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C O N F I D E N T I A L USEU BRUSSELS 004207 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE PASS NSC FOR TMCKIBBEN 
 
E.O. 12958: DECL: 12/22/2016 
TAGS: CVIS EAID ECON ELAB ENRG EUN PGOV PHUM PREL
SUBJECT: EU PRESIDENT BARROSO'S JANUARY VISIT: THE VIEW 
FROM BRUSSELS 
 
 
Classified By: USEU POLMINCOUNS LAURENCE WOHLERS, FOR REASONS 
1.5(D) AND (E) 
 
¶1.  (C/NF) European Union Commission President Jose-Manuel 
Barroso's January 8 trip to Washington is an opportunity to 
marshal Commission support for action over the next six 
months in accelerating political and technical cooperation on 
energy and climate change, completing the Doha Round, and 
making progress on our common foreign policy agenda in the 
Middle East, Afghanistan, Balkans, and Africa.  Publicly, 
Barroso will likely play the role of the harmonious second 
fiddle to the German presidency on these issues.  However, 
their views are not always identical, with Barroso generally 
espousing more pro-market views, particularly in regards to 
energy security.  Barroso's Washington trip, therefore, will 
be an opportunity to develop common strategies with the 
Commission on the issues of greatest strategic importance. 
 
¶2.  (C/NF) Two years after taking office, Barroso has a clear 
sense of his policy priorities, developed a reputation as an 
effective communicator, and shaped (by EU standards) a 
cohesive leadership team within the Commission.  However, 
Barroso's real achievements on internal EU questions since 
his last trip to Washington have been limited, hampered by 
divided leadership in key member state capitals, continuing 
member state interference with Brussels in the absence of 
constitutional stability, and his own lack of a strong power 
base.  In the near term, therefore, there are real 
constraints on his ability to prevent the debate on the 
constitution or sensitive internal EU matters from shifting 
away from Brussels and directly into European capitals. 
Nevertheless, given the coming Portuguese EU presidency and 
forthcoming leadership changes in several member states, 
Barroso could be better positioned to influence EU policy in 
the longer term. 
 
¶3.  (C/NF) Counterintuitively, Barroso and the Commission 
have in fact been front and center on the improved working 
relations between Europe and the United States on a number of 
key fronts, including homeland security and better strategic 
coordination of assistance (the latter involving the EU's 
combined $55 billion in overseas assistance).  In this 
context, Barroso is likely to use the agenda for his visit to 
reinforce a number of objectives he is already pursuing. 
First he will launch a major new energy initiative in 
January, and will look to bolster his presentation by 
matching as many of his goals with ours as possible.  This 
includes relations with Russia -- although Barroso publicly 
defers to the Council's lead on Russia, diversification of 
energy supplies (and diminishing Russia's stranglehold on 
European gas and oil markets) is a critical part of his 
energy strategy.   On Doha, which increasingly dominates 
political thinking here, Barroso may be interested in a joint 
signal to negotiators to break through existing obstacles. 
On the Middle East, the EU Commission plays a strong role in 
certain areas, including supporting the Siniora government 
and in steering international resources in a way that 
circumvents Hamas; Barroso will want to discuss how to 
continue that engagement. 
 
¶4.  (C/NF) The meeting also provides a vehicle to highlight 
outstanding critical tasks in US-EU counter-terrorism 
cooperation.  Finally, Barroso will likely raise EU member 
states' concerns about the visa waiver program and may have 
questions about the President's new VWP initiative. END 
SUMMARY 
 
The Barroso Vision:  a drive to "reform from the center" 
--------------------------------------------- ----------- 
 
¶5.  (C/NF) Two years into his mandate, Barroso's vision, if 
not necessarily his means to achieve it, is clear.  Gone is 
the grand, expansionist, and persistently theological 
Eurocrats' obsession with "the European project".  As 
Barroso's aides note, even the constitutional question 
interests him only from a pragmatic perspective -- until it 
is settled he understands that the Union cannot move on. 
Move on to what?  The Barroso vision is pragmatic: 
developing a more competitive, innovative, and flexible 
Europe better prepared to cope with rapid change in the 
global environment.  Barroso's people describe it as 
"reforming from the center", and believe that the EU toolbox 
can help force change on old guard, member-state mindsets. 
 
But where's the mandate? Not Delors' EU anymore 
--------------------------------------------- -- 
 
¶6.  (C/NF) Although Barroso is widely acknowledged to be a 
more competent and clever president than his two 
predecessors, this has not stopped the flow of policy 
influence out of the Commission towards the Brussels-based 
Council machinery, the individual member states, and the 
budget-controlling Parliament.  Barroso's team freely admits 
that, as an outsider from a small member state, he lacks a 
core power base in the EU.  But they also note that in the 
new EU of 27, policy decisions inevitably result from 
closed-door horse-trading in which the Council and the member 
states, not the Commission, are the key players.  Indeed, the 
German presidency has been blunt in signaling its intentions 
on two key issues:  institutional reform, which it clearly 
hopes to keep outside of the "Brussels machinery", and 
energy, on which it has taken an ambiguous stance, claiming 
to want reform but frustrating Barroso's reform agenda.  This 
unfavorable power balance may account for the fact that 
Barroso has publicly focused his energies on the 
uncontroversial objectives of making the "Brussels machinery" 
more efficient and responsive to the average European 
citizen. 
 
Some leverage nonetheless 
------------------------- 
 
¶7.  (C/NF) Barroso is not without leverage, however.  First, 
compared to the fractious Council and Parliament, Barroso has 
the most cohesive team in Brussels.  While it's not a model 
of camaraderie, it does generally adhere to the President's 
lead, thus allowing the Commission to drive internal EU 
policy development in Brussels.  Second, Barroso has 
considerable deal-making ability -- he relishes working 
behind the scenes, as he has done successfully on the 
Services agreement and the recent Turkey deal. His aides say 
he will play a similar role on the Constitution -- working 
quietly to pull people towards a centrist deal (for Barroso, 
the substance of the deal is far less important than getting 
the institutional question done and off the table).  Third, 
Barroso compensates for his lack of a core power base by 
assiduously building alliances.  Rather than fighting the 
Council's growing clout, for example, he has directed his 
staff to build collaborative ties between the two; 
particularly on foreign policy issues where the Council has 
the stronger mandate but the Commission most of the funding. 
 
Time on his side? 
------------------ 
 
¶8.  (C/NF) Aides say that, over the next calendar year, 
Barroso is determined to push forward greater EU political 
consensus in three key areas: energy security and 
sustainability, EU institutional reform and enlargement, and 
trade and economic growth (including Lisbon reforms). To be 
sure, Barroso's relationship ith Chancellor Merkel will be 
tested on all of these issues.  Nevertheless, his ability to 
push his agenda may improve with time. For one thing, the 
Portuguese presidency during the ltter half of 2007 will be 
a natural platform or policy cooperation.  Political forces 
in key member states may also work to his advantage, with the 
possible election of a political soul-mate in France and the 
end of the long political transition in the UK.  Moreover, 
Barroso continues to cultivate relationships with the new 
member states who, although they do not yet punch their 
weight in EU circles, are generally closer to Barroso's 
thinking on energy security questions, the value of market 
forces, and the need to stand up to Russia. 
 
KEY ITEMS FOR THE JANUARY MEETING 
--------------------------------- 
 
Energy 
------ 
 
¶9.  (C/NF) Energy reform may be the issue to which Barroso is 
most personally committed.  His aides say that Barroso 
believes that energy security is important not just for its 
own sake, but because the development of a flexible and 
innovative energy market is the key to overall economic 
reform.  He wants the Commission to take an active role in 
completing the EU's internal energy market, which would 
include three main elements: 1) create a more unified EU 
foreign energy policy (viz. Russia); 2) promote energy 
efficiency, develop alternative fuels; and 3) keep open the 
option of more nuclear power for the EU. 
 
¶10.  (C/NF) On January 10, the Commission will present a 
series of proposals on the internal market, coal, nuclear 
power, geopolitical energy policy, energy efficiency and 
biofuels.  But the Germans have already signaled opposition 
to the Commission's goal of breaking up Europe's largest 
energy companies into more competitive units.  They have also 
rejected the Commission's global warming targets.  The 
Commission has taken a harder line toward Russia on energy 
than has Germany.  Still, there are areas of consensus, such 
as the need to develop cleaner and more efficient 
technologies. 
 
¶11.  (C/NF) USEU has worked closely with the Barroso cabinet 
over the past year in shaping an ambitious energy work plan, 
and the Commission and Germany share a constructive agenda 
for engaging the U.S. on energy policy.  Following up on the 
energy goals of the June 2006 Vienna Summit, the Germans 
presented a paper in December proposing more intensive 
collaboration on research and development projects.  The U.S. 
should be able to work with both.  Barroso's aides believe 
that the immediate focus should be on implementing the 
numerous projects we already have in the pipeline: biofuels, 
energy efficiency and carbon capture and storage.  They also 
support an intensified dialogue on the Caspian region.  On 
these specific issues, there is a remarkable amount of 
agreement among the Barroso-led Commission, the German 
presidency, and the U.S. We need to ensure, however, that the 
internal turf battles between the Commission and the member 
states do not prevent us from making practical progress with 
the EU on energy co-operation. 
 
Trade 
----- 
 
¶12.  (C/NF) Barroso's visit comes at an important time for 
Doha negotiations.  There is a sense in the EU that there has 
to be significant movement on the DDA in the next two months 
in order for there to be a deal in the short term.  This 
belief arises from the combination of the expiration of the 
Administration's Trade Promotion Authority at the end of 
June, the need to begin work on the U.S. farm bill, and the 
French elections in May.  Aides say that Barroso personally 
believes strongly in the need to achieve a new WTO round for 
the good of the global trading system.  Our own impression, 
however, is that Barroso tends to prefer to defer to 
Mandelson on the specifics of negotiations, which is why the 
latter came to the Vienna summit and will attend this 
meeting.  Barroso may solicit our views on how to deepen the 
transatlantic economic relationship.  The German Presidency 
provides an excellent opportunity to accelerate our existing 
regulatory cooperation and other elements of our 
transatlantic economic agenda. While immediate emphasis 
should be on practical progress over the next six months, we 
should be open to exploring further ambitious plans for the 
future, including evaluating German ideas on how to deepen 
the transatlantic market. 
 
Economic Growth and Reform 
-------------------------- 
 
¶13. (C/NF) Barroso and the Commission remain committed to the 
Lisbon agenda of economic reform, despite the current 
economic upswing in the Eurozone.  Barroso aides have 
indicated that he may ask about U.S. views on Chancellor 
Merkel's ideas for accelerating regulatory cooperation as a 
means to deepen Transatlantic economic integration. Barroso 
is reportedly sympathetic to calls for completing the 
transatlantic market by 2015, but does not want to get out 
ahead of the United States. 
 
Foreign Policy 
-------------- 
 
¶14.  (C/NF) Barroso's foreign policy priorities can be 
divided into three general categories:  critical to the 
future of the Union; critical to the Euroatlantic 
relationship; and deeply important due to historical reasons 
and personal interests.  The stabilization and integration of 
the Western Balkans into Europe falls squarely into the first 
category.  Barroso and the German Presidency are acutely 
aware that EU credibility could be damaged by failure of the 
ESDP mission in Kosovo.  Afghanistan, Iran, and the Middle 
East fall into the second category.  Barroso certainly 
understands the geostrategic importance for the Euroatlantic 
community of helping to achieve peace and stabilization of 
these volatile areas.  However, policy success or failure 
would not necessarily create a crisis of political legitimacy 
for the EU.  Africa and Darfur in particular, would fall into 
the third and final category.  Barroso's own policy advisors 
have noted his deep personal commitment and interest in 
bringing about peace and development in Africa. 
 
¶15.  (C/NF) Middle East/Afghanistan:   Although the 
Council/Solana have the foreign policy lead on the Middle 
East, Commission monies and trade authorities have in reality 
a powerful imprint on the EU's presence in the region. 
Barroso leaves the public lead here to Commissioner 
Ferrero-Walder, who is heavily engaged both substantively and 
publicly. The European Commission has been the biggest donor 
to the Palestinian Territories, having allocated euros 2.6 
billion since 1994.  Similarly, for Afghanistan the 
Commission has made good on their euro 1 billion pledge at 
the Tokyo Donors' Conference and is now planning euros 150 
million for each of the next seven years.  Since the fall of 
Saddam Hussein, the Commission has made euros 720 million 
available for Iraq reconstruction and will have an additional 
euros 160 million for the Iraq Compact. In some cases, as in 
the creation of the Temporary Implementation Mechanism for 
the Palestinian territories, the Commission has made de facto 
foreign policy.  In others, such as a September visit by 
Commission officials to Syria to engage moderate Syrians, the 
Commission has eventually pulled back in deference to strong 
Council views.  Nevertheless, the Commission clearly feels 
pressure from a number of member states (as well as some of 
its own working level officials) to take a more pro-Arab 
line, and it will be important to signal to Barroso the 
importance of reinforcing a common approach between the EU 
and the US. 
 
¶16.  (C/NF) Russia/FSU: There is a confusing interplay of 
responsibilities between the Council and the Commission on 
relations with Russia/the FSU.  Barroso's Commission, 
conscious of the vulnerability of smaller states to Russian 
pressure, generally takes a harder line on energy and is also 
more willing to support Moldova and Georgia with money and 
resources.  The Council remains divided: as the Lahti dinner 
with Putin made clear, certain member states, including 
France and Germany, take a more accommodating stance toward 
Russia.  This affects the Commission's ability to explore 
ways to change the current dynamic on so-called frozen 
conflicts.  In recent months, the Commission has also made 
considerable efforts to strengthen its assistance packages 
and cooperation agreements (including on energy), with 
Russia's neighbors.  In the absence of any EU offer to offer 
a membership perspective or seriously address trade and visa 
barriers, however, the Commission's efforts may be 
insufficient to counterbalance enormous political and 
economic pressures the neighbors face from Russia. 
 
Justice and Home Affairs 
------------------------ 
 
¶17.  (C/NF) Barroso's visit offers an opportunity to obtain 
his assurance that he will continue to help us to resolve key 
CT and security-related issues, including terrorist financing 
(use of SWIFT), PNR, and privacy.   We should make clear our 
expectation that Barroso and the Commission will take 
responsibility on security and show stronger leadership, 
including through public statements on the need to find a 
reasonable, legal balance on security and privacy issues. 
 
Visa Waiver Program 
------------------- 
 
¶18.  (C/NF) Barroso will feel compelled to raise the Visa 
Waiver Program, as the EU leadership does at every 
opportunity.  The European Commission and member states 
continue to press for the admission of nine of the new member 
states, plus Greece.  The President's recent Tallinn 
declaration to seek greater VWP entry flexibility from 
Congress was widely welcomed by a still agitated EU, who want 
to see the specifics behind the proposal and swift action. 
The next Commission report (expected in April) on EU visa 
waiver privileges with a variety of countries may focus 
especially on the United States. 
 
All Roads (Eventually) Lead Through the Commission 
--------------------------------------------- ----- 
 
¶19.  (C/NF) Internal EU business will absorb much of 
Barroso's attention over the next six months. Starting with 
the 50th Anniversary of the Treaty of Rome in late March, the 
French (and possibly UK) elections in April, through to the 
end of the German Presidency in June, Europe-wide debate at 
all levels will intensify over future of the Constitutional 
treaty, European integration, and the EU institutions.  Even 
so, Barroso's visit to Washington is a timely opportunity to 
solidify Commission support for key U.S. objectives in the 
Transatlantic relationship.  As Commission President, Barroso 
has far more influence over economic and trade policy 
formulation than EU foreign policy strategy.  However, even 
in the latter case, the Commission's control of money and 
people mean that it is frequently vital to the implementation 
of those policies.  This makes him an indispensable partner, 
during the German Presidency and beyond. 
 
MCKINLEY 
.