VZCZCXRO0138
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHTC #0116/01 0541647
ZNR UUUUU ZZH
R 231647Z FEB 09
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC 2561
INFO RUEHAT/AMCONSUL AMSTERDAM 4145
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 THE HAGUE 000116 
 
SIPDIS 
 
STATE PASS FEDERAL RESERVE BOARD - INTERNATIONAL DIVISION, TREASURY 
FOR IMI/OASIA.VATUKORALA, USDOC FOR 
4212/USFCS/MAC/EURA/OWE/DCALVERT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL NL
SUBJECT: NETHERLANDS: PREPARATION FOR EU AND G20 SUMMITS 
 
THE HAGUE 00000116  001.2 OF 002 
 
 
¶1. Summary:  Dutch MFA officials noted that the financial crisis 
will feature prominently in the February meeting of the EU General 
Affairs and External Relations Council (GAERC) and will be the 
central focus of the March 16-17 GAERC.  The EU will use both 
meetings to prepare for the European Council summit on March 19-20, 
which in turn will prepare EU positions for the G20 summit on April 
¶2.  The Dutch, as well as the Spanish, have been invited to the G20 
summit; Dutch Prime Minister Balkenende will attend.  The Dutch 
expect the European Council to focus on banking supervision, credit 
rating agencies, and the Commission's stimulus package.  The 
Netherlands' main message at the G20 summit will be a "plea for open 
markets" and warnings against what the Dutch see as rising 
protectionism in the U.S. and EU.  End summary. 
 
--------------------------------------------- ----- 
Preparing for the European Council and G20 Summits 
--------------------------------------------- ----- 
 
¶2. Dutch Ministry of Foreign Affairs officials briefed officers from 
the U.S. and other foreign embassies FebruarQ20 on Dutch positions 
for the February 23-24 meeting in Brussels of the EU General Affairs 
and External Relations Council (GAERC).  Economic discussions will 
feature prominently in the February GAERC and will be the central 
focus of the March 16-17 GAERC.  EU Member States will use both 
GAERC meetings to prepare for the European Council's spring meeting 
of EU leaders, March 19-20 in Brussels, at which the European 
economic recovery plan is again expected to dominate.  (Note:  The 
Czech Presidency has also called an informal meeting of EU leaders 
in Brussels on March 1 to discuss the economic recovery plan.  End 
note.)  According to the Dutch, the goal of the February GAERC is to 
prepare the agenda for the March European Council summit, with the 
bulk of preparatory work on summit issues to be done at the March 
GAERC.  The European Council summit, in turn, is expected to prepare 
EU positions for the G20 summit in London on April 2. 
 
-------------- 
G20 Invitation 
-------------- 
 
¶3. The Dutch MFA confirmed that the British government has invited 
the Netherlands to participate in the G20 summit.  At the invitation 
of President Sarkozy (during France's EU presidency in fall 2008), 
the Dutch and Spanish attended the first G20 summit on November 15 
in Washington as part of the EU delegation.  This time in London, 
according to the Dutch MFA, the Dutch and Spanish will attend as 
sovereign states.  However, unlike the G20 members who will bring 
both their heads of state and finance ministers, the Dutch and 
Spanish will have only one seat for heads of state, with Dutch PM 
Balkenende attending for the Dutch. 
 
¶4. Balkenende also attended the February 22 meeting in Berlin of 
European G20 leaders from Germany, UK, France, and Italy - as well 
as Spain, the Netherlands, the Czech Republic, and senior EU 
officials - to prepare for the April event.  Balkenende said 
February 23 that he was pleased that participants agreed to condemn 
national protectionism, which would be "disastrous" for an open 
economy like the Netherlands.  He added that the IMF has "an 
essential role" in solving the current crisis, as well as in 
coordinating cooperation between different countries.  Finance 
Minister Wouter Bos said he had mixed feelings about the results of 
QMinister Wouter Bos said he had mixed feelings about the results of 
the Berlin discussion, as he welcomes stricter financial supervision 
but expects that it will take a long time to achieve.  Bos noted 
that it might be difficult for some EU Member States to comply with 
non-protectionist measures -- referring especially to France -- and 
added that "you will have to keep warning Member States about this 
every week". 
 
--------------------------------------------- 
Dutch Expectations for the EU and G20 Summits 
--------------------------------------------- 
 
¶5. The Dutch expect the European Council summit in March to focus on 
three major issues related to the European economic recovery plan: 
(1) banking supervision, (2) credit rating agencies, and (3) the 
European Commission's stimulus package.  Regarding banking 
supervision, the Dutch MFA noted that EU members agree on the need 
for better coordination among national supervisory authorities - 
both within the EU and internationally - but an open question is how 
formal that coordination should be.  EU members have a wide spectrum 
of options, from informal coordination as simple as a "telephone 
roster" of EU central bank governors to encourage communication, to 
formal supervision of all national central banks by the European 
Central Bank (ECB).  Dutch Finance Minister Wouter Bos told 
parliament February 20 that he does not support such supra-national 
supervision by the ECB, as it does not fit the Dutch "twin peak 
model" of banking supervision and undermines the acQuntability of 
 
THE HAGUE 00000116  002.2 OF 002 
 
 
national governments.  (Note:  The "twin peak model," based on that 
of Australia, separates the Dutch Central Bank's prudential 
supervision of banking compliance with financial solvency rules from 
the supervision of business conduct, which the Netherlands Authority 
for the Financial Markets performs.  End note.) 
 
¶6. Regarding credit rating agencies, the Dutch will stress at the 
European Council summit that global rules must be applied here, 
given the handful of agencies that dominate the international 
market.  The Dutch expect debate at the summit on whether the EU 
should support such global supervision or rely on an EU-centric 
system. 
 
¶7. EU leaders also will decide at the European Council summit 
whether to support the European Commission's proposed 5 billion euro 
economic stimulus package, which focuses primarily on infrastructure 
projects (e.g. wind parks) to promote clean energy in Europe.  While 
the Dutch are not opposed to the Commission's package, they will 
emphasize that the Commission should reprioritize its spending plans 
in order to find the 5 billion euro from existing funds, rather than 
asking Member States to commit additional resources in this time of 
crisis to an EU-wide initiative.  The Dutch also expect the European 
Council to review some Member States' stimulus packages to promote a 
cohesive EU-wide response to the economic crisis -- and to prevent 
individual states from adopting protectionist measures that could 
harm other members.  The Dutch will stress that the packages should 
not be "one size fits all"; rather, they should be tailored to each 
member's needs while contributing to overall EU stability.  (Note: 
EU officials recently have criticized Dutch stimulus measures as 
insufficient, as they do not total at least 1.5 percent of GDP as 
recommended by the Commission.  The Dutch argue, however, that (1) 
the Commission is not taking into account all of their efforts, (2) 
they must be conservative when considering new measures because, in 
a small, open economy like the Netherlands, about 80 percent of such 
government spending is usually exported out of the country, and (3) 
the Dutch must continue to focus their rescue efforts on shoring up 
the financial sector, the lynch pin of their economy.  End note.) 
 
¶8. At the G20 summit, the Dutch will stress the need for global 
measures to address the financial crisis, recognizing that 
individual countries and even the EU cannot effectively implement 
their own solutions.  The Netherlands' main message will be a "plea 
for open markets" and warnings against what the Dutch see as rising 
protectionism in EU Member States, the United States, and many other 
nations.  The Dutch also will argue that the financial crisis should 
give new impetus to WTO members to successfully conclude the Doha 
round of trade negotiations.  Finally, the Dutch will stress the 
importance of loosening credit markets in richer less developed 
countries (LDCs) such as Pakistan.  The Dutch argue that these 
wealthier LDCs have seen credit supplies dry up but are not 
candidates for the same levels of assistance of which poorer LDCs 
can take advantage.  If richer LDCs like Pakistan are cut off from 
international money flows, they could slide backward toward 
increased radicalization.  In the Dutch view, regional international 
banks and credit institutions may be best positioned to assist this 
Qbanks and credit institutions may be best positioned to assist this 
stratum of LDCs. 
 
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COMMENT 
------- 
 
 
¶9. Comment:  An invitation to the G20 summit in London is a major 
win for the Dutch, who fought hard to be included in the Washington 
summit.  Although not a G20 member, the Netherlands argued 
successfully in November that the Dutch play a major role in the 
international financial system; they have a disproportionate amount 
at stake in the reform of that system; and their expertise should be 
utilized.  Now, with a second invitation, the Dutch likely have 
assured their seat at the table for future G20 events related to the 
global financial crisis.  At both the EU and G20 summits, we can 
expect the Dutch to continue calling for international cooperation 
to build a new supervisory financial system, rather than a piecemeal 
approach by individual governments.  The Dutch also will stress 
their mantra of open markets, free trade, and anti-protectionism - 
they were disturbed by the "Buy American" provisions of the new 
American Recovery and Reinvestment Act and other measures that they 
fear could introduce a new wave of national protectionism and 
escalating trade wars.  End comment. 
 
¶10. USEU has cleared this message. 
 
 
GALLAGHER