US embassy cable - 04THEHAGUE1670

C O N F I D E N T I A L SECTION 01 OF 03 THE HAGUE 001670 
 
SIPDIS 
 
USDOCOSOUTH NAPLES IT 
 
E.O. 12958: DECL: 06/30/2014 
TAGS: PREL, PGOV, EU, NL 
SUBJECT: DUTCH EU PRESIDENCY:  THE VIEW FROM THE HAGUE 
 
REF: A. BRUSSELS 2669 
 
     B. THE HAGUE 1273 
     C. THE HAGUE 1660 
 
Classified By: AMBASSADOR CLIFFORD SOBEL, REASONS: 1.5(B) AND (D). 
 
1. (C) Summary:  Balancing Dutch, European, and transatlantic 
interests will be a challenge for the Dutch presidency, made 
more complicated by the demands of a 25 member EU, a new 
parliament and Commission, and the new constitutional treaty. 
 A "successful" presidency is seen by PM Balkendende as key 
to maintaining international influence and domestic support 
for his government.  In practical terms, this means that the 
Dutch will err on the side of realism and "getting it right" 
rather than pursuing an ambitious agenda or trying to push 
minority positions (even those the Dutch might otherwise 
support) through the EU.  The decision on Turkey, of course, 
looms large, particularly given its potential impact on 
referenda on the Constitutional Treaty (including in the 
Netherlands).  The China Arms Embargo question here is less 
about human rights and Asian security than avoiding a 
trainwreck at the EU-China summit.  In transportation 
security and counterterrorism, the Dutch have a good record 
of accomplishments to build on in the JHA.  The Dutch 
economic agenda is practical and focused on realizing actual 
progress rather than setting unrealistic goals.  While we may 
find the Dutch less willing to support openly specific U.S. 
objectives in several areas, overall the presidency will be a 
net plus for the U.S., not least because of the Dutch 
commitment to transparency and keeping transatlantic channels 
of communication open.  The Dutch also can and will provide 
tactical advice on how to handle certain sensitive issues. 
End Summary. 
 
2. (C)  The theme of the 2004 Dutch EU presidency is "realism 
and ambition," with ambition clearly the lesser of the two. 
As noted ref A, the uncertainties of dealing with a new 
Commission and new European Parliament, combined with the 
natural restrictions of the "short" summer-fall presidency, 
will inhibit the Dutch from proposing or implementing major 
new initiatives.  This will also be the first full presidency 
of a 25 member EU and the first held under the shadow of the 
finalized constitutional treaty.  While the Irish did the 
Dutch a great favor by concluding the treaty and successfully 
negotiating a new Commission president, much of the Dutch 
presidency will necessarily be focused on settling in, 
adjusting to new personalities and procedures, and avoiding 
any major dustups. 
 
COMPETENCE ABOVE ALL 
-------------------- 
 
3. (C) The Dutch derive much of their international 
credibility and influence from their well-earned reputation 
for competence, fairness, and responsibility.  A dramatic 
failure -- such as the cancellation of a major summit or 
mismanagement of the Turkish accession decision -- would 
seriously damage this reputation, and could also have serious 
domestic consequences for the Balkenende government.  A 
senior MFA official recently told us that Balkenende believes 
holding a "successful" EU presidency is one of the keys to 
keeping his coalition cabinet together for a full four years; 
he has recently begun holding "retreats" with the entire 
cabinet to discuss EU issues.  The appointment of the 
non-politician Ben Bot -- a former diplomat with impeccable 
EU credentials -- is seen as another reflection of 
Balkenende's determination to preside over a flawless 
presidency. 
 
4. (C) The Dutch will do their best to complete unfinished 
business from previous presidencies (even if it means doing 
work usually performed by the commission) and to fulfill 
summit obligations (including developing proposals to enhance 
EU-U.S. cooperation in the Broader Middle East).  They have 
prepared endlessly to deal with all the issues on the agenda, 
and, drawing a lesson from the Madrid bombings, have even 
prepared contingency plans to coordinate EU actions in the 
first hours of a unforeseen emergencies. 
 
GOOD EUROPEANS 
-------------- 
 
5. (C) The Dutch must not only be competent, however; they 
must also be good Europeans.  As EU president, the Dutch are 
prepared to sacrifice parochial concerns in some areas in 
order to create or preserve a consensus within the EU.  For 
example, last December the Dutch parliament voted unanimously 
to oppose lifting the arms embargo on China, but made no fuss 
when told by Bot that the GONL would follow a common EU 
position.  Ultimately it is other EU members, not the Dutch 
public, that will determine the success or failure of the 
Dutch presidency. Within the EU, the Council meetings and 
summits provide the most public fora for Balkenende to 
demonstrate his international credentials; for that reason, 
the Dutch will be very cautious about leaving unresolved or 
contentious items on the agendas of such events. 
 
5. (C) On the other hand, just how European the average Dutch 
citizen feels remains an open question -- but not for long. 
The Netherlands will hold an early referendum on the 
constitutional treaty, perhaps by December.  Several fringe 
parties on the left and right will campaign against the 
treaty, and the commitment of even some members of 
Balkenende's coalition to the treaty is in doubt.  The 
conservative Liberal Party (VVD) in particular has a 
Euroskeptic tradition and may  refrain from active 
campaigning in favor of the treaty, even if VVD members 
Defense Minister Kamp and Deputy Prime Minister Zalm support 
the government's line.  There has never been a national 
referendum in the Netherlands, and it is safe to say that 
Balkenende will be watching carefully to see how EU decisions 
on sensitive issues -- especially Turkey -- play into the 
debate.  The dramatic success of assassinated populist leader 
Pim Fortuyn in 2002 shows that the Dutch electorate is still 
capable of surprises. 
 
SOLID TRANSATLANTICISTS 
----------------------- 
 
6. (C)  The Dutch have always maintained that NATO and the EU 
can cooperate effectively, and now have a good chance to 
prove it.  The coincidence of an EU presidency and a Dutch 
SYG of NATO mean the Dutch have the will and many of the 
tools necessary to ensure that the SFOR to EUFOR transition 
goes smoothly -- one of the highest priorities for their 
presidency.  The fact that the Council's policy leader for 
ESDP issues is also Dutch only improves the chances of 
improved NATO-EU coordination on defense and security issues 
during the Dutch presidency.  The Dutch are also enthusiastic 
about bringing together AG Ashcroft and DHS Sec. Ridge with 
the EU Member States Justice and Interior Ministers at the 
informal JHA Council in late September to highlight 
transatlantic cooperation in fighting terrorism. 
 
7. (C) On the other hand, the Dutch, as a small nation, are 
prickly about their independence and do not want to appear 
subservient to any other nation's agenda.  In the 
transatlantic context, this means they will continue to frame 
their actions -- such as their recent decision to extend 
their troop presence in Iraq -- in neutral terms that 
downplay linkage to perceived U.S. interests.  The stated 
Dutch priorities for their presidency give short shrift to 
the transatlantic agenda as such, but the Dutch have made 
clear that transatlantic concerns will factor into their 
handling of all external agenda items. 
 
NORMS AND VALUES 
---------------- 
 
8. (C)  Balkenende has said he wants to use the presidency to 
advance a discussion of "norms and values" -- a personal 
hobbyhorse for which he is often ridiculed in the Dutch 
press.  By sponsoring a series of conferences on the subject 
in Europe and the United States, Balkenende reportedly hopes 
to initiate a dialogue on the shared 
cultural/social/political/legal values that can help define 
modern civilized society.  Broadening this discussion beyond 
the Netherlands would increase its currency (and Balkenende's 
credibility) domestically while linking it to a larger, 
arguably "transatlantic" set of issues.  In practical terms, 
this probably means little more than a paragraph or two in 
the final documents of the presidency, but for Balkenende 
this would be a significant achievement. 
 
ECONOMIC AGENDA 
--------------- 
 
9. (C) On the economic side, the top Dutch priority will be 
trying to jump-start the stalled Lisbon agenda of 
revitalizing the European economy and improving Europe's 
competitiveness.  (The Dutch economy has been a laggard even 
by eurozone standards, contracting by 0.8 percent in 2003 and 
forecast to grow by perhaps one percent in 2004.)  That 
effort begins with the first major event of the presidency 
calendar, the July 1-3 informal competitiveness council in 
Maastricht, which will bring together economy and education 
ministers for a review and discussion of the EU,s lagging 
growth in productivity vis-a-vis the U.S.  Yet, as our 
Economy Ministry contacts have repeatedly pointed out, one 
area in which the EU has not fallen behind has been in the 
analysis of its productivity problems.  The deficiency has 
been rather in the design and implementation of the policies 
(increased labor market flexibility, more competitive product 
and service markets, eased entry and exit rules for firms, 
etc.)  needed to achieve the stated goal.  The Dutch say 
that, although the formal mid-term review Lisbon will not 
occur until the spring of 2005, under the Luxembourg 
presidency, they feel compelled to put forward specific 
proposals for moving ahead on Lisbon at the November 
competitiveness council in Brussels, based in part on the Wim 
Kok report commissioned at the European summit in March. 
Expectations, at least internally, appear to be low, however, 
at least judged by remarks made last week by Economy Minister 
Brinkhorst, who, speaking at a Ministry-sponsored conference 
on innovation called the competitiveness council a "dead 
horse" lying in the path of progress (although some here have 
argued that Brinkhorst himself may be as much to blame for 
the lack of progress as the council). 
 
10 (C) Other important Dutch objectives for the presidency 
include beginning discussions on the EU,s budget for 
2007-2013, with a view towards reducing the Netherlands, net 
contribution of 0.65 percent of GDP, among the highest in the 
Union.  The Dutch also want to raise the profile and improve 
the effectiveness of the fight against terrorist finance, an 
issue they have placed on the agenda of the July 5 Ecofin 
council meeting.  In addition, the Dutch finance ministry 
plans to make a major effort to reduce administrative burdens 
and improve regulatory processes, complete the Financial 
Services Action Plan, and lay the groundwork for an EU-wide 
corporate governance code. 
 
COMMENT:  WHAT DOES IT ALL MEAN? 
-------------------------------- 
 
11. (C)  The Dutch EU presidency will be a net gain for the 
United States.  We should expect them to be honest partners, 
and to keep transatlantic communication channels open. While 
their desire to build consensus will make it difficult to 
take tough positions (particularly on politically sensitive 
issues such as the China Arms Embargo or Turkey), the Dutch 
should be upfront in highlighting areas where we may disagree 
(ref b) early enough to give us an opportunity to influence 
the process.  The Dutch will also seek to advise us on how to 
handle sensitive issues within the EU context, including with 
regard to tone and timing, and may even provide guidance on 
dealing with other, less cooperative members. 
 
12. (C) In areas where they feel their organizational ability 
and determination can make a real difference -- such as 
facilitating the SFOR-EUFOR transition, implementing the 
counterterrorism agenda, or developing proposals to move 
forward in the Middle East -- the Dutch agenda will be 
positive but not overly ambitious.  The Dutch made 
counterterrorism a top priority for their presidency, but 
will "manage" the JHA process and continue existing programs 
with few initiatives.  They are actively promoting the need 
to address terrorist financing broadly, across pillars, 
rather than seeing it only in terms of Finance Ministry 
responsibility.  On the Middle East, the Dutch continue to 
talk about developing concrete projects, but so far have only 
one real proposal on the table -- holding Euro-Med 
discussions (including Israel) in Cairo during the presidency 
(this would be the first time the group met outside of 
Europe, but the Egyptians reportedly have not yet agreed to 
the venue).  While we might have hoped for a more ambitious 
Dutch agenda, their focus on "getting it right" is 
understandable given the circumstances they inherited, and 
hopefully will make it easier to achieve substantive progress 
in key areas in the future. 
SOBEL