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DE RUEHBS #1028/01 2090957
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R 280957Z JUL 09 ZDK ZUI RUEHLJ 3234 2091158 SVC
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE

UNCLAS SECTION 01 OF 03 BRUSSELS 001028 
 
SENSITIVE 
 
STATE FOR EUR/ERA KESSLER, WILLIAMS 
STATE FOR EEB/IFD/ODF NUTTER, LAITINEN 
STATE FOR EEB/TPP/ABT/ATP CLEMENTS 
STATE FOR NSC GAYLE MURPHY 
USDA for FAS/OSTA Froggett 
USDA for FAS/OCRA Nenon 
 
 
State Pass to USAID FOR NNICHOLSON, NOMEARA 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EAID ECON SOCI EIND ETRD SENV TPHY TSPL EUN
SUBJECT: EEB/ODF Director Nutter's Development Meetings with EU 
 
BRUSSELS 00001028  001.2 OF 003 
 
 
¶1. (SBU) SUMMARY: On July 7-8, the Director of the Office of 
Development Finance (ODF) within State's Economic, Energy, and 
Business Bureau (EEB) held consultations with European Commission 
and European Union (EU) member states' development officials to 
discuss U.S.-EU development issues, including a possible U.S.-EU 
development dialogue.  Commission and member state interlocutors 
expressed enthusiasm for a dialogue, with food security, development 
and aid effectiveness, climate change, and emerging donors favored 
by the EU for dialogue topics.  END SUMMARY. 
 
BACKGROUND 
---------- 
 
¶2. (SBU) The Director of State's Office of Development Finance 
(ODF), Julie Nutter, concluded two days of talks with Commission, 
Member State and EU Presidency officials July 8.  USEU Development 
Counselor Jonathan Addleton also participated in some of the 
discussions, which focused on food security, aid effectiveness, 
emerging donors, opportunities for further U.S.-EU collaboration and 
cooperation, and establishment of a possible development dialogue 
between the United States and the EU.  Finnish Ambassador to the EU 
Jan Store hosted a lunch for Nutter, attended by U.S., Swedish and 
Spanish development counselors and centered on development issues as 
prioritized by the current and prospective EU Presidencies and by 
Finland, which strongly favors a dialogue.  Nutter and her 
interlocutors agreed to continue discussions on the dialogue and 
related issues at various fora in the run-up to the annual U.S.-EU 
Summit, currently foreseen for early November, as development is 
expected to be on the agenda. 
 
MANY DEVELOPMENT THEMES TO DISCUSS 
---------------------------------- 
 
¶3. (SBU) Throughout her discussions, Nutter emphasized the plethora 
of policy issues that provide opportunities for cooperation and 
could support a policy dialogue, including the role of emerging 
donors, the use of the Millennium Deelopment Goals (MDGs), 
public-private partnerhips, innovative financing, and the role of 
diasporas in development.  She stressed the importance of discussing 
obstacles to collaboration with a view toward "cooperating as far as 
we can."  She noted President Obama and Secretary Clinton are making 
Africa a priority, especially in regard to food security.  Nutter 
added that EU President Barroso's chief of staff Joao Vale de 
Almeida, in a conversation early July with State Deputy Secretary 
Lew, emphasized the Commission's "continued focus on food security." 
 She underlined that, given the context of the financial crisis and 
pressures on assistance budgets, the world's two largest donors 
could not afford to be duplicative and inefficient.  Nutter also 
repeatedly pointed to the role of the Millennium Challenge 
Corporation (MCC) as an important model for highlighting the role of 
development partners in determining development priorities and in 
creating the policy environments necessary for development programs 
to work.  Addleton urged continued consultation with the field and 
emphasized its importance in informing any dialogue. 
 
COMMISSION: NEVER WASTE A GOOD CRISIS 
------------------------------------- 
 
¶4. (SBU) In Nutter's meetings with DG Development officials, policy 
coherence, the use of governance in programs and policy, and aid 
effectiveness were recurring themes.  Elena Peresso, an advisor to 
the EU Commissioner for Development, pointed to a Commission study 
that put the cost of lost efficiencies to the EU between 2005-2008 
at 5-7 billion Euros.  She said this alarming figure demonstrated 
the importance of policy coherence at a time when strained resources 
required cooperation and collaboration in the field, and added that 
the financial crisis has made the EU "more creative", quoting now 
former Commissioner for Development Louis Michel, who said "never 
waste a good crisis".  Peresso said the next three EU 
presidencies--Sweden, Spain, and Belgium-were "like-minded and 
pragmatic," "have their hearts in development" and would likely 
support a dialogue.  She said a letter written by World Bank 
President Robert Zoellick to the leaders of the G-8 ahead of the 
L'Aquila summit urging leaders to "direct their attention to the 
world's poor" contained a number of opportunities that represent 
"similar objectives" and could also inform a dialogue. 
 
¶5. (SBU) Peter McQuaide, Head of Unit, Relations with International 
Organizations in DG Development, noted that transitions on both 
sides of the Atlantic madebut necessary." 
In redestion that obstacles to  028 
BUSTED 
 
BRUSSELS 00001028  002.2 OF 003 
 
 
be on the table, McQuaide agreed, noting that "if we're going to 
have a more productive relationship, we will need to have difficult 
conversations."  On emerging donors, McQuaide said the EU had "made 
some progress" with Brazil on tropical agricultural productivity. 
He added that Mexico was working in three countries in Africa and 
that Russia was reemerging as a donor in Africa as well. 
 
¶6. (SBU) Maciej Popowski, Director of EU Development Policy, 
outlined Commission thoughts on a development dialogue, which he 
said represented a necessary "thematic platform" for senior 
development policy makers.  He said the Commission would hold an 
internal discussion in late July before the summer break and would 
work with the member states on the concept.  Popowski agreed that a 
series of joint EU-U.S. missions to Africa would be a good first 
step in demonstrating the utility of a dialogue and might help push 
the discussion to a political level.  He suggested that European 
Development Days in October represent an opportunity for policy 
makers to explore this further and expressed his hope that a USAID 
Administrator would be in place by that time.  Popowski also cited 
two future studies which could inform the dialogue: an EU piece to 
be released next May or June on what to do beyond the MDGs in 2016, 
and the other an OECD Working Party on Aid Effectiveness evaluating 
same, also coming out next year. 
 
¶7. (SBU) The European Aid Cooperation Office (AIDCO) Director of 
Operations Francesca Mosca, and Head of Unit Jose Leandro gave 
Nutter background on AIDCO's role, which Mosca said was to 
coordinate overlapping development programs and responsibilities 
among various mechanisms and ministries.  She said issue coherence 
"was a challenge", but noted there was "more flexibility in the 
field at an implementation level" and said a dialogue would be 
useful at both.  She said her office was currently developing key 
indicators on outcome and impact of development support.  On budget 
support, Mosca noted a European Parliament study that suggested 
direct budget support saved transaction costs for recipients, but 
not for donor countries.  Leandro emphasized Commission policy on 
governance as an objective of poverty reduction in the MDGs, but not 
an objective in and of itself, and suggested this as a possible 
dialogue discussion point. 
 
MEMBER STATE ENTHUSIASM 
----------------------- 
 
¶8. (SBU) In a demonstration of the importance Finland attaches to a 
dialogue, Riitta Oksanen, Head of Unit for Development Policy in the 
Finnish Ministry of Foreign Affairs traveled to Brussels to meet 
with Nutter.  Oksanen said "the potential is there for a dialogue; 
we should definitely give it a try."  She agreed with the proposed 
focus on food security, regional integration, and aid effectiveness 
and said the Finnish Government's White Paper on development policy 
"comes from the Foreign Minister himself" and touches on those 
issues as well as all three pillars of development: economic, 
social, and ecological.  The White Paper recommends a more 
comprehensive approach to private sector roles in development, which 
Oksanen said had been "neglected" by policy makers.  She said 
recommendations included more funding in the field, new mechanisms 
to support the private sector, and an emphasis on trade, with aid 
for trade a priority.  Oksanen emphasized "the conversation should 
be more about development effectiveness rather than aid 
effectiveness."  She and Nutter agreed that a number of upcoming 
development related events, such as the United Nations General 
Assembly (UNGA), the G20 Summit in Pittsburgh September 24-25, and 
October 2009 Bank/Fund meetings represented opportunities for 
further discussion and refinement of possible dialogue topics. 
 
¶9. (SBU) On July 8, the Finnish Ambassador to the EU, Jan Store, 
hosted a lunch for Nutter attended by Finnish, Swedish and Spanish 
development permanent representatives.  Stressing the utility of a 
dialogue, Store said, "We have not made the best use of what we can 
do together", and posited that in order to improve, dialogue had to 
take place at three levels: the senior level, the working level in 
capitals (cooperation), and in the field (coordination).  Ambassador 
Store also stressed the need for internal EU coordination and said 
Finnish development officials noted a number of occasions in which 
member states "did not exchange views and did not cooperate" on 
development. 
 
¶10. (SBU) Swedish Development Counselor Marita Olson said Sweden was 
"very keen and interested" in a dialogue and said the Swedish 
Presidency would like to take the issue forward during European 
Development Days October 22-24 in Stockholm.  Olson said aid 
 
BRUSSELS 00001028  003.2 OF 003 
 
 
effectiveness and food security were priorities for the Swedes these 
next six months, with governance and emerging donors as sub-topics. 
She also said her office was interested in remittances, migration, 
and division of labor, all of which could fall under the umbrella of 
a dialogue. 
 
¶11. (SBU) Spanish Development Counselor Felix Fernandez-Shaw 
outlined his government's development priorities for the Spanish 
Presidency taking office in January, 2010.  Fernandez-Shaw said aid 
effectiveness, division of labor, and the role of gender in 
development would drive Spain's aid agenda.  He also said Spain 
would take up the issues of tax evasion and capital flight, which 
represents three times the level of Overseas Development Assistance 
(ODA), from a development angle, with developing countries losing 
significant money and resources.  He opined that, with the current 
change in U.S. attitudes towards development and cooperation, "we 
are in a stronger position to deliver" an effective development 
dialogue, and hoped the U.S. and EU would work together to do so. 
 
CHINA 
----- 
 
¶12. (SBU) On China, DG External Relations (RELEX) Head of Unit for 
China Franz Jessen said that while the Chinese made the "right 
noises" on Africa, they really weren't engaging.  He said the 
Chinese go "wherever they have specific interests" and their goals 
were more around securing markets than making a strong commitment to 
economic development.  Jessen said engaging China on development was 
"difficult" and said Chinese confidece as a global player (and the 
sixth largest investor in global FDI) suggests that "lecturing does 
not work." The way the EU engages, he continued, is by "respectfully 
reminding them" of obligations to which they and others have 
ascribed, such as the Paris declaration.  Jessen also noted the 
Taiwanese were very active as well and were engaged in a bit of 
donor competition with the mainland. 
 
COMMENT 
------- 
 
¶13. (SBU) In her Brussels meetings, Nutter heard strong general 
interest in senior level policy discussions on development from both 
Commission and member state interlocutors.  As the Swedes make 
development a high priority during their presidency, it is clear 
that a continued exchange of views with them and the Commission on 
the substance and format of such discussions could be productive. 
Continued engagement with member states, such as Finland, and other 
enthusiastic donors should also be pursued, as it would bring the 
robust field perspective needed to support and provide value and 
grist to a high level development dialogue, whatever form it might 
take. 
 
CHASE