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OO RUEHWEB

DE RUEHFR #1334/01 0941610
ZNR UUUUU ZZH
O 041610Z APR 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6213
INFO RUEHSS/OECD POSTS COLLECTIVE
RUEHEG/AMEMBASSY CAIRO 0973
RUEHBJ/AMEMBASSY BEIJING 1463
RUEHBR/AMEMBASSY BRASILIA 1849
RUEHNE/AMEMBASSY NEW DELHI 1092
RUEHML/AMEMBASSY MANILA 0240
RUEHMO/AMEMBASSY MOSCOW 5805
RUEHSA/AMEMBASSY PRETORIA 1290
RUEHRB/AMEMBASSY RABAT 1034
RUEHSG/AMEMBASSY SANTIAGO 0470
RUEHTV/AMEMBASSY TEL AVIV 0628
RUCNDT/USMISSION USUN NEW YORK 1200

UNCLAS PARIS 001334 
 
SIPDIS 
 
FROM USOECD PARIS 
 
SENSITIVE - NOT FOR INTERNET DISTRIBUTION 
SIPDIS 
 
STATE FOR E, EEB, EUR, G, IO/S AND S/P, NSC FOR MCCORMICK 
 
E.O. 12958:N/A 
TAGS: EAID ECON ETRD OECD
SUBJECT: OECD: State of Play on Enlargement and Enhanced Engagement 
- Approaching Time to Take Decisions 
 
REF:  (A) PARIS 1116 (B) PARIS 827 (C) PARIS 525 (D) PARIS 160 
 
¶1.  (SBU) Summary:  As we approach the April ECSS and May 
Ministerial Council Meeting, elements of an OECD enlargement and 
enhanced engagement (EE) package are emerging.  Members appear ready 
to bless opening accesion negotiations with Chile and Israel, 
although some continue to express concerns about the latter's 
like-minded qualifications and Mideast regional sensitivities.  A 
consensus also seems to be forming to invite Secretary General (SG) 
Gurria to initiate discussions with the BRICS -- Brazil, Russia, 
India, China, and South Africa -- with the goal of expanding the 
Organization's cooperation with those countries.  One major question 
affects both enlargement and EE:  should Russia be offered the 
accession or enhanced engagement track?  The other outstanding issue 
is how to deal with the aspirations of the EU-8.  And whatever 
decisions are taken on a final package will have financial 
implications:  Members continue to debate how to cover the costs of 
enlargement and EE as well as ensuring the long-term financial 
sustainability of the Organization.  The U.S. will need to be 
prepared to address each of these issues in the coming weeks during 
key discussions by the Council (April 12), the ECSS (April 19-20) 
and, eventually, the Ministerial (May 15-16).  End Summary. 
 
¶2.  (SBU) SG Gurria continues to promote an enlargement and Enhanced 
Engagement (EE) package based on his informal paper, elements of 
which the Council has debated over the past three months (Reftels). 
This package would include opening discussions with five countries 
(Chile, Estonia, Israel, Russia and Slovenia) on accession, drawing 
closer to four other major emerging economies (Brazil, China, India 
and South Africa) via individual programs of Enhanced Engagement, 
and expanding OECD outreach to key countries in Africa, Asia, Latin 
America and the Mideast. 
 
---------------- 
Chile and Israel 
---------------- 
 
¶3.  (SBU) Of the five countries named for accession in the SG's 
informal paper, OECD Members appear ready to bless initiation of 
accession discussions with Chile and Israel.  Chile is almost 
universally regarded as prepared now to begin the accession process, 
and some Members have called for putting Chile on a fast track. 
Regarding Israel, several delegations have in the past raised 
concerns about its like-mindedness, with questions about the 
inclusiveness of Israel's economy as well as about its human rights 
practices.  In addition, there is a desire to avoid alienating other 
countries in the Mideast.  That said, strong U.S. support for both 
Chile and Israel has helped move their candidacies along.  There is 
no country prepared to stand up on its own and say "no" to Israel, 
and this currently includes New Zealand and some of the EU member 
states that had earlier expressed human rights concerns. 
 
¶4.  (SBU) Nevertheless, given the sensitivity of Israeli membership, 
Mission believes it wise to continue voicing strong support for 
Israel at every opportunity in order to preclude any OECD Member 
from contemplating blocking Israel's candidacy for political or 
other reasons, e.g., human rights concerns, Arab state 
sensitivities, getting the "right package," etc.  The latter is 
particularly relevant with respect to gauging the willingness of EU 
members to link or hold hostage the candidacies of either Chile or 
Israel to those of the eight non-OECD member EU countries (EU-8). 
 
------ 
Russia 
------ 
 
¶5.  (SBU) When it comes to Russia, the U.S. has stood out as the 
principal obstacle to offering the Russians an accession track at 
this time.  Support from France, Germany, Italy, the Nordic 
countries and Turkey has strengthened the SG's arguments that OECD 
membership will bolster reform elements in Russia and may provide 
the last chance to embrace Russia in the OECD's set of rules, best 
practices and standards.  USOECD continues to question Russian 
like-mindedness in Council discussions, while other Members 
including Australia, Canada and the UK have also raised concerns. 
 
That said, UK Ambassador Lyscom now seems ready to join France and 
other EU states in further opening the door to Russian membership. 
We are prepared to deploy the approach suggested in the Secretary's 
draft reply to FM Lavrov's letter requesting serious attention to 
Russia's long-standing membership aspirations, and request 
authorization to that effect prior to Council's next discussion on 
April 12. 
 
---- 
EU-8 
---- 
 
¶6.  (SBU) The second challenge facing Members is how to treat the 
eight EU member states that are not members of the OECD.  The SG's 
informal paper includes Estonia and Slovenia as candidates with 
which to open discussions "with a view to Membership," including 
preparing a "roadmap" setting out terms and conditions for the 
accession process of each.  The Council remains divided between 
Europeans who are pushing to bring in as many EU member states as 
possible and the APEC countries, which have questioned the regional 
implications of such an approach.  We understand that the current EU 
agreed position (taken at the March 28 COREPER) is to support 
Estonia and Slovenia joining in a first round of accession, followed 
by admission of at least one EU Member State in each subsequent 
round.  For this reason, USOECD and other non-European Members are 
skeptical about language on enlargement that would legitimize 
"sequencing" for the EU-8.  As reported in Ref A, the German Permrep 
(as EU President) has begun pushing for a quick decision that would 
lock in Estonia and Slovenia and language on sequencing. 
 
¶7.  COMMENT AND RFG:  USOECD to this point has been skeptical 
regarding the EU-8 candidates, but has not categorically opposed 
consideration of these countries as candidates for accession, as 
have some APEC delegations.  We believe, however, that obtaining EU 
consensus for the accession of both Chile and Israel may well entail 
agreement to have at least one EU Member State invited to begin 
accession negotiations, though this will not appease other APEC 
members.  We also sense that getting the EU small- and mid-size 
countries to sign on to a revised financing scale that includes a 
minimum base fee (see para 11 below) may require offering membership 
to a second EU Member State.  We believe that APEC pressure to 
resist new EU Members will tend to support our position on financing 
and recognize there may only be a limited trade-off with Israel for 
EU candidates.  Mission requests guidance with respect to EU-8 
membership and the question of sequencing.  END COMMENT AND RFG. 
 
 
--------------------------------------------- ------- 
Emerging Consensus on Enhanced Engagement with BRICS 
--------------------------------------------- ------- 
 
¶8.  (SBU) The SG's informal paper embodies his desire and that of a 
number of Members to portray the OECD's relevance in terms of naming 
as many countries as possible as part of a Ministerial document. 
This is particularly true with respect to the number of candidates 
invited to begin accession negotiations.  The Japanese Ambassador, 
for example, has stated that an enlargement package without Russia 
would be relatively "insignificant," and other Ambassadors have 
pointed to the need for a robust enlargement if the OECD is to 
remain relevant.  From the Mission's point of view, the goal of the 
current enlargement and EE exercise should be to expand relations 
with those countries that play an increasingly significant role in 
the global economic arena.  EE as it is being defined would provide 
a framework for broader, more intensive cooperation with the 
selected partners, designed to increase their policy convergence 
with OECD principles, encourage like-minded views on issues of 
common concern and increase their attractiveness as future potential 
OECD Members. 
 
¶9.  (SBU) Over the past several weeks, Ambassador Morella and her 
Canadian counterpart, Jocelyne Bourgon (who has just left post), 
have been consulting with a small group of colleagues on an 
alternative to the SG's informal paper.  Ambassador Joan Boer 
(Netherlands), who chairs the External Relations Committee (ERC), 
has incorporated the group's ideas into a draft proposal that would 
 
 
focus on conveying the OECD's commitment to reach out more globally 
through enlargement, enhanced engagement and outreach activities to 
increase its policy impact and influence.  In this draft, the SG 
would be empowered to launch enhanced engagement discussions with 
each of the five BRICS (including Russia, whose special relationship 
would be recognized) and to open accession negotiations with the two 
countries -- Chile and Israel -- that have consensus support, and 
possibly two EU member states, still to be identified.  Text 
treating the proposal to also invite the SG to open discussions with 
the EU Presidency and EU member states regarding how to develop 
closer relations and cooperation between with the OECD and the EU is 
bracketed.  Finally, the proposal would empower the SG to explore 
ways to develop and deepen regional programs, in particular with 
respect to Southeast Asia (at Japanese insistence).  Second-tier 
countries -- including Argentina, Egypt, Indonesia, Malaysia, 
Morocco and Thailand -- that are listed in the SG's informal paper 
would not be named in the alternative text. 
 
¶10.  (SBU) COMMENT:  Given what we know about the current positions 
on enlargement, it is hard to imagine that an accession package 
limited to Chile and Israel could be agreed.  For example, France 
and others will push hard to include Russia, and although divisions 
exist among EU delegations regarding how to treat the EU-8, there 
seems to be general EU support for starting accession negotiations 
with two (i.e., Estonia and Slovenia).  As noted above, whether or 
not EU Members would be willing to publicly veto the candidacies of 
Chile and Israel if no EU countries are named remains to be seen. 
END COMMENT. 
 
---------------- 
Financing Issues 
---------------- 
 
¶11.  (SBU) How to finance enlargement and EE, in whatever form it 
emerges as a final package, will be a key concern.  Divisions remain 
between larger Members, which cover their recurring costs, and the 
small- and medium-sized countries,  that don't and argue that the 
OECD (and enlargement) should be funded like any other multilateral 
organization; i.e., based on the principle of capacity to pay.  The 
April 2 meeting of the Special Group on Financing made no progress, 
with delegations holding to well-known positions.  It has become 
evident that Members are awaiting the composition of an enlargement 
package before agreeing to a new financing scheme, not only for 
enlargement for for the long-term sustainability of the 
Organization.  Mission's sense is that these countries accept the 
fact that they will have to increase their contributions, but they 
will want to see something in return.  Again, as we have noted 
above, the willingness of these smaller, but still relatively 
affluent states (most of whom are EU members), may depend on how 
many EU members are offered an accession process.  For the moment, 
the financing discussions remain stuck, and Danish Ambassador Smidt, 
Chair of the Special Group, will present to Council on April 12 the 
same basic proposal he gave them at its last discussion on March 20 
(see Ref A). 
 
MORELLA