VZCZCXYZ0003
PP RUEHWEB

DE RUEHFR #2158 3311407
ZNR UUUUU ZZH
P 261407Z NOV 08
FM AMEMBASSY PARIS
TO RUEATRS/DEPARTMENT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 4925

UNCLAS PARIS 002158 
 
SENSITIVE 
SIPDIS 
 
H PLEASE PASS TO HASC CHAIRMAN SKELTON 
 
E.O. 12958: N/A 
TAGS: EFIN PREL OREP FR
SUBJECT: SENIOR FRENCH ADVISOR DISCUSSES THE FINANCIAL AND 
ECONOMIC CRISIS WITH CODEL SKELTON 
 
¶1.  (SBU) Senior advisor in the office of the French 
President Damien Loras and House Armed Services Committee 
Chairman Skelton and colleagues engaged in a lively 
discussion of the financial and economic crisis during a 
meeting November 24.  They also briefly discussed relations 
with Russia. Participating in the bipartisan Codel were: 
Chairman Ike Skelton (HASC), Congressman Solomon Ortiz 
(D-TX), Congressman Rick Larsen (D-WA), Congresswoman 
Madeleine Bordallo (D-Guam), Congressman Tim Murphy (R-PA and 
Congressman David Loebsack (D-Iowa).  DCM and Political M-C 
also participated. 
 
¶2.  (SBU) Loras praised Washington's willingness to host the 
G-20 Summit meeting.  He sought to dispel any lingering 
suspicion that France had wanted the U.S. to host in order to 
spotlight the U.S. as the source and center of the crisis. 
Instead, he argued that it was important for a "refoundation" 
to start in the U.S. and in the west and for the United 
States to keep control of the process and be at its center. 
He was quick to stress this should not be seen in opposition 
to trends in emerging economies, but to ensure others not 
take advantage of our divisions.  Loras went on to say the 
crisis cannot be solved without the involvement of big 
emerging economies like China, India and Brazil.  To get 
their support, they will need a bigger role in the IMF and 
possibly in a G-8 type structure that is larger than eight, 
but smaller than the G20 format. Loras also sought to dispel 
any differences over the speed and extent of regulatory 
initiatives, saying that many in France welcomed Washington's 
push back against traditional French calls for greater 
regulation.  Sarkozy, he argued, was trying to wean France 
away from over regulation and toward a freer market economy; 
the financial crisis has made this more difficult, but 
Sarkozy remains committed to reform. 
 
¶3.  (SBU) Loras urged maximum coordination in rolling out 
stimulus packages so that we can together have a maximum 
impact on the world's economies.  Responding to a question, 
Chairman Skelton and others referred to a stimulus package 
under discussion in the Senate that both Houses may consider 
when they resume work December 8.   They also noted that if 
no agreement is reached, President-elect Obama has made clear 
he wants the new Congress to begin work on January 6, when it 
is sworn in, and to have a stimulus package ready for him 
shortly after inauguration.  The package could be in the 
range of USD 150 billion to 300 billion or more.  Part of the 
package would focus on infrastructure projects, as well as an 
increase in food stamp projects and as a down payment on a 
tax cut package.  Funding would likely be through deficit 
spending.  Loras noted that France is trying to work with EU 
partners to develop the largest stimulus package possible. 
The UK has already announced its plans; Sarkozy was meeting 
with Merkel the same day to try to win support for national 
decisions that would be coordinated to have the greatest 
impact.  France hopes this can be announced at the December 
meeting of European Heads of State. 
 
¶4.  (SBU) Asked about Russia, Loras presented the French view 
that the government in Moscow is a sometimes dangerous and 
unpredictable partner.  Sarkozy and France believe it is more 
important to engage with them; that it is not in our interest 
to let them be isolated.  The decisions taken to expand the 
EU and NATO were good decisions, but going further could 
provoke Russian non-cooperation on issues from Iran - 
including selling Iran surface to air missiles - to pipeline 
disruption to nuclear waste disposal that would not be in our 
interest.  Engaging Russia is a long-term process.  But the 
current economic crisis has proven that the Russians can't 
improve their economy alone and need our help.  Even their 
economic assistance, which he said was almost USD 200 billion 
so far, had had no domestic impact.  In Sarkozy's view it is 
better to have Russia with us than against us, but not, he 
emphasized, at any cost. 
 
¶5.  (SBU) Codel Skelton staff authorized us to transmit this 
cable without review by the Codel. 
 
 
 
 
 
STAPLETON