US embassy cable - 04BRUSSELS758

C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 000758 
 
SIPDIS 
 
DEPT FOR EUR/ERA, EUR/SNEC, EUR/CACEN, EUR/ACE 
 
E.O. 12958: DECL: 02/20/2009 
TAGS: PREL, PGOV, AM, AJ, GG, RS, EUN, USEU BRUSSELS 
SUBJECT: US-EU COEST CONSULTATIONS PART 2: SOUTH CAUCASUS 
 
REF: BRUSSELS 666 
 
Classified By: USEU Poloff Van Reidhead for reasons 1.5 (b) and (d) 
 
1. (C) SUMMARY: On February 9 in Brussels, EUR DAS Lynn 
Pascoe -- accompanied by EUR/ACE Deputy Dan Rosenblum and 
EUR/ERA Director Kathy Allegrone -- discussed US-EU 
cooperation in Central Asia and the South Caucasus with the 
EU's COEST Troika.  This cable covers the South Caucasus 
portion of the consultations.  The discussion of Central Asia 
is reported ref. A. 
 
-- Wider Europe Initiative (WEI): Decision will be made by 
end of June on whether to include South Caucasus in WEI; 
Irish FM Cowen, EUSR Talvitie and Enlargement Commissioner 
Verheugen all support South Caucasus inclusion, and are 
pushing others to do so; EU remains concerned about Russian 
reaction and overly high expectations of South Caucasus 
governments. 
 
-- Georgia: EU remains confident in Saakashvili's efforts to 
reform public institutions; EU has 30 million euros budgeted 
for assistance in 2004; US and EU to enhance on-the-ground 
coordination even further. 
 
-- Armenia: Kocharian making positive strides toward meeting 
conditions of Council of Europe membership; EU agrees that 
progress should be made toward opening the Turkish-Armenian 
border, but doubts whether this can happen without progress 
on Nagorno-Karabakh. 
 
-- Azerbaijan: Ilham Aliev tells EU he "can wait" on 
resolving Nagorno-Karabakh; EU agrees that recent positive 
attention on Georgia creates an opening for increasing 
pressure on Azerbaijan, which worries about being forgotten 
after Georgia's dramatic turnaround.  END SUMMARY. 
 
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Wider Europe Initiative: 
Momentum Growing to Include South Caucasus 
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2. (C) COEST Troika members told Pascoe that moves to include 
the three South Caucasus states in the EU's Wider Europe 
Initiative (WEI) were gaining ground.  Commission rep 
Reinhold Brender said that a decision would have to be taken 
by the end of June, and noted that Armenian President 
Kocharian made a direct plea for WEI inclusion during a visit 
to Brussels in December (at which time he also invited 
Enlargement Commissioner Verheugen to visit Yerevan).  The EU 
had two serious concerns about expanding WEI into the South 
Caucasus, he said: first, how would Russia react?  And 
second, how could the EU gently deflate the unrealistic 
expectations of the three countries regarding benefits of WEI 
membership?  The Council Secretariat's Michael Swann echoed 
this concern by explaining that the EU is nervous about 
comments by Georgian President Saakashvili and Azeri 
President Ilham Aliev that EU membership is an ultimate 
policy objective of their countries.  Wouldn't inclusion in 
the WEI reinforce this unrealistic objective?  Pascoe replied 
that the EU should tell Russia that the South Caucasus states 
are independent, and free to choose their own sovereign 
policies.  The benefit of expanding WEI into the region would 
be too great to abandon just because the Russians might get 
upset.  Of the second concern, Pascoe said that the high 
expectations of regional leaders was to be expected and 
provided a powerful impetus to reform.  There would be time 
to deal with these issues after WEI expansion and as reforms 
proceed. 
 
3. (SBU) Irish Presidency rep Barbara Jones said that 
maximizing the WEI's value as a point of leverage over 
included countries was an issue of great concern to the EU. 
Council Policy Planning advisor William Boe illustrated the 
concern by pointed out that Syria has been in the WEI for 
over a year now, yet has made little progress.  In that 
context, he asked, why should the EU expect more of Armenia 
after WEI inclusion?  Jones noted that Commissioner Verheugen 
is briefing other Commissioners on the issue this month.  She 
said that while some FMs remain wary -- arguing that the EU 
"doesn't need a policy driven by enlargement" -- many others 
are increasingly supportive of inclusion of the South 
Caucasus in the WEI.  Among the notable supporters of 
inclusion were Irish FM Cowen (who "will manage the Council 
debate," she said), Enlargement Commissioner Verheugen, and 
EU Special Rep Heikki Talvitie. 
 
4. (C) COMMENT: The EU clearly has serious issues to resolve 
-- notably about scope, precedence, and managing expectations 
-- before signaling any decision to the region's leaders. 
Yet based on signals we have been receiving since December 
from Council, Commission and member state officials, it seems 
clear that the EU's momentum has shifted from debates about 
whether to include the Caucasus in WEI, to discussions about 
when, how, and to what end.  Skeptics remain but are rapidly 
being outpaced by advocates of WEI expansion.  END COMMENT. 
 
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Georgia: A Success for US-EU Cooperation 
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5. (SBU) Jones said the EU remains optimistic about the new 
Georgian administration and anticipates positive outcomes 
from the new reform initiatives and the upcoming 
parliamentary elections.  She said it was important to 
maintain the momentum and to continue cooperating on 
difficult issues like Abkhazia, Adjara and IMF restructuring. 
 Pascoe agreed, observing that Georgia represented a stunning 
success for US-EU cooperation.  On Russia, Jones said the EU 
was maintaining a strong line with Moscow on the need to 
cooperate; Irish FM Cowen told FM Ivanov in a recent meeting 
that Russia must take Georgia's territorial integrity more 
seriously.  Pascoe agreed that Russia must learn to deal with 
Georgia as a normal, sovereign country.  Solutions to 
difficult issues like Abkhazia would not be found without 
serious Georgian progress and some Russian help.  Quoting a 
statement by NATO SYG de Hoop Scheffer that the South 
Caucasus were as much a part of Europe's near abroad as 
Russia's, Pascoe urged the EU not to acquiesce to Russia's 
effort to treat Georgia as a privileged sphere of influence. 
While recent public statements by Russian officials seemed 
positive, it was important to maintain the pressure to keep 
Moscow moving forward.  Boe said that compromise would be the 
key to resolving the Russian basing issues.  The Russians 
know the proposed payment of USD 500 million is a nonstarter, 
he said, and will probably seek to use the presence of US 
forces (conducting Georgia's train and equip program) to 
their advantage during negotiations. 
 
6. (SBU) Boe said that HiRep Solana and EUSR Talvitie are 
focused on the development of basic state structures as the 
primary priority in Georgia.  He noted that the EU budgeted 
30 million euros for assistance to Georgia in 2004. 
Commission rep Brender said the EU currently has 5 million 
euros available now for food security, and said the 2004 
budget would provide for 12 million euros for the EU's TACIS 
(Technical Assistance to the CIS) program in Georgia, 12 
million euros for food security, 4 million euros for 
rehabilitation projects in South Ossetia and Abkhazia, and 
2.5 million euros for an EU initiative on democracy and human 
rights.  EUR/ACE Deputy Rosenblum noted that the US FY2005 
budget request for assistance to Georgia was higher than the 
amount requested for any other FSU state.  The US is 
prioritizing revenue collection, anti-corruption, and job 
creation.  He also noted that the US is considering 
supporting projects we have never before done in Georgia, 
such as helping mitigate the employment impact of public 
sector reform, adding that in this area the US will follow 
the World Bank lead.  Rosenblum noted that the US 
contribution for upcoming parliamentary elections will amount 
to about one quarter of Georgia's self-assessed need of USD 
3.4 million.  The US was also looking for help from others to 
fund a USD 500,000 computerized voter registration system, he 
said. 
 
7. (SBU) Pascoe urged the EU to maintain the pressure on 
Georgia to reform.  We should not be any softer on 
Saakashvili than we were on the last group, he said. 
Saakashvili's positive start needed to be bolstered, and 
outside pressure should be maintained to keep the new 
government on track.  Jones agreed, and said she would carry 
the message to EU member states to "keep the spotlight on" 
Saakashvili and his new administration.  Pascoe said that 
US-EU cooperation on the ground should be increased even 
further.  We should build on our success during the run up to 
the January election and carry our coordination into 
additional aspects of regional assistance, he said.  Jones 
said the EU welcomed the enhanced coordination and would 
direct its Missions to continue these efforts. 
 
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Armenia 
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8. (SBU) Pascoe noted that while the US continues to press 
Turkey on the need to make progress with Armenia, Azeri 
President Ilham Aliev continues to plead with Turkey not to 
abandon its defense of Azeri interests in Nagorno-Karabakh 
(NK).  Turkish PM Erdogan seems interested in beginning 
discussions on opening the Turkish-Armenian border, but is 
caught between Turkey's commitments to Azerbaijan and its 
partnerships with the West.  Pascoe estimated that Armenian 
President Kocharian will eventually compromise with the 
Azeris over NK, but perhaps Ilham Aliev is not yet a strong 
enough Azeri partner.  Boe voiced skepticism that the that NK 
could be delinked from the issue of Turkish-Armenian 
relations, and asked rhetorically how it would be possible to 
open the Turkish-Armenian border without first resolving NK. 
Pascoe said that the US and EU needed to set out a series of 
arguments to push home resolution of NK as soon as possible, 
rather than just letting it simmer on indefinitely. 
 
9. (SBU) Jones assessed as positive Kocharian's recent 
progress toward meeting the conditions of Council of Europe 
(CoE) membership.  Pascoe agreed, underscoring that CoE 
membership remained a useful point of leverage over Armenia. 
 
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Azerbaijan 
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10. (C) Boe noted that Ilham Aliev told EUSR Talvitie during 
a recent visit (January 20 to February 5) to the region that 
he (Aliev) could wait for a solution to NK.  He was young and 
not in a hurry like his father had been, Ilham reportedly 
said.  Boe said that it was unclear whether Ilham's remarks 
signaled a shift in policy or a sign of his weakness as he 
tries to consolidate power in Baku.  Boe also remarked that 
he and Talvitie had been hearing conflicting stories about 
Ilham's personal interest in power.  "Some say he wants 
power, and some say he only wants to play," Boe said.  In 
either case, the Azeris seem to playing up the image of Ilham 
as a professional by boasting to Talvitie that Ilham now 
shows up for work at 9:00 every day. 
 
11. (C) Pascoe said the US was trying to strengthen Ilham and 
assist him with reform efforts because, while far from 
perfect, he is the most progressive figure available from a 
pool of unimpressive candidates.  Boe asked how we intended 
to do that.  Pascoe responded that the US was exploring ideas 
with Ilham and would want to discuss these issues during 
Talvitie's March 1-2 visit to Washington.  Boe pointed out 
that Georgia's recent and dramatic progress -- which has the 
Azeris complaining that the Georgians are getting all the 
attention lately -- provided a useful point of leverage over 
Ilham.  Pascoe agreed that Georgia's about-face had had a 
profound impact on Azerbaijan, and said the US and EU should 
use this new leverage for maximum benefit. 
 
Schnabel