VZCZCXYZ0001
RR RUEHWEB

DE RUEHWL #0305/01 1051919
ZNY CCCCC ZZH
R 151919Z APR 07
FM AMEMBASSY WELLINGTON
TO SECSTATE WASHDC 4145

C O N F I D E N T I A L WELLINGTON 000305 
 
SIPDIS 
 
SIPDIS 
 
 
 
STATE FOR D (FRITZ), EAP/FO, AND EAP/ANP 
 
E.O. 12958: DECL: 04/13/2017 
TAGS: PGOV NZ
 
SUBJECT: POTENTIAL FOR NZ FOREIGN MINISTER-GOVT SPLIT OVER NZ-CHINA 
FTA 
Classified by DCM David J. Keegan, 
for reasons 1.4 (b) and (d). 
 
Summary 
------- 
 
¶1. (C) A source close to Foreign Minister Winston Peters, whose New 
Zealand First Party seriously lags in the polls, says Peters may 
openly voice his opposition to New Zealand's free trade deal with 
China in an effort to secure the loyalty of his voter base.  Although 
the dispute could strain the private constructive working 
relationship between Peters and PM Helen Clark, the Labour Party 
needs Peter's continued cooperation to retain control of the 
Government and PM Clark would  likely publicly play down Peters' 
objections.  Peters by all accounts relishes his position and would 
be loathe to jeopardize it. Even more importantly, as seasoned 
political veterans, Clark and Peters understand each other and will 
be able to minimize the impact of the issue on their cooperation. 
They could even work behind the scenes to limit the damage to the 
Government of their "disagreement."  End Summary. 
 
Playing to his Party's Support Base? 
------------------------------------ 
¶2. (C) As a NZ-China FTA comes ever closer to completion, an advisor 
to Foreign Minister Winston Peters tells us that Peters might feel 
compelled to speak out publicly against the agreement.  Peters' NZ 
First Party is in trouble, and he needs to secure his party's base. 
The latest 3News/TNS political poll showed NZ First's support at a 
meager 1.2 percent, well below the threshold needed to retain its 
presence in Parliament after the 2008 election. (Comment: Under New 
Zealand's electoral system, a party gets seats in parliament if its 
Party wins either 5% or more of the total Party votes cast or one of 
its candidates wins a local electorate seat.  Peters lost the only NZ 
First electorate seat at the 2005 election. It's not clear he could 
ever win it back. End Comment.) 
¶8. (C) A good part of NZ First's support base is made up of low wage 
workers and manufacturers, who admire the party's particular brand of 
economic nationalism and Peters' passionate defense of their sector 
from foreign interests. Throughout the 2005 campaign Peters asserted 
that a NZ-China FTA would cripple the local manufacturing sector and 
create widespread job losses.  Our source says Peters and his caucus 
remain committed to opposing to trade deals with low-wage economies. 
 
Schism would strain relationship with PM Clark and Goff 
--------------------------------------------- ---------- 
¶4. (C) Peters governing arrangement with PM Clark permits him to 
oppose the Government publicly on any issues that fall outside of his 
foreign affairs portfolio, including trade. He is likely to express 
any criticism as leader of NZ First and not Foreign Minister.  But 
regardless of his cover, going public over his opposition to the 
China trade deal would likely create at least the appearance of a 
schism with the Government and put a strain on his relations with 
Clark.  Most analysts assume the PM will use the conclusion of a 
China FTA to offset criticism that her government has failed to gain 
a free trade agreement with the United States.   Clark is a political 
pragmatist, and she relies heavily on Peters' continued support to 
retain her Government's slim majority in Parliament.  She will 
therefore likely publicly play down Peters' opposition to the China 
deal. Behind closed doors, however, she could resent Peters for 
causing the political and PR problems that would likely ensue, 
particularly if he chooses to announce his objection in the run up to 
the next election. 
¶5. (C) Peters' has thus far managed to avoid a public split with 
Trade Minister Phil Goff (who shares responsibility for the Ministry 
of Foreign Affairs and Trade, where he served as Foreign Minister in 
the previous Labour administration). Peters' decision to criticize a 
China FTA  success could initiate a public and potentially nasty 
feud. Despite his freedom to do so, Peters has resisted commenting on 
the Trade portfolio.  As Foreign Minister before Peters, Goff 
initially did steal some of Peters' foreign policy limelight 
immediately after the new Government was formed in late 2005, for 
example by being the first to reach areas in the Pacific affected by 
the Tsunami.  Of late, however, Goff has become quiet on foreign 
policy issues, focusing instead on his defense and trade portfolios. 
Possible timing of any public objection 
--------------------------------------- 
¶6. (C) Peters' advisor told us that the most likely timing of a 
public announcement of Peters' objection to the trade deal will come 
during the three months before the next election - which constitutes 
the official campaign period in NZ.  Post understands that during 
this time Peters will restrict his overseas travel to a bare minimum 
and concentrate on reviving New Zealand First's electoral prospects. 
¶7. (C) Comment:  Peters' opposition to the China FTA would embarrass 
Labour but it is unlikely he would bring down the Government.  Nor is 
it likely that he would lose his Foreign Affairs portfolio as a 
result.  A seasoned political veteran, Clark would understand his 
motivation.  (And as a seasoned veteran himself, Peters might even 
precook his "criticism" with the PM in advance.)  The main opposition 
party National might try to use Peters' criticisms to claim he is 
 
 
 
unfit for office, in an effort to drive a wedge between Peters and 
the Government as they unsuccessfully tried to do two years ago.  But 
as NZ businesses strongly favor the China FTA, the Nats are unlikely 
to want to see a prolonged debate over the agreement and will 
probably not push the issue too far. 
McCormick