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O 241421Z APR 07
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C O N F I D E N T I A L SECTION 01 OF 04 BRUSSELS 001380 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE PASS NSC FOR TMCKIBBEN 
 
E.O. 12958: DECL: 04/24/2017 
TAGS: PREL ECON ENRG EU PGOV
SUBJECT: SCENE-SETTER FOR U.S.-EU SUMMIT 
 
 
Classified By: USEU CDA MCKINLEY FOR REASONS 1.5(D) AND (E) 
 
¶1. (C/NF) Summary:  The April 30th U.S.-EU Summit should 
ratify an important economic package with positive messages 
for our improved economic and political relationship.  This 
is Chancellor Merkel's Summit, and EU officials coming to 
Washington will be conscious that they are playing more of a 
second fiddle role to the Presidency than they are accustomed 
to.  The Summit should also demonstrate that on the key 
foreign policy issues, transatlantic cooperation is in very 
good shape.  Despite lingering disputes on energy and climate 
issues, there is broad agreement between us that these need 
to be treated as part of an integrated package. 
 
¶2. (C/NF) The early date of this year's Summit allows us 
something that has been lacking in the past: immediate follow 
up with the same EU Presidency.  We should take the 
opportunity for real-time reviews of next steps on Iran 
sanctions, Sudan, and Kosovo where European cooperation is 
essential as more difficult decisions loom.  This year, with 
two months available before Europe's summer break, we also 
have the chance to reinforce the transatlantic economic 
partnership and energy/climate pieces with specific and 
targeted events and meetings.  It will be important for key 
U.S. and EU regulatory officials to meet to establish the 
regulatory work plan and decide how to approach the specific 
objectives laid out in the Summit.  On the energy and climate 
side too, we need to build on the cooperation established 
over the past two years.  Finally, Europeans have celebrated 
fifty years of remarkable achievements through the EU, but 
are less clear on what the future holds. Capitalizing on 
their desire to exert influence on a global stage, we have 
the opportunity to project a compelling message of unity on 
the critical issues before us.   End summary. 
 
Germany's Summit 
--------------- 
 
¶3. (C/NF) Much more than is usually the case, this is the 
presidency country's Summit.  That reflects not only how much 
Merkel has taken charge of both the ideas and the process, 
but more broadly the reality that the entire German 
presidency has been perceived as muscular, and, on occasion, 
exclusionary when the Germans felt the need.  This is 
particularly true at Brussels senior staffing levels, where 
contacts have complained of being steam-rolled on German 
foreign policy goals, such as the development of a new 
Central Asia strategy.  Others have been irritated at being 
virtually cut-out of the U.S.-EU summit preparations, with 
Permreps complaining that they did not even see the 
declaration drafts until last week, while a Commission source 
noted that the German tactic of running the Summit statements 
on three separate tracks had made it harder for the other EU 
institutions to shape the outcome. 
 
Ruffling feathers but respected nonetheless 
------------------------------------------- 
 
¶4. (C/NF) Bruised feelings aside, however, we mostly hear 
high praise for what the German presidency has actually 
accomplished.  Top of that list is the sense that the 
U.S.-German relationship is back on track, something which 
all here recognize will pay dividends for the EU as a whole. 
Second, our contacts credit Merkel with a shrewd choice in 
focusing on the economic partnership as the new centerpiece 
for transatlantic relatios at the Summit.  It offers a way 
to both impove relations with the U.S. in general and lay 
the foundations for a more efficient transatlantic market in 
particular.  Further, the Germans appear on track to produce 
a U.S.-EU Summit that will, as one contact noted, "for the 
first time in awhile, have some really meaningful 
deliverables".  Third, our contacts admit that the Germans 
have mostly pushed EU foreign policy in a productive 
direction (for example, the new Central Asia strategy is a 
long-overdue rethinking of the EU's relationship with its 
eastern neighbors).  Indeed, there is a general recognition 
that the Germans, thanks to their deep bureaucratic bench, 
have run the myriad EU meetings and troikas with remarkable 
effectiveness (a strong managerial hand has been particularly 
important in keeping the internal Kosovo debate on track). 
 
¶5. (C/NF) All of this gives Merkel a strong hand coming into 
the Summit -- and potentially for the follow-up beyond. 
Thus, other EU leaders will come to Washington conscious that 
this is really more Merkel's Summit than theirs, but 
nevertheless pleased with the overall results.  Indeed, 
already some sources are beginning to worry about the ability 
of the Portuguese to pick up the German baton in July. 
 
BRUSSELS 00001380  002 OF 004 
 
 
 
The foreign policy relationship:  in strong shape 
--------------------------------------------- ---- 
 
¶6. (C/NF) For many Brussels foreign policy thinkers, U.S.-EU 
cooperation has never been better.  The key new development 
of 2007, from their perspective, has been the reemergence of 
a robust MEPP process and, in particular, the reinvigoration 
of the Quartet.  Although we hear this across the board, 
Commission sources, traditionally the most impatient for 
movement on the peace process, have been especially effusive 
in praising the Secretary's engagement in the process.  In 
turn, the public perception of a new peace process -- one in 
which the EU has a visible role -- has strengthened Brussels' 
ability to resist the pressures of (certain) member states to 
engage the NUG and Hamas more directly.  In fact, at the 
recent Gymnich, it was Commissioner Ferrero-Waldner who 
reportedly knocked back several foreign ministers impatient 
to go beyond Quartet principles. 
 
¶7. (C/NF) On almost all other foreign policy issues as well, 
the Brussels' perspective is that U.S.-EU cooperation is as 
close or closer than it was a year ago.  On Iran, the EU is 
breathing a collective sigh of relief that the 27 held 
together on sanctions implementation, and have moved further 
toward reducing export credits to Iran than most had thought 
likely.  (Although the German EU Presidency continues to 
avoid EU-wide consideration of a cessation of export credits 
and other economic measures -- fears of a loss of business to 
Russia and China loom large in this regard.)  Although 
Brussels and Berlin remain on the same general line with 
respect to Iran with the EU's so-called "double track" 
approach of sanctions and dialogue, the recent dust-up over 
Iran's detention of UK military personnel served to swing the 
EU toward a tougher policy line against Tehran. 
 
¶8. (C/NF) On Kosovo, key EU players are similarly pleased 
with what the U.S. and the EU have accomplished together. 
Though just as clearly worried about holding the 27 together, 
and aware that it will be the EU's job to knock heads among 
wavering member states, they do believe that the very high 
degree of U.S.-EU dialogue has made that job easier.  On 
Russia, the EU (in particular Germany) seems to be moving 
closer to our analysis (though the implications for energy 
policy and greater EU proactiveness on the frozen conflicts 
still seem distant).  On Afghanistan, the EU is proud it has 
put together the police training mission so quickly (though 
conscious we would like to see more).  On Sudan, the EU is 
edging closer towards a sanctions perspective, though here 
too not as quickly as we would like.  Somalia is one 
potential note of EU unhappiness, as  the EU institutions 
believe that the U.S. could have pushed the TFG harder 
towards national reconciliation. 
 
Economic issues 
-------------- 
 
¶9. (C/NF) On the economic side, this Summit really should 
mark a key change from previous ones, not so much for the 
content but because of the political force behind it. 
Breaking down remaining barriers and improving the 
functioning of the transatlantic marketplace are ideas that 
have been around for a while.  But Merkel's political push, 
and the focus now on improving and reducing regulatory 
burdens, give new and useful emphasis to the practical steps 
needed to achieve long-sought goals.  It is important to keep 
in mind two of the factors influencing the Chancellor.  One 
is geopolitical, which is to use success in the transatlantic 
partnership to counterbalance the stance of her coalition 
partners, who are less critical of Russia and more critical 
of us.  The second is to have the U.S. help the EU 
deregulate, an objective which cannot be emphasized too 
publicly in the EU, but which nevertheless is a strong factor 
in Merkel's thinking.  The Summit should also give the U.S. a 
tool to face down the EU as they try to build a role as the 
de facto global regulator, with the excesses of the chemical 
regulation REACH as the most obvious example.  Finally, in 
order to see this through, it will be important to make 
progress on realizing the ideas featured at the Summit within 
the next two months.  Near-term follow-through should also be 
an outcome of this Summit, with a focus on achieving some 
quick successes on regulatory reforms with the involvement of 
the U.S. Congress. 
 
¶10. (C/NF) It is important in all the talk of this economic 
partnership not to lose sight of completing the Doha round, 
and we have been emphasizing to our contacts in the business 
community that the Merkel initiative is a complement to Doha. 
 
BRUSSELS 00001380  003 OF 004 
 
 
 While this distinction often gets lost in the press here, we 
should be able to clarify this at the Summit. 
 
¶11. (C/NF) The major unresolved issue for the Summit as we 
write is how to handle the energy and climate statement.  The 
Germans and the Commission are aligned in wanting a robust 
statement on the dangers of climate change and on the need 
for launching a new international agreement.  They want to 
lay a foundation for the G8 Summit in June and tell us that 
the "European public" needs to see something new in a U.S.-EU 
Summit document.  These issues will have to be resolved in 
the course of this week.  On the plus side, there is a new 
acknowledgement in Brussels that energy and climate issues 
need to be dealt with together.  This gives us a lot to work 
with because it allows us to promote our results-based agenda 
on climate and energy. 
 
¶12. (C/NF) On the energy and climate statement, it is a mark 
of progress in the U.S.-EU relationship that we are clearly 
dealing with these issues in an integrated way.  The EU's 
spring Council ratified a joint approach to energy and 
climate issues, greatly pushed by Merkel.  We have developed 
practical cooperation with the Europeans on energy matters 
over the past two years with the idea that whatever we do 
also has positive implications for our relationship on 
climate issues.  Commission officials understand that the 
real reductions of greenhouse gas emissions will come from 
increased energy efficiency, the development of new 
technologies and improvements in regulatory policy.  They 
also see the need to develop a comprehensive international 
approach, enshrined in some sort of post-Kyoto framework, 
which would allow them to internationalize some of the 
commitments they have taken on themselves.  This means 
engaging China and the developing world, something many 
leading Europeans say privately, if not publicly. Europeans 
should be reminded that the need to engage China is fully 
bipartisan in the U.S. 
 
The home stretch of the German presidency 
----------------------------------------- 
 
¶13. (C/NF) The German Presidency is a good example of what 
can happen when a large member state puts its political 
muscle behind its Presidency, rather than act like an 
impartial broker, as the UK tried to do in 2005.  With the 
European project at a bit of standstill -- new leadership in 
the large member states yet to take office and the future of 
the Constitution in limbo -- the EU can use the help of key 
governments to propel it forward.  That means redefining the 
debate on integration, future enlargement, and the European 
response to globalization.  It is fortunate that Merkel used 
her influence to focus on building the transatlantic economic 
relationship during Germany's six-month Presidency. 
Recognizing that we can do more to build the transatlantic 
marketplace by improving regulation on both sides of the 
Atlantic is an important insight widely supported by the 
business community.  We anticipate that PNR and visa waiver 
questions will be raised, but not as central topics of 
discussion.  The Summit should also provide an opportunity to 
cement our excellent cooperation on Iran in particular. 
Cooperation on PNR, visa waiver, SWIFT, and Iran illustrate 
the high-level of commonality on counter-terrorism issues, 
notwithstanding the adverse press on Guantanamo and 
renditions. 
 
¶14. (C/NF) That the Summit is occurring so early in the 
Presidency also affords us a unique opportunity to kick-start 
the early implementation of Summit commitments.  On the 
economic side, this will be relatively easy:  the Presidency 
will be looking to work closely with us in the remaining 
months to move forward on its highest priorities.  On the 
other hand, second tier priorities risk being triaged away as 
the Presidency (and the entire EU) becomes increasingly 
focused on the Constitution issue.  In this context, we 
suspect that we will have to work harder to ensure that many 
foreign policy priorities, including Russia, the frozen 
conflicts, and Iran, continue to receive the attention they 
have in recent months.  The likely successes on the economic 
and energy/climate at the Summit, should not obscure the 
importance of producing similarly strong messages on U.S.-EU 
political cooperation on the critical issues before us.  High 
Representative Solana and, to a lesser extent External 
Relations Commissioner Ferrero-Waldner, will remain 
indispensable in helping form European consensus on difficult 
questions regarding Iran, the Middle East, and Sudan (to name 
a few issues), once the German Presidency is behind us. 
Merkel has delivered for the six months she sat in the 
Presidency: ensuring implementation will come down to the EU 
 
BRUSSELS 00001380  004 OF 004 
 
 
institutions and U.S. institutions as well.  The Germans will 
stay with the economic integration issues through the next 
two Presidencies.  We must also do our part. 
 
MCKINLEY 
.