VZCZCXRO7003
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHRL #1071/01 1451525
ZNR UUUUU ZZH
P 251525Z MAY 07
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC PRIORITY 8396
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUCNFRG/FRG COLLECTIVE PRIORITY
RUEHOT/AMEMBASSY OTTAWA PRIORITY 1052
RUEHKO/AMEMBASSY TOKYO PRIORITY 1480
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 BERLIN 001071 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EEB, OES, EUR/AGS, AND EUR/ERA 
USTR FOR MOWREY AND DONNELLY 
PLEASE PASS CEQ AND EPA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD SENV ENRG PREL PGOV PL EU GM
SUBJECT: CHANCELLOR MERKEL PREVIEWS G-8 SUMMIT 
 
¶1. Summary: German Chancellor Merkel emphasized climate 
change, hedge funds, Africa, and closer cooperation with 
emerging economies as core themes for the June 6-8 G-8 Summit 
in her remarks before the Bundestag May 24.  Merkel 
acknowledged the debate on climate change is contentious, but 
argued developed countries need to take a leadership role to 
encourage emerging economies to act.  Merkel listed increased 
energy efficiency, alternative and renewable energies, as 
well as clean energy, as key solutions.  In a May 25 
newspaper interview, Merkel's chief of staff Thomas de 
Maiziere rejected attempts to put blame solely on the United 
States, saying Russia and emerging economies such as India 
and China are "difficult partners," as well.  DeMaiziere said 
the U.S. was "willing to move" on energy efficiency and 
predicted this would test the EU's ability to keep up. 
Merkel did not anticipate issues involving hedge funds would 
be resolved at the Summit, adding Germany would pursue the 
issue beyond its G-8 presidency.  On Doha, Merkel said the EU 
is ready to move forward if other WTO members are.  End 
Summary. 
 
¶2. German Chancellor Angela Merkel's speech before the 
Bundestag May 24 outlined Germany's agenda in the run-up to 
the G-8 Heiligendamm Summit, scheduled for June 6-8.  Merkel 
told the audience that globalization presents G-8 countries 
with opportunities, not just challenges and risks.  Germany, 
with eight million jobs dependent on exports, will benefit 
from free trade as much as developing countries and emerging 
economies.  She noted that 45 percent of the German GDP stems 
from exports.  Merkel identified seven core themes for 
Heiligendamm:  Global Growth; Innovation; Cross-Border 
Investment; Social Standards for Globalization; Climate 
Change; Liberalization of Global Trade; and Africa. 
 
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Outreach 
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¶3. Regarding cooperation with emerging markets, Merkel 
described the dialogue with the Outreach Five (China, India, 
Mexico, South Africa, and Brazil) as crucial.  She noted 
there would be a meeting with representatives from those 
countries as part of the G-8 Summit on June 8.  According to 
Merkel, there are no plans to expand the G-8 to G-13, but it 
is necessary to continue to carry on an "issue-oriented 
dialogue with these countries beyond the Heiligendamm 
Summit."  Challenges such as climate change and IPR can only 
be tackled jointly, she noted. 
 
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Climate Change 
-------------- 
 
¶4. Merkel emphasized the need to reduce CO2 emissions and 
ensure that global average temperature increases do not 
exceed pre-industrial levels by more than 2 degrees Celsius. 
She conceded the tone of the climate change debate is 
controversial -- as was the case at the U.S.-EU Summit -- and 
said the G-8 needs to adopt a common position.  The world,s 
leading industrialized countries need to take a leadership 
role; only then can they encourage emerging economies to 
follow suit.  Merkel also stressed the need for more 
efficient, clean energy use in the form of new power plants, 
energy efficient buildings, and new fuels. 
 
¶5. In a May 25 interview with Berliner Zeitung, Merkel's 
chief of staff, Thomas de Maiziere, warned against "premature 
judgment," saying he still expected "considerable movement at 
the Summit by all participants."  He cautioned against an 
expectation of agreeing on specific results comparable to 
those produced by the Spring European Council meeting.  De 
Maiziere rejected attempts to put all blame for the lack of 
progress on the United States, pointing to Russia and the 
emerging economies as difficult partners on the issue, as 
well.  "In the area of energy efficiency the U.S. was willing 
to move" he said and predicted that this would test the 
Europeans' ability to keep up.  At that point, de Maiziere 
said, "it would be all about technology and industrial 
capabilities." 
 
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BERLIN 00001071  002 OF 002 
 
 
World Economy / Global Growth 
----------------------------- 
 
¶6. Turning to the "Global Growth" chapter, Merkel pointed out 
the important role of hedge funds for financial markets.  She 
stressed the need for greater transparency in order to limit 
the risks of destabilizing effects associated with hedge 
funds and called for a "code of conduct" and standards for 
risk management.  Merkel said she did not expect a quick 
solution at the Summit; nevertheless, Germany will pursue the 
issue beyond its G-8 presidency.  In the May 25 Berliner 
Zeitung interview, de Maiziere rejected the notion that 
Germany's efforts on hedge funds had not produced tangible 
results. The German initiative raised the profile of the 
issue and placed it on the international agenda, he said, 
stressing "we have had more progress in the last three months 
(on hedge funds) than we had in the last three to four years." 
 
¶7. On IPR, Merkel said that protection of intellectual 
property rights is important for fostering innovation.  The 
G-8 members need to work with emerging economies to combat 
counterfeiting, piracy, and other IPR infractions.  Merkel 
stated the G-8 must emphasize that foreign investment is a 
key component for growth and encourage countries to lower 
barriers.  Merkel urged trading partners to continue opening 
their markets if they expect to have access to "our markets." 
 Merkel told the audience that the G-8 needs to push for 
dialogue with emerging economies on the social aspects of 
globalization and send strong signals for establishing social 
standards.  Merkel mentioned the ILO, OECD, and UN Global 
Compact as fora for establishing standards for corporate 
social responsibility. 
 
¶8. On global trade, the Chancellor underlined the small 
window of opportunity to conclude the WTO Doha Round 
successfully and all of the members should be prepared to 
compromise to get a deal done.  The EU is ready to move 
forward if other members are. 
 
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Africa 
------ 
 
¶9. Merkel stressed the need to deepen and widen cooperation 
with African countries.  She announced the five founding 
countries of the New Partnership for African Development 
(NEPAD) -- Algeria, Egypt, Nigeria, Senegal, and South Africa 
-- would be present at the Summit on June 8.  Merkel said she 
saw this as a sign for the support of good governance by the 
G-8.  Merkel mentioned Africa's economic growth and described 
it as a continent that's "on the move."  However, Merkel 
noted there is plenty of work to be done, citing recent 
elections in Nigeria and the demolition of poor neighborhoods 
in Zimbabwe as examples. 
 
¶10. Merkel said Germany will honor its pledge to increase 
funding of development assistance (it aims for 0.7 percent of 
GDP) with a sizable portion going to improve health care 
systems in Africa, specifically in combating HIV/AIDS. 
Merkel noted Germany would free up an additional 400 million 
euros in 2007 to combat HIV/AIDS and would look for G-8 
contributions to the Global Fund and replenishment 
conference. 
 
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"A Human Face" 
-------------- 
 
¶11. Merkel concluded by saying Germany's G-8 agenda 
demonstrates that Germany is aware of its responsibilities. 
By tackling global challenges, Germany hopes to show the 
world the G-8's "human face." 
 
TIMKEN JR