VZCZCXYZ0004
RR RUEHWEB

DE RUEHLO #0778/01 0770947
ZNR UUUUU ZZH
R 170947Z MAR 08
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 7818
INFO RUEHBS/USEU BRUSSELS
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS LONDON 000778 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN UK
SUBJECT: Treasury Deputy Secretary and British 
International Affairs Advisor Share Views On 
Challenges Facing The U.S. and UK 
 
REFTEL LONDON 0750 
 
Summary 
------- 
 
¶1. (SBU) Key issues facing the UK, the likely passage 
of the EU treaty, U.S. financial markets, sovereign 
wealth funds (SWFs), and the Clean Technology fund 
were discussed by Jon Cunliffe, Head of International 
Affairs and Europe at the Cabinet Office in a March 10 
meeting with Treasury Deputy Secretary Robert Kimmitt 
that was attended by Ambassador Tuttle. END SUMMARY 
 
Key UK Issues And The EU Treaty 
------------------------------- 
 
¶2. (SBU) Cunliffe said the key issues facing the UK 
include: keeping the UK open for foreign investment; 
managing globalization; resisting overregulation in 
response to the financial crisis, and managing climate 
change. 
 
¶3. (SBU) Parliament will likely pass the EU Treaty in 
mid to late June, according to Cunliffe.  He said the 
House of Commons passed the treaty the week of 
March 3, but the House of Lords cannot be given a 
schedule by which to consider the treaty.  When it 
does consider the treaty, it might offer amendments 
that will require it to ping pong back and forth with 
the Commons for up to three times, but Cunliffe said 
he is now confident that the treaty will pass.  He 
added that this was less clear last September and 
October when there were three national newspapers 
leading campaigns for a referendum on the treaty. 
 
SWFs Vs State Owned Enterprises 
------------------------------- 
 
¶4. (SBU) Cunliffe agreed with Kimmitt that State-owned 
Enterprises (SOEs) are different from Sovereign Wealth 
Funds (SWFs), which have been historically non- 
political.  Cunliffe said that while the UK no longer 
had its own SOEs, it had no problem with SOEs as long 
as they were governed by independent management, were 
transparent in their dealings, and followed the rules 
applicable to all companies.  When assessing a SOE 
investing in the U.S., Kimmitt said the government 
looks at the investing company, but also looks at the 
government shareholder to assess the potential that it 
would influence the SOE for political ends. 
 
U.S. Financial Markets 
---------------------- 
 
¶5. (SBU) Regarding the current U.S. financial market 
crisis, Cunliffe said what concerns him most is how 
the crisis is slowly spreading to new financial 
products and entities, like the monoline insurance 
companies and other asset classes.  He said that 
recent hits on bank capital must begin to take their 
toll at some point. 
 
Climate Change And Clean Technology Fund 
---------------------------------------- 
 
¶6. (SBU) Managing the climate change debate is a key 
challenge, said Cunliffe.  WeQve got to get climate 
change out of the trenches and away from a win-lose 
mentality.  The problem is no longer just an issue for 
the Department of Environment Food and Rural Affairs 
(DEFRA).  It cuts right across all government, said 
Cunliffe.  The U.S. will not sign up for a climate 
change deal unless it includes China, and neither will 
the UK.  He then added that India was different in 
that it is in a very early stage of development. 
Cunliffe said we are breaking out of the cold war on 
climate change and that there is broad recognition in 
the EU that the U.S. position shifted eight or nine 
months ago.  As we prepare for the upcoming G-7 and G- 
8 meetings, he said we need to find a climate change 
solution that meets the needs of all parties. 
 
¶7. (SBU) Kimmitt added that the Clean Technology Fund 
(CTF) is an important part of addressing the climate 
change issue. He said that Treasury Under Secretary 
McCormick has the lead on the CTF and will suggest he 
schedule a call with Cunliffe to discuss the CTF prior 
to Cunliffe leaving for Japan on Saturday, March 15 
for a sherpa meeting. (NOTE: Chancellor Darling 
 
 
mentioned the CTF in his budget presentation to 
Parliament on March 12. See reftel). 
 
¶8. (U) Participants: USG: Ambassador Robert Tuttle; 
Robert Kimmitt, Deputy Secretary, Treasury; Eric 
Meyer, Director, Europe and Eurasia, Treasury; Rob 
Saliterman, Spokesman, International Affairs, 
Treasury; Warren Chane, Notetaker. UK: Jon Cunliffe, 
Head of International Affairs and Europe; Simon 
Girdlestone, Desk Officer Q EC Budget and Future 
Financing. 
 
¶9. (U) Deputy Secretary Kimmitt has cleared this 
message. 
 
 
TUTTLE