBU) DFAT Senior Legal Adviser Penny Richards responded 
that several obstacles prevented the Government of Australia 
from agreeing to the latest U.S. proposal, including the 
overly broad scope of the agreement; U.S. engagement with 
persons already surrendered to third countries; the 
non-treaty status of the state-level Australia-New Zealand 
extradition arrangement; the lack of reference in the 
agreement to the U.S.-Australia Status of Forces Agreement; 
re-extradition of persons to third countries that might be in 
conflict with obligations not to surrender American citizens 
to the International Criminal Court; and the need to 
accommodate confidentiality requirements under the Rome 
Statute.  The Australian side agreed with A/S Hillen's 
suggestion for lawyers to meet for a final attempt to resolve 
differences before December 12, adding the caveat that the 
Minister for Foreign Affairs, the Minister for Defence and 
the Attorney General would need to approve any agreement. 
Participants did not discuss a date for the next meeting of 
the lawyers. 
 
---- 
IRAQ: GOA Reaffirms Commitment to Stay "For the Long Haul" 
---- 
¶5. (C) Senior officials, including Defence Minister Brendan 
Nelson, Chief of the Defence Force (CDF) Angus Houston and 
DFAT Deputy Secretary David J. Ritchie, reaffirmed to A/S 
Hillen on several occasions Australia's commitment to Iraq, 
including provision of military forces without a timetable 
for withdrawal.  DFAT Deputy Secretary David J. Ritchie, 
during a November 3 roundtable, told Hillen that there was 
"no daylight" between U.S. and Australian views of Iraq and 
stated flatly that there was "no current thinking of pulling 
out," although Australia may make some adjustment to its 
tasks, as needed.  CDF reassured A/S Hillen that Australia 
was in Iraq for "the long haul," but expressed concerns about 
the commitments of other Coalition members.  ADOD Secretary 
Ric Smith added that the issues had become "highly 
politicized" and that there was pressure to show progress 
before the next election.  Ritchie reaffirmed that any 
withdrawal of Australian forces would depend on circumstances 
on the ground; Australia would not set a timetable, despite 
strongly negative domestic views about the deteriorating 
situation in Iraq and the continued involvement of Australian 
troops.  He said polls showed Australians wanted Australian 
troops to be withdrawn from Iraq "but not precipitously." 
Public opinion was partly driven by U.S. views, but also by 
public perceptions that Iraq was in chaos, the Coalition was 
bogged down, and the war was "unwinnable."  Ritchie urged 
close, advance consultation on any planned changes in U.S. 
tactics, establishment of benchmarks or milestones for the 
Iraqi Government, or plans for withdrawal of U.S./Coalition 
forces, asserting that "We want to make sure we aren't 
surprised." 
 
¶6. (S/NF) A/S Hillen underlined the need for Coalition 
partners to remain engaged in Iraq to prevent the greater 
chaos that would attend a precipitous withdrawal.  He assured 
his Australian hosts that domestic political shifts in the 
United States would not affect the President's overall 
strategy in Iraq over the next two years, predicting that 
Congress would continue to support U.S. troops there 
regardless of the results of the mid-term elections.  He took 
on board the GOA wish for continued close consultations on 
any planned changes in Iraq.  CDF Houston expressed "grave 
concern" about the Maliki Government's inability, and 
unwillingness, to reign in the Shi'ite militias.  Maliki's 
blatantly partisan tactics of dealing with the militias 
threatened the legitimacy of the unity government, Houston 
said, and patience within the international community was 
 
CANBERRA 00001804  003 OF 009 
 
 
wearing thin.  He asked if the U.S. had any plans to deal 
with the militia problem itself.  A/S Hillen stated that U.S. 
intervention was among the range of possible options, but the 
expectation was that the Iraqis would address the militia 
issue themselves, with Coalition assistance. 
 
----------- 
AFGHANISTAN: The Long View 
----------- 
¶7. (C/NF) A/S Hillen outlined coalition objectives in 
Afghanistan, noting the importance of putting in place 
programs and systems of sustainable governance in areas where 
the insurgency was being effectively tamped down.  Overall, 
there was no reason for pessimism about Afghanistan's future. 
 The United States took the long view, cognizant that 
assisting the new democracy would be a 10-20 year project. 
He disclosed that the United States was planning to announce 
a large reconstruction program, focused mainly on 
infrastructure, i.e., roads and the electricity grid.  It was 
important to help President Karzai shift his focus to needs 
outside Kabul.  While the resurgence of the Taliban in some 
areas was discouraging, on the positive side, the Taliban was 
not attempting to establish alternative government 
structures.  Hillen assessed that NATO was doing well overall 
but lacked capacity to integrate military and civil aspects 
of their operation.  A/S Hillen noted that the opium trade 
remained the greatest threat to security, as drug smuggling 
provided the Taliban with a continual source of income.  He 
said that the key to stopping the drug trade was finding 
viable livelihood alternatives; a difficult task when the 
best case scenario projected that eight years from now, 
former poppy farmers would only be making 35% of what they 
currently earn growing poppies.  A/S Hillen expressed 
frustration that the British were slow to acknowledge the 
link between the opium trade and Taliban resurgence.  A/S 
Hillen asked the Australians to weigh in with the British to 
convince them to aggressively pursue eradication. 
 
¶8. (C/NF) The GOA welcomed A/S Hillen's announcement of plans 
for an infrastructure package.  Deputy Secretary Ritchie, 
Defence Secretary Smith, and DFAT Secretary L'Estrange agreed 
to help persuade the UK about the nexus between terrorism and 
narcotics.  Smith and Ritchie noted they would have an 
opportunity to raise the issue with the British at their 
annual Pol-Mil talks with the UK the following week. 
Secretary Smith suggested that the best solution to opium 
 
SIPDIS 
cultivation might be to mirror farmer subsidy programs, 
whereby the Coalition forces would purchase the poppy crops. 
The Australians agreed with A/S Hillen's overall assessment 
of the situation in Afghanistan, including the need for 
President Karzai to extend his writ beyond the capital.  The 
Afghan people were frustrated over the lack of services and 
the government's failure to provide them, Ritchie told him; 
thus the focus should remain on reconstruction.  Ritchie gave 
an upbeat readout of Australia's cooperation with the Dutch 
in Oruzgan Province, adding that the new Australian Embassy 
would be collocated with that of the Dutch in Kabul.  He 
agreed with A/S Hillen's negative assessment of President 
Musharraf's peace deal with Waziristan's tribal elders, 
adding that Pakistan needed to do more against the Taliban. 
Ritchie commented that Afghanistan enjoyed wide bipartisan 
support in Australia, and the Australian Government was also 
somewhat optimistic about its future.  Australian troops 
deployed there were committed for two years but the GOA 
expected to have forces beyond that time frame. 
 
---- 
IRAN: Australia "Deeply Worried" 
---- 
¶9. (C/NF) Diverging from the prepared agenda at Australia's 
request, A/S Hillen outlined the four-pronged U.S. strategy 
towards Iran, including pressure to end its nuclear program. 
 
CANBERRA 00001804  004 OF 009 
 
 
Iran, whose success would encourage other states with nuclear 
ambitions, was more problematic than North Korea, he 
observed.  Unlike the latter, Iran was not surrounded by 
strong states with the will and ability to apply pressure on 
it to denuclearize.  The United States remained concerned 
also over Iran's continued belief in the efficacy of 
supporting sub-national or non-state actors.  On Iran's 
relationship to Iraq, the United States wanted Iraq to be 
strong enough to resist Iran but not so strong that it could 
threaten its neighbors.  A/S Hillen concluded by noting U.S. 
efforts to restrain Israel from reacting rashly to Iranian 
behavior. 
 
¶10. (S/NF) David Ritchie said Australia was deeply worried 
about Iran.  Iran saw itself as part of the Persian Empire, 
rather than of the Arab world, and aspired for dominance 
among the Shia and pre-eminence in the region.  Iran had 
calculated that it was prepared to live with some level of 
sanctions over its nuclear program, Ritchie commented, adding 
that the GOA and the U.S. needed more intelligence on Iran's 
clandestine weapons and nuclear program.  Financial 
intelligence showed the varying ways in which Iran was using 
the banking system.  Ritchie underlined the need for the 
international community to confront President Ahmadinejad's 
"fake argument" that Iran's nuclear program was designed to 
meet its energy needs.  He worried that mild sanctions 
against Iran would only reinforce the notion that there was 
little cost in proceeding with nuclearization.  First 
Assistant Secretary for the Americas Division Les Luck 
interjected that like-minded states should involve China, 
along with Russia and the Europeans, more deeply in 
confronting Iran.  Ritchie countered that the Europeans were 
weak on Iran.  Vice Chief of the Australian Defence Forces 
(VCDF) Ken Gillespie stated that Iran wanted to cause the 
U.S. as much "grief" in Iraq as possible, but that the 
Iranians didn't actually want Iraq to collapse.  A/S Hillen 
agreed, noting that Iran preferred the "status quo" of an 
Iraq simmering with insurgency, but not imploding into 
full-scale civil war.  A/S Hillen stated that the Arab 
nations remained extremely worried about Iranian regional 
hegemony and needed continued assurances that the U.S. was 
not going to abandon them. 
 
---------------- 
COUNTERTERRORISM: GOA's Highest Priority 
---------------- 
¶11. (C/NF) DFAT Assistant Secretary for Counterterrorism 
Perry Head summarized recent Australian initiatives in 
countering terrorism, which he termed the GOA's highest 
priority.  The GOA had enhanced its CT presence in Southeast 
Asia and provided new resources for DFAT, enabling it to 
create new offices for coordination and policy.  Surveying 
Australia's most significant CT challenges in the region, 
Head listed terrorism in the Philippines as a major concern, 
along with the difficulty of achieving effective CT 
coordination with the GRP.  While the terrorism threat from 
JI in Indonesia remained high, Australia was pleased with the 
level and pace of its CT cooperation with the Government of 
Indonesia, which Head characterized as proceeding as well as 
could be hoped.  Ritchie interjected that Australia expected 
to sign the Framework Agreement for Security Cooperation with 
Indonesia on November 13.  Malaysia was "still doing a good 
job" on CT, with bilateral cooperation proceeding 
satisfactorily.  In Thailand, unrest in the South appeared to 
be more the result of local grievances rather than agitation 
by international jihadists.  Ritchie noted that prospects for 
addressing terrorism in southern Thailand appeared to be 
better with the post-coup leadership of the Thai Government. 
In addition to promoting regional CT cooperation, Australia 
was engaging extremist ideology in the "Battle of Ideas." 
Head cited several examples of cooperation with Indonesia on 
this front, including collaborating with the GOI on a film 
 
CANBERRA 00001804  005 OF 009 
 
 
featuring victims of terrorism.  Head drew attention to 
Foreign Minister Downer's November 1 speech "Terrorism: 
Winning the Battle of Ideas" (Ref C), which outlined the GOA 
strategy to retake the high ground in this area.  First 
Assistant Secretary for International Security David Stuart 
commented that resolution of the Israeli-Palestinian conflict 
would remove a rallying point for extremists.  David Ritchie 
observed that Australia had had little success engaging India 
on CT cooperation, adding that Australia was worried also 
about Bangladesh. 
 
¶12. (C/NF) Referring to the recently concluded Trilateral 
Counterterrorism meeting in Tokyo, Perry Head said the GOA 
remained concerned that Japan lacked effective internal 
coordination, which did not auger well for progress in 
cooperating on CT.  It was important to try to make progress 
with Japan in this area.  Ritchie suggested that the 
Trilateral Strategic Dialogue (TSD) table the issue of 
Japanese coordination at the TSD Ministerial in early 2007. 
 
¶13. (C/NF) Referring to countering extremist ideology, A/S 
Hillen foreshadowed renewed energy on the part of the United 
States in addressing the Israeli-Palestinian problem.  He 
concurred that the United States and others needed to be more 
effective in the battle of ideas.  Hillen praised Indonesian 
cooperation on counterterrorism, pointing to the large number 
of arrests of terrorist suspects, and hinted that the 
President likely would visit Indonesia on the margins of 
APEC.  He agreed with the GOA's view of the difficulties in 
eliciting cooperation from the Philippines, ruefully 
observing that, while there had been little return on the 
U.S. investment in the RP, the opportunity costs were too 
high for the U.S. not to be engaged.  A/S Hillen agreed with 
the concerns Australia expressed about Japan, underscoring 
the importance of getting trilateral cooperation "out of the 
gate." 
 
------- 
MANPADS 
------- 
¶14. (C) A/S Hillen, referring to the USG Deputies Committee 
decision to make MANPADS a global priority, noted that, of 
the estimated 50,000 loose MANPADS, about 19,000 had been 
destroyed or secured with another 5,000 targeted for 
destruction.  Key target countries were Yemen, Afghanistan 
and Iraq.  He mentioned that the United States had quadrupled 
spending on the manpads issue, and planned to appoint a 
special representative on manpads.  Hillen added that he 
headed a task force to coordinate efforts from the 
intelligence community, Customs, State Department, and other 
agencies.  The U.S. planned to conclude agreements with 
producers and would look at buying out some state producers, 
such as Bulgaria. 
 
¶15. (C) David Stuart said the recent MANPADS conference in 
Washington, D.C. had been useful.  The Australia Government 
wanted to be able to announce progress on airport security 
and stockpile security, and hoped to make a solid 
announcement at APEC. 
 
---------------------------- 
NORTH KOREA, CHINA AND JAPAN 
---------------------------- 
¶16. (C) ADOD Deputy Secretary Mike Pezzullo stated that 
Australia would interdict North Korean vessels traveling 
within its jurisdiction, and were exploring options for 
interdictions outside of Australian jurisdiction.  He said 
that pressure needed to be placed now on the "like-minded" 
community to take action against the DPRK, before the 
momentum created by UNSCR 1718 begins to dissipate.  Pezzullo 
added that this crisis was the "perfect alignment" needed to 
get the Japanese to push past their Constitutional reluctance 
 
CANBERRA 00001804  006 OF 009 
 
 
and to take a more active role on the world stage.  North 
Asia First Assistant Secretary Peter Baxter welcomed the 
successful U.S.-China collaboration in getting North Korea to 
agree to return to the Six Party Talks (6PT).  "When the cost 
went up, China finally used the muscle it had always had," he 
observed.  Australia was pleased with Japan's overture toward 
China.  Baxter characterized Prime Minister Abe's recent 
visit to Beijing as more useful than his visit to Seoul. 
South Korea was the "weak link," he added; it already was 
looking at resumption of the 6PT as an excuse to review its 
commitment to implementing UNSCR 1718.  GOA relations with 
Japan were moving quickly; Australia wanted to position 
itself as Japan's natural partner, after the United States, 
he said.  Australia was negotiating a framework agreement on 
security cooperation with Japan, and had provided the text to 
Tokyo.  This would build on the 1996 Joint Declaration 
between the two countries.  In a subsequent meeting, DFAT 
Secretary L'Estrange also commented favorably on the changing 
 
SIPDIS 
mood between Japan and China, and Japan's willingness to take 
a hard line on the DPRK.  He marveled that his Japanese 
interlocutors were prepared to give their personal views 
along with the GOJ policy line during his most recent trip to 
Japan, which had never happened previously. 
 
--------------- 
PACIFIC ISLANDS: Beset by Problems of Governance and Stability 
--------------- 
¶17. (C/NF) Deputy Secretary David J. Ritchie and First 
Assistant Secretary of the Pacific Division David A. Ritchie 
(different middle initial) briefed A/S Hillen on key issues 
and trouble spots in the Pacific.  In broad strategic terms, 
the situation in the Pacific was in a trough.  Governance was 
an issue throughout Melanesia.  It was important for Pacific 
countries to understand that it was not just Australia but 
the international community that was concerned about good 
governance.  The Deputy Secretary echoed DFAT Secretary 
L'Estrange's and Deputy Defence Secretary Pezullo's separate 
appeals for support for Australia's message in this regard, 
including a request that the United States weigh in with 
Taiwan, and to a lesser extent China, on the need to avoid 
using assistance in ways that undercut good governance and 
sustainable development.  Taiwan's motivation in conducting 
checkbook diplomacy was political recognition.  FM Downer's 
focus was on Taiwan, rather than China for which the GOA had 
less evidence of outright funding of politicians. 
 
-- SOLOMON ISLANDS: The GOA noted Taiwan was blatantly 
bankrolling Solomon Islands (SI) politicians, and there were 
signs Taiwan was preparing to fund an alternative to RAMSI's 
police function.  The SI had invited Taiwan to provide forces 
for the police or army.  PM Sogavare was anti-Australia and 
trying to do away with RAMSI.  Anti-Australian sentiment was 
growing in the Solomon Islands.  Sogavare had physically 
threatened Deputy Secretary Ritchie when the latter had 
called on him to protest the expulsion of Australia's High 
Commissioner.  The Pacific Island Forum had been useful in 
getting a consensus that protected RAMSI, at least 
temporarily.  Australia's strategy was to work below the 
radar in maintaining RAMSI until Sogavare was voted out of 
office.  Sogavare's chief worry was that Australia would 
expose corruption and begin arrests of SI politicians, up to 
and including the Prime Minister. 
 
-- FIJI: CDF Houston stated that, at this time, Australian 
military planning for Fiji was limited to evacuation of 
Australian citizens.  In the event of a coup, he said, 
Australia would seek to work through means other than 
military intervention to stabilize the country.  Houston 
added that, with 4,000 good Fijian soldiers on the ground, 
any intervention by an outside force would be "a tough nut to 
crack."  Other interlocutors noted GOA intelligence showed 
that Fiji Defense Chief Frank Bainimarama had been planning a 
 
CANBERRA 00001804  007 OF 009 
 
 
coup for some time.  He was expected to transit Los Angeles 
on/about November 4 en route to Suva.  Australia hoped the 
United States would be able to give him a strong warning 
against mounting a coup during his U.S. transit.  To Brig. 
General Toolan's question about the legal or financial 
consequences of a coup, the GOA confirmed that there would be 
consequences, but, unlike the United States, there was no 
mechanism for an automatic cutoff of funding.  The Australian 
side suggested there might be some leverage over Fiji through 
its extensive involvement in peacekeeping operations. 
 
-- PAPUA NEW GUINEA:  (C/NF) Defence Intelligence 
Organisation Director Major General Maurie McNarn described 
the looming AIDS crisis in PNG, which threatens to 
destabilize the nation.  He said that the rate of AIDS 
amongst the population could reach 2.5 percent, which would 
cause hospitals to collapse.  MG McNarn also predicted that 
the food supply could experience significant disruptions, as 
the bulk of subsistence agriculture in PNG was done by women, 
and women were being infected with AIDS at a greater rate 
than men.  McNarn added that Australia could be the first 
Western nation to have a major AIDS crisis directly on its 
border.  He said that Australia was providing aid to PNG, but 
given the rampant corruption of the PNG government, there was 
a limit to how much the GOA could do. 
 
---------- 
EAST TIMOR: Green Versus Blue Helmets 
---------- 
¶18. (C/NF) During a November 3 meeting, Secretary of the 
Department of Foreign Affairs and Trade Michael L'Estrange 
thanked the United States for its assistance to Australian 
forces during their intervention in East Timor.  He termed 
the situation in East Timor "depressing," pointing to 
continued political infighting.  FRETELIN seemed more 
determined than ever to run its own course, and had been 
provoking unrest as a means of discrediting Australian forces 
in favor of a blue-helmet UN force.  Separately, Deputy 
Secretary of Defense for Strategy Pezzullo reaffirmed the 
 
SIPDIS 
GOA's deep appreciation for U.S. and British support for 
maintaining the Australian green-helmet mission in East 
Timor.  He described working with the UN Department of 
Peacekeeping Operations (DPKO) as a "horror," and said that 
the UN had done everything possible to denigrate the 
Australian green-helmets in favor of promoting the 
blue-helmets.  He expressed disbelief that the UN refused to 
acknowledge that Australia was a competent military force 
able to take the East Timor issue "off the hands" of the 
overstretched DPKO. 
 
 
--------------------------------------------- ---- 
AUSTRALIA-UNITED STATES MINISTERIAL CONSULTATIONS (AUSMIN): 
Agenda Suggestions and Format 
--------------------------------------------- ---- 
¶19. (C/NF) Over a November 3 working lunch hosted by First 
Assistant Secretary for the Americans Division Les Luck, the 
Australian side made several proposals for the 2006 AUSMIN 
agenda.  Deputy Secretary for Strategy Michael Pezullo 
suggested adding updates and plans for defense 
interoperability, Joint Combined Training Capability (JCTC), 
Global Peace Operations Initiative (GPOI), and Missile 
Defense (MD), all of which had been agreed at the 2004 
AUSMIN.  Luck proposed combining A/S Hillen's suggestion that 
the Alliance refocus on regional capacity-building, made 
during his November 2 address to the Kokoda Dinner, with the 
latest U.S. global initiative to combat nuclear terrorism to 
identify new measures and outcomes that might build regional 
capacity to address nuclear terrorism threats, e.g., from 
North Korea.  The Australian side also proposed adding 
Intelligence, Surveillance and Reconnaissance (ISR); 
nation-to-nation training capability; space; International 
 
CANBERRA 00001804  008 OF 009 
 
 
Traffic in Arms (ITAR) regulations; regional capacity 
building; increased use of Australia territory for training; 
U.S. Global Defense Posture; intelligence-sharing and 
National Disclosure Policy; Trilateral Strategic Dialogue 
process and challenges; and Asian architecture, including 
APEC and EAS.  Expanding on the topic of East Asian 
architecture, the Australian side noted that Prime Minister 
Howard favored including India in APEC and reaffirmed the 
GOA's view of the importance of maintaining the primacy of 
APEC as the only vehicle that brings together all of the 
heads of government -- including the U.S. President. 
Assistant Secretary for the United States Branch, Allaster 
Cox, defined the GOA's strategic interest in regional 
architecture in terms of ensuring that the United States 
remained engaged. 
 
¶20. (C/NF) A/S Hillen, who had opened the discussion by 
inviting suggestions for agenda items in addition to export 
controls and Article 98, noted that the PM and EAP bureaus 
had been working on the agenda and plans for AUSMIN.  He 
opined that some items might be incorporated into the joint 
communique, for example, reaffirming the ongoing commitment 
to Iraq and Afghanistan.  Hillen agreed that AUSMIN 
represented a way to challenge both parties to move forward, 
for example, with the JCTC.  He concurred that it would be 
important to announce the important progress that had been 
achieved in implementing the National Disclosure Policy.  DCM 
Quinlan interjected that some issues remained regarding 
intelligence sharing with some members of the IC.  Regarding 
the discussion of regional architecture, Hillen reminded the 
Australians that any agenda item would need to be tightly 
focused, and asked the GOA to provide a preview of what 
Australia hoped to accomplish.  On process, he said he and 
EAP A/S Hill would together agree on the AUSMIN agenda for 
the State Department.  He took on board the Australia's 
strong preference to keep the sides small -- 4 plus 4, if 
possible.  The Australian side likely would comprise Foreign 
Minister Downer, Defence Minister Nelson, Secretary of the 
Department of Foreign Affairs and Trade L'Estrange, Secretary 
of the Department of Defence Warner, Chief of the Defence 
Force Angus Houston, Ambassador Richardson, Secretary of the 
Department of Prime Minister and Cabinet Peter Shergold, and 
one other.   A/S Hillen agreed on the desirability of 
discussing at AUSMIN the allies' expectations for Japan, with 
a view to considering imposition of deadlines on Japan to 
spur it to accomplish specific objectives.  This would be 
especially important, as Japan planned to create a ministry 
of defense and to stand up a new intelligence agency. 
 
----------------------------------- 
TRILATERAL STRATEGIC DIALOGUE (TSD): GOA Seeks an Early 
Ministerial in 2007 
----------------------------------- 
¶21. (C/NF) Secretary L'Estrange observed that the TSD in New 
York had made practical progress on counterterrorism, 
maritime security and disaster relief.  The proposed TSD on 
the margins of APEC in Hanoi would be too short to allow for 
much discussion beyond APEC and North Korea.  He expressed 
disappointment that the Secretary's proposed January TSD on 
the West Coast would slip, adding it would be a pity if it 
drifted to the April-May timeframe.  (Foreign Minister Downer 
said the same thing to us separately.)  L'Estrange appealed 
for the U.S. side to set a new date for the TSD as early as 
possible in 2007, with enough time to cover a longer agenda. 
He restated Australia's interest in engaging India in 
multilateral discussions -- not in the TSD but perhaps on the 
margins of other meetings. 
 
----------------------------- 
AUSTRALIAN DEFENSE CAPABILITY: 2007 Strategic Update 
----------------------------- 
¶22. (C) Pezzullo mentioned that the GOA would likely come out 
 
CANBERRA 00001804  009 OF 009 
 
 
with a new strategic update in the first quarter of 2007. 
The update would acknowledge that Australia has two major 
strategic missions.  The first, and primary mission, of the 
Australian Defence Force (ADF) would be to take the leading 
role to quell conflicts in the immediate region, an area 
Pezzullo defined as covering more than 10 percent of the 
world's surface.  The ADF's secondary mission would be to 
make meaningful contributions in global missions outside of 
Australia's immediate region.  In these conflicts, Australia 
would not be a "framework leader." 
 
----------- 
NEW ZEALAND: No Free Pass 
----------- 
¶23. (C) According to Pezzullo, Australia supports efforts to 
ramp up U.S.-New Zealand dialogue and move past the nuclear 
debate.  He added, however, that New Zealand should have to 
pay a "negative premium" for its continued stance on 
nuclear-powered ship visits.  "New Zealand can't opt out of 
the nuclear issue," he said, "and still be full players in 
the Alliance."  A/S Hillen agreed, and noted that New Zealand 
would have to be willing to be a larger player in other 
issues, in order to move the nuclear issue "off the center." 
 
-------------------------- 
JOINT STRIKE FIGHTER (JSF): Price and Production Worries 
-------------------------- 
¶24. (C) Defence Materiel Organisation CEO Stephen Gumley 
thanked A/S Hillen for his efforts to address Australian 
concerns regarding the technology transfer process, including 
the question of dual nationals.  Gumley stated that A/S 
Hillen's advocacy had gone a long way towards reassuring the 
GOA that its companies would not be left at an insurmountable 
competitive disadvantage in the Joint Strike Fighter (JSF) 
project.  Gumley stated, however, that the Australian 
government could not agree to buy the JSF until it knows how 
much it will cost.  Since the ultimate price of the JSF will 
be dependent on how many countries agree to buy it, he added, 
there will need to be a "hard conversation" in the near 
future.  Gumley also reiterated that Australia was truly in 
the "hot seat" with its "strategic bet" on JSF, because if 
JSF fell through, Australia would be left without any air 
capability by early in the next decade.  If the JSF project 
were to be significantly delayed, Chief Capability 
Development Group Lt. Gen Hurley said, and if Australia's 
ageing fleet of F-111 could not be further maintained, 
Australia might need to ask the U.S. for access to its 
airplanes, including taking U.S. production slots.  Hurley 
described this as a "crisis scenario only" fall-back 
position, but one for which the U.S. should be prepared. 
 
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GPOI: MOU signed 
----- 
¶25.  (C) A/S Hillen and ADOD Secretary Ric Smith signed a 
Memorandum of Understanding on joint activities under the 
Global Peace Operations Initiative (GPOI) umbrella.  As part 
of the GPOI MOU, an ADF officer will be assigned to the PM 
bureau at State, beginning in December 2006. 
 
MCCALLUM