US embassy cable - 03THEHAGUE2959

C O N F I D E N T I A L SECTION 01 OF 05 THE HAGUE 002959 
 
SIPDIS 
 
EUR FOR PDAS RIES 
STATE PASS TO USTR FOR NOVELLI 
 
E.O. 12958: DECL: 11/21/2013 
TAGS: PREL, ETRD, ECON, PTER, NL 
SUBJECT: VISIT OF EUR PDAS CHARLIE RIES TO THE HAGUE 
 
REF: STATE 318789 
 
Classified By: Ambassador Clifford Sobel for Reasons 1.5 b & d 
 
Summary 
----------- 
1. (C) During meetings in The Hague November 19-20 in advance 
of the Dutch EU presidency (July - December 2004), EUR PDAS 
Ries stressed the importance of 
early and close U.S.-Dutch consultations to avoid surprises 
and needless conflicts.  On specific areas of potential 
cooperation, Ries pushed for improvements in the way the EU 
handles terrorist finance issues, discussed possible common 
U.S.- EU interests in the area of deregulation and expressed 
the USG's interest in further cooperation on security and JHA 
issues in light of recent progress on CSI and PNR.  Dutch 
officials welcomed the idea of improved US-EU consultations, 
noting the importance the Netherlands has traditionally 
placed on solid transatlantic relations.  They also stressed 
their close collaboration with the Irish on the two 
countries' presidencies in 2004 and speculated that the 
various institutional changes the EU would undergo next year 
- a new parliament, a change in the Commission, ten new 
member states, and the impact of the new constitution - might 
give the holder of the presidency greater room for maneuver 
in some respects, while hampering it in others. 
 
2. (C) On Pillar 2 issues, the Dutch welcomed the U.S. 
initiative to promote democracy in the greater Middle East 
and commented on the sensitivity of the decision on whether 
to start accession negotiations for Turkey, a decision to be 
taken by the end of next year.  They reiterated their 
interest in making good transatlantic relations a focal point 
of their presidency, and cited other possible areas of 
cooperation, including Africa and the Russia near abroad. 
Both the Dutch employers' association and economy ministry 
expressed their strong interest in getting Dutch business 
more involved in Iraq, including access to USG contracts, 
while a senior finance ministry rep noted the difficulty that 
Minister Zalm had had in trying to pry development assistance 
money away from MFA's development minister for the Madrid 
donors' conference. 
 
3. (C) Dutch officials agreed with Ries that, following the 
assessment of the Justice/Home Affairs Tampere Agenda in the 
Irish semester, they had an opportunity to shape EU border 
asylum, and law enforcement policies in the years ahead. 
Dutch officials expressed willingness to hold bilateral 
discussions on the US-EU security and border control agenda. 
On other current issues, Ries was pressed on steel and FSCs, 
although, on the latter, ICS Economics Ministry DG Bruinsma 
said that the Netherlands would oppose the Commission's plan 
for automatic retaliation starting March 1.  The Finance 
Ministry also raised the bilateral tax treaty negotiations, 
commenting that as such a good friend the U.S. and major 
investor, The Netherlands  should enjoy the same advantages 
as Japan, Mexico, and the UK. 
End summary. 
 
MinFin Treasurer-General van Dijkhuizen 
--------------------------------------------- ------ 
4. (SBU) In a meeting with the top civil servant in the 
Ministry of Finance, Treasurer General Cees van Dijkhuizen, 
Ries and van Dijkhuizen agreed that the transatlantic 
financial relationship has been steadily improving with 
issues such as corporate governance and accounting standards 
that had initially caused tension now on the path to 
resolution.  Ries noted that the USG was looking forward to 
working with the Netherlands during its upcoming EU 
presidency.  Noting the Dutch desire to promote 
implementation and enhancement of the Lisbon agenda during 
its presidency, Ries offered that the United States would be 
interested in exploring the possibilities of a "transatlantic 
Lisbon" that explored cooperative ways to promote innovation 
and productivity. 
 
5. (SBU) Van Dijkhuizen agreed there was potential for 
working together but cautioned that the Commission and some 
member states were sensitive about working too closely with 
the USG - some had in the past even objected to using the 
United States as a point of comparison.  He mentioned that a 
process for discussing liberalization and deepening of 
financial services trade (building and expanding on the OECD 
barriers study) might be a forum for cooperation and offered 
that Finance Minister Zalm had already raised the issue with 
UK Chancellor Brown.  Van Dijkhuizen also pointed out that 
the possibility for new initiatives during the Dutch 
presidency would be limited by the lame duck Commission and 
brand-new European parliament. 
 
6. (C) Ries reiterated the points in the Secretary's letter 
to EU Foreign Ministers on designation of Hamas-related 
charities (reftel) emphasizing that for the flow of Hamas 
funds to be cut off, Hamas financiers need to be shut down. 
Commenting on the issue of designations more broadly, Ries 
emphasized the importance of the EU designating more quickly 
and effectively.  He noted that some EU members are requiring 
a higher standard of evidence for designation than is called 
for in UNSCR 1373 and the internal EU requirement for 
unanimous consent in the case of designations has hamstrung 
the entire process.  Ries asked whether a better but more 
compartmentalized flow of intelligence information might go a 
long way toward addressing the current problems. DCM added 
that provisions for appeals might also speed up the 
designation process. Van Dijkhuizen indicated the Dutch 
support the EU having a robust and effective designation 
process and expressed interest in the idea of a technical 
committee to review intelligence and make recommendations to 
the clearing house.  However, he noted the many obstacles in 
the way of improvements including the multiple bureaucracies 
involved in each member state and the EU requirement for 
unanimity on third pillar issues.  He welcomed the U.S. and 
Netherlands keeping in touch on this issue and continuing to 
exchange ideas on possible solutions. He subsequently 
proposed a meeting to discuss clearinghouse designation 
processes to include other relevant Dutch ministries. 
 
7. (U) Ries asked van Dijkhuizen to keep a close eye on the 
development of the EU chemicals directive (REACH) noting that 
enactment of the draft directive in its current form would 
present obstacles to economic growth, burden business, and 
cause tremendous job loss.  Van Dijkhuizen noted that a Dutch 
priority both domestically and in the EU is to reduce 
unnecessary regulatory burdens and red tape. 
 
8. (U) Van Dijkhuizen noted the importance of successful 
completion of bilateral tax treaty negotiations pointing out 
that Japan and the UK already have more favorable tax 
treaties with the United States than that being negotiated 
with the Netherlands.  He noted that the Netherlands planned 
to raise this at the political level.  The Ambassador noted 
that another bilateral negotiating session has been planned 
for December and that we were hopeful on the possibilities 
for progress. 
 
9. (C) Van Dijkhuizen apologized for the "paltry" Dutch 
financial contributions to Iraq construction noting that the 
Finance Ministry was in favor of increasing the amount, but 
is blocked by the Development Cooperation Minister.  He said 
Minister Zalm would continue to press his colleague, Minister 
van Ardenne, on this issue. 
 
MFA State Secretary Nicolai 
----------------------------------- 
10. (C) MFA State Secretary Atzo Nicolai, who holds the title 
of Minister for European Cooperation when abroad, told Ries 
that the Dutch were cooperating closely with the Irish on a 
common program for 2004, to be unveiled in early December, as 
well as with the subsequent four presidency countries on a 
more integrated multi-annual plan of action.  Both the Irish 
and Dutch would emphasize reinvigorating the Lisbon agenda, 
on which little has been accomplished, in the Dutch view. 
Ries commented that he had recently met with a group of MEPs 
on a broad range of issues, but the one that had most engaged 
them was deregulation - and specifically the US experience in 
evaluating and analyzing proposed regulatory actions. 
Regarding the next EU budget cycle, Nicolai said that a top 
Dutch priority would be to reduce the Netherlands' net 
contribution in relation to GDP, which is twice that of 
Sweden, the second-highest net payer.  He also noted that the 
Netherlands has always been one of the strongest supporters 
of CAP reform and reducing agricultural subsidies.  While 
acknowledging the Netherlands' financial pressures, Ries also 
expressed the hope that the next EU budget would provide 
adequate funding for foreign affairs issues, the need for 
which has just been made clear by Iraq. 
 
11. (C) Nicolai said that the institutional changes in the EU 
and Commission in '04 would provide the Presidency with some 
latitude, but that the lame duck commission and other factors 
would be obstacles. EU enlargement would also be a major 
preoccupation during the Dutch presidency, Nicolai commented, 
with negotiations progressing with Romania and Bulgaria and 
increased attention being given to the candidacy of Croatia. 
Turkey would present a particularly difficult and sensitive 
issue, however.  If the Commission's evaluation of Turkey's 
performance against the Copenhagen criteria were unambiguous, 
it would of course simplify the decision on whether to begin 
formal negotiations, due to be taken by December 2004.  But 
in the more likely case that the Commission's report proves 
to be inconclusive, the decision would be much more difficult 
and sensitive, also because of domestic political concerns. 
With regard to Cyprus, Ries suggested the possibility of a 
'virtuous circle' - i.e., that a suggestion from the EU that 
progress toward a Cyprus settlement would be rewarded might 
encourage such a step from the Turks.  Nicolai responded that 
a Cyprus settlement would be necessary but not sufficient for 
the EU to start negotiations with Turkey and that Turkey 
would need to recognize Cyprus. It would be inconceivable for 
an EU member state not to recognize another member state. 
 
12. (SBU) On other, more current issues, Ries noted that the 
US and EU were close to an agreement on PNR, were making good 
progress on Galileo in The Hague this week, and had just 
initialed a CSI agreement the previous day in Brussels.  He 
emphasized the importance of getting that agreement ratified 
more quickly than the six weeks estimated by the Commission 
in order to proceed with bilateral deals, most notably with 
Greece, in view of the upcoming Olympics. 
 
MFA Deputy Political Director Schaper 
--------------------------------------------- -- 
13. (SBU) Over a luncheon hosted by the Ambassador on second 
pillar issues with senior MFA officials headed by deputy 
Political Director Herman Schaper, Ries commented in more 
detail on the consensus reached the previous day in Brussels 
between the Secretary and the 25 foreign ministers of the 
enlarged EU on an improved process of US-EU policy planning 
consultations.  Ries said that it would be important to have 
a mix of policy planners with operational people in order to 
make the process effective, but the precise modalities of 
such consultations were still to be determined. Regarding the 
Dutch Presidency, he commented that, based on his experience 
the most effective presidencies were those that took 
responsibility to get things done, and that were open to 
regular, quiet consultations with the U.S. that made it 
possible to prefigure mutually acceptable outcomes. 
 
14. (C) On specific country and regional issues, Schaper said 
that the Netherlands was very open to U.S. ideas on the 
greater Middle East and wants to stimulate thinking within 
the EU about promoting reforms in the Arab world.  The EU 
should be looking at putting together programs to support 
building civil society, internal development, advancing human 
rights, assisting NGO's and improving the status of women. 
The Dutch plan to host an EU seminar on religion and politics 
in Tunis during their presidency.  Ries noted that the US is 
looking at what we could put forward on behalf of the greater 
Middle East at the G-8 and the US-EU Summits.  He noted also 
that some have floated the idea of an OSCE-like institution 
for the Middle East, but stressed that it was vital that the 
international community not get bogged down in process to the 
detriment of our substantive goals.  In a brief discussion on 
Iraq, Schaper raised the possibility of a special role for 
Max van der Stoel in drafting the fundamental law (The Hague 
2915). 
 
15. (C) On other issues, Schaper said that Africa was a 
special priority for the Netherlands, which is engaging in a 
new effort to better integrate political and developmental 
concerns.  On Turkey, Schaper reiterated Nicolai's concerns 
about the sensitivity of the enlargement decision, noting in 
particular that the Cold War sense of strategic alliance with 
Turkey in the Netherlands was giving way to more awareness of 
cultural differences. He added that while there is resistance 
in the cabinet to Turkish accession, new Dutch FM Ben Bot had 
served as Ambassador in Ankara and thus would bring a special 
degree of insight to the issue.  Schaper said that the 
Moldova situation demonstrates that Russia is "locking down" 
again on its near-abroad, even as it relinquished its 
traditional role in the Balkans. Schaper also raised the 
issue of the EU assuming the NATO mission in the Balkans.  He 
suggested that benchmarks and a timetable might be developed, 
particularly since the security situation went hand in hand 
with EU discussions about an association pact. On security 
issues, Ries cited the MLAT agreement, the initialing of a 
CSI deal, and good progress on PNR and Galileo as evidence of 
US-EU cooperation. Schaper agreed that the US and EU had made 
some progress on important issues and showed interest in 
moving forward "Third Pillar" issues in '04.  On terrorist 
finance, Ries noted the difficulties caused in the 
designation process by the EU's rule of unanimity, and by the 
evidentiary standards demanded by some member states, 
requirements that went beyond those established in Security 
Council resolutions. 
 
Meeting at Business Association 
--------------------------------------- 
16. (U) Chris Oudshoorn, director of economic issues at the 
employers' association VNO-NCW, told Ries that his group was 
working with its Irish counterparts in advance of the two 
presidencies next year.  The joint goal of the business 
groups is to push their respective governments into moving 
ahead on the Lisbon agenda by improving the regulatory 
climate for business and completing the single market, 
especially in services.  Asked about the draft chemicals 
directive, Oudshoorn commented that his group thought that 
the revised draft was still too burdensome.  Dutch business 
is cooperating with business groups in Germany, Britain, and 
other countries to get the directive amended further, 
particularly in the direction of prioritizing its 
requirements on the potentially most dangerous substances. 
He reported that he had just met with the Dutch government 
and was preparing a study for it on the real impact of the 
directive on Dutch business.  Oudshoorn estimated that the 
actual burden imposed by the draft directive would be ten 
times the Commission's estimate of 2.5 to 5.0 billion euros. 
 
17. (SBU) Asked about Dutch business's interest in Iraq 
reconstruction, Oudshoorn reported on his group's creation of 
a 'Task Force Iraq' and on its fact-finding mission to the 
region in September, a mission led by Economics Ministry 
Director General Bruinsma.  He expressed considerable 
frustration about what he saw as the lack of support for 
Dutch business interests from the MFA, where what he called 
'developmental fundamentalism' reigned - i.e., a strong 
preference for untied aid and assistance through multilateral 
institutions. DCM advocated that Dutch business get active in 
Al Mutana province, where the Dutch peacekeepers are located, 
starting small so as to be able to build on demonstrated 
success stories.  Oudshoorn was also interested in the new 
U.S. aid package for Iraq and queried Ries as to what access 
there might be for companies from other countries, 
particularly those with troops on the ground.  Ries replied 
that the lawyers had looked at the possibility of some sort 
of preferential  access for coalition partners but had 
decided that that would violate WTO rules.  He noted instead 
that Iraq's own oil revenues were rising steadily and 
commented that companies that got into the market early would 
be best positioned to take advantage of the opportunities to 
come. 
 
Economics Ministry DG Bruinsma 
------------------------------------------ 
18. (C) At the Economics Ministry, Director General for 
International Affairs Dirk Bruinsma reported that Economics 
Minister Brinkhorst, who had been a vice-chair at Cancun, was 
very interested in restarting the Doha negotiations. 
Minister Brinkhorst would be traveling to several Asian 
countries - including Japan, China, India, and Malaysia - in 
early 2004 and would push Doha at each stop.  Bruinsma 
commented that trade disputes such as steel, FSCs, and now 
China were not sending the right signal to get Doha back on 
track.  He added, however, that the Netherlands would oppose 
the Commission's automatic retaliation plan in the event that 
the FSC problem is not settled to the Commission's 
satisfaction by March 1. 
Bruinsma said the Dutch presidency would convene an EU-Asia 
economic ministerial in Rotterdam and a Euromed trade 
ministerial in Turkey in fall '04.  Bruinsma also expressed 
support for the "rebirth" of the trans-Atlantic business 
dialogue (TABD) and particularly the initiative on financial 
services. 
 
19. (C) Regarding the upcoming December WTO meeting in 
Geneva, he reported that the 133 Committee would meet on 
November 28 to review the Commission's negotiating position, 
which would be followed by a December 2 discussion by member 
state trade ministers.  Bruinsma thought that the Commission 
would continue to press for two of the four Singapore issues, 
trade facilitation and transparency in government 
procurement, but that investment and the environment would be 
put off until later.  Asked if a new negotiating mandate 
would be necessary, Bruinsma said that the Commission 
continued to operate on the basis of the November 1999, 
pre-Seattle, mandate, since attempting to amend that mandate 
would open up a Pandora's Box of unwelcome possibilities. 
 
20. (U) On Iraq, Bruinsma reported that he had gone into 
Baghdad in September on the margins of the VNO-NCW's trade 
mission to the region.  Some 700 Dutch companies had 
registered their interest in getting involved in Iraq 
reconstruction - some, now, as subcontractors to U.S. 
companies, while others, notably Shell, were waiting to do 
business with the new Iraqi government to be established next 
year. 
 
Justice Ministry DG Visser 
-------------------------------- 
21. (SBU) In a meeting with Ministry of Justice Director 
General for International Affairs Rob Visser, Ries reviewed 
recent positive US-EU developments on justice and home 
affairs (JHA) issues such as cooperation agreements with 
EUROPOL, and the recently concluded US-EU MLAT and 
extradition treaty.  Ries mentioned better terrorist 
financing regulation, better coordination of border 
management and security issues, cooperation with third 
countries on CT issues, enhanced police cooperation on 
synthetic drugs, and joint action on child pornography, TIP 
and a Balkan witness protection program as possible areas for 
further U.S.-EU cooperation on JHA issues. Noting that the 
"third pillar" initiatives are largely presidency-driven, 
Ries urged the Dutch side to help us understand what might be 
possible to achieve in terms of integrating in the EU's 
border control reforms, 3rd country cooperation, and law 
enforcement. 
 
22. (SBU) DG Visser said JHA issues would be one of the main 
focuses of the Dutch presidency.  He had already discussed 
with the MFA the need to keep transatlantic considerations in 
the mix. The 1999 Tampere Agenda review during the Irish 
presidency opens the door for the Dutch to begin charting a 
new agenda and the GoNL wants to factor US policies and 
equities into the planning.  The Dutch are interested in 
biometric standards, asylum and migration issues (which are 
increasingly supranational), and border control issues.  Law 
enforcement and police/justice affairs tend to "move at a 
slower speed," but Visser said there was scope for EU-wide 
measures.  He noted that if the new EU constitution is 
approved, the disappearance of pillars will give the Dutch 
the opportunity to help form the structure that will guide 
law enforcement and border security issues for the next 5-10 
years. 
 
23. (SBU) Ries agreed the EC and EU changes allowed for 
creativity in addressing security issues and indicated U.S. 
interest in joining with the Dutch in such forward thinking. 
Ries and Ambassador Sobel discussed the possibility of 
bringing together both policy and operational personnel (DHS, 
Justice, State) with the Dutch for a fresh look at these 
issues. Visser said he was interested in a bilateral meeting 
with US experts on the JHA agenda in the runup to the 
presidency.  The Ambassador also suggested that it might be 
helpful for Visser to visit Washington to meet with people on 
these issues. Visser said he was interested and promised to 
continue planning with US officials.  Ries concluded by 
saying that the work of the Dutch Presidency in these areas 
could set out policy lines with an important impact in 2005 
and beyond. 
 
 
 
 
 
 
 
 
 
 
 
 
 
SOBEL