US embassy cable - 03THEHAGUE2692

C O N F I D E N T I A L SECTION 01 OF 02 THE HAGUE 002692 
 
SIPDIS 
 
E.O. 12958: DECL: 10/23/2013 
TAGS: PREL, EAID, ECON, NL 
SUBJECT: DUTCH TO PLEDGE USD 15 MN AT MADRID 
 
REF: (A) STATE 297590 (B) THE HAGUE 2675 
 
Classified By: AMBASSADOR.  REASONS 1.5(B) AND (D) 
 
1. (C)  SUMMARY:  The Netherlands will pledge EUR 13 mn (USD 
15 mn) at Madrid.  FinMin Zalm told visiting DOD U/S Zakheim 
and an interagency delegation that the GoNL sees its troops 
on the ground as its principal contribution to the 
stabilization effort, but that the passage of UNSCR 1511 
helped the government to reconsider its previous no-new-money 
stance.  Another EUR 1 mn for police training is under 
consideration, but is not yet ready for public announcement. 
End summary. 
 
2. (C) The GoNL announced October 22 that it would make a EUR 
13M (USD 15M) pledge at the Iraq Donors Conference in Madrid. 
 The pledge, which follows months of steady Dutch resistance 
to further contributions, came as an interagency team headed 
by DOD U/S Dov Zakheim visited The Hague to press for 
additional Dutch support.  U/S Zakheim, joined by Ambassador 
Sobel, Ambassador Robin Raphel, Treasury A/S for 
International Affairs Randal Quarles, officials from the CPA, 
USAID, and DOD, and Embassy staff, thanked a group of senior 
Dutch officials headed by Finance Minister Gerritt Zalm for 
the Netherlands' contributions to date, while asking for an 
early announcement of additional support for the 2005-07 
period. 
 
3. (C) U/S Zakheim noted the pledges being made by such 
countries as Canada (USD 230 mn) and Sweden (USD 30 mn), 
neither one of which had supported the coalition effort in 
Iraq, adding that it would be anomalous if such an important 
and influential donor country as the Netherlands, which did 
have troops on the ground, did not come through at this time. 
Zakheim emphasized that support for Iraqi reconstruction 
could take many forms, from cash transfers to specific 
projects to other non-cash means, such as the exhumation of 
mass graves the Dutch have expressed a willingness to take 
on.  Treasury A/S Quarles explained that the new multi-donor 
trust fund would operate under IFI procurement rules, to 
which the Dutch have long been accustomed.  He asked for 
Dutch support via their executive directors at the IMF and 
World Bank for those institutions' more active engagement in 
Iraq, mentioning the IFC's new credit facility for SMEs as an 
example of the kind of initiative that should be backed. 
Ambassador Raphel emphasized that the US did not want to 
monopolize the Iraqi reconstruction process, and that was 
important for the Iraqi people to see other nations involved, 
beyond the principal coalition partners.  As a possibility 
for additional Dutch involvement, she cited the trade credit 
facility backed by a US Eximbank guaranty being created by 
the new Trade Bank of Iraq, and wondered if the GoNL had 
given any consideration to doing something similar. 
 
4. (C) Finance Minister Zalm (who was flanked by Economy 
Minister Karen van Gennip, MFA political director Herman 
Schaper, and MOF no. 2 Joop Wijn, who will lead the Dutch 
delegation at Madrid) explained that the GoNL had only agreed 
to reconsider its previous no-new-money position at the 10-17 
Cabinet meeting, at which an EUR 10 mn Dutch pledge for the 
Madrid conference was approved.  Zalm explained that the 
unanimous passage of UNSCR 1511 had been an important step in 
marshalling support for the additional funding.  Five million 
euros would come from the development assistance budget, and 
five million from other sources.  (Note:  The remaining three 
million euros in the Dutch Madrid pledge represents the 
Economy Ministry's previously-arranged facility to support 
Dutch business in Iraq.)  That, however, was all the GoNL 
could do at this time, said Zalm, although more might be made 
available for 2005 and after.  Zalm commented that the Dutch 
consider their 1100 Marines in the UK zone in southern Iraq, 
who cost roughly 60 mn euros (almost USD 70 mn) every six 
months to support, as their principal contribution to Iraq 
reconstruction.  The MFA's Schaper noted that the Dutch were 
considering placing someone with the Council for 
International Coordination in Baghdad as a means of 
increasing the Netherlands' involvement in the reconstruction 
effort.  However, the security situation there had caused the 
Dutch to draw down their personnel at the Dutch mission in 
Baghdad to minimal levels for the present. 
 
5. (C) Earlier, Amb. Raphel and A/S Quarles discussed the 
role of the private sector in Iraqi reconstruction with 
Jacques Schraven, head of the Dutch employers' association 
VNO-NCW.  Schraven outlined the Dutch business community's 
strong interest in Iraq and the results of a recent 
conference and fact-finding mission to the region organized 
by his group.  He also, however, expressed frustration with 
what he saw as the GoNL's arms-length attitude to the 
business community and its concerns in the allocation and 
management of Dutch development assistance, and hoped that 
the GoNL would become more active in Iraq as a means of 
increasing opportunities for Dutch businesses there.  Raphel 
and Quarles also pushed for greater Dutch involvement in the 
reconstruction effort with members of parliament Camiel 
Eurlings and Geert Wilders, the foreign affairs spokespeople 
for the Christian Democrats and liberal VVD, the two largest 
parties in the governing coalition.  Raphel and Quarles 
outlined U.S. expectations for the Madrid conference, fielded 
questions regarding the state of play of the reconstruction 
effort and opportunities for the private sector, and 
explained how the new multi-donor trust fund was expected to 
work. 
 
6.  (U) U/S Zakheim did not have the opportunity to review 
this cable before his departure. 
 
 
SOBEL