US embassy cable - 04DUBLIN1721

UNCLAS SECTION 01 OF 02 DUBLIN 001721 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR H FOR RICHARD FONTAINE, ELLEN BRADY OF SENATORS' 
MCCAIN/GRAHAM 
 
E.O. 12958: N/A 
TAGS: CASC, CVIS, EAIR, ETRD, MARR, OREP, PGOV, PHUM, PREL, PTER, EUN 
SUBJECT: SCENESETTER FOR SENATORS MCCAIN AND GRAHAM'S 
DECEMBER 1-3 VISIT TO IRELAND 
 
 
1.  (SBU)  A background paper follows, describing key 
political concerns. We would also note that the Northern 
Ireland peace process is at a critical juncture, and the 
final results of the process begun at Leeds Castle might be 
announced during your visit. 
 
-------------------- 
Political Background 
-------------------- 
 
2.  (SBU) Ironically, the party that has led Ireland through 
most of the Celtic Tiger era, Fianna Fail, has seen a recent 
erosion in its political support.  In the June 2004 local and 
European Parliament elections, Fianna Fail lost a number of 
seats to opposition parties, led by Fine Gael and the upstart 
Sinn Fein.  Commentators attributed Fianna Fail's poor 
showing to the electorate's sense that not all segments of 
society have shared the benefits of the Celtic Tiger economy, 
as reflected in growing crime rates and other social 
problems.  In a bid to re-energize the party and government 
ahead of the 2007 general elections, Prime Minister 
(Taoiseach) Bertie Ahern re-shuffled his cabinet in late 
September.  The move presages an effort by Fianna Fail to 
recast its image as a party more attuned to social concerns. 
 
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The Government Budget 
--------------------- 
 
3.  (SBU) Estimates for the 2005 government budget, released 
on November 18, set forth Fianna Fail's economic priorities 
in its bid to rebuild political support.  Although a budget 
deficit was originally forecast for 2004, increased revenues 
tied to economic growth and one-off tax collections on 
off-shore bank accounts will yield a year-end budget surplus 
of 0.3 percent of GDP.  Some ruling party members have 
pressed new Finance Minister Brian Cowen to use this 
unexpected windfall to address hot-button social issues, 
including Ireland's dysfunctional health care system and 
outdated transportation infrastructure.  The Irish Central 
Bank and most economists, however, have cautioned against 
steep increases in government spending that could fuel 
inflation, particularly with robust GDP growth predicted for 
2005.  In recent public comments, Minister Cowen has 
indicated that the budget will offer tax relief for lower 
income groups, but will avoid inflationary pressures that 
could raise wage demands and erode Ireland's competitiveness. 
 On December 1, the national budget will be released, 
providing specific details in regards to program funding. 
 
-------------------------- 
Ireland-Militarily Neutral 
-------------------------- 
 
4.  (SBU) Ireland is militarily neutral, and does not have 
troops in Iraq.  Ireland continues, however, to allow the US 
military to refuel at Shannon airport, and to support major 
peacekeeping operations in areas such as Kosovo, Afghanistan, 
Lebanon, and Liberia, where Ireland is the largest 
non-African contingency.  (Under Irish law, troops cannot be 
deployed without a "triple-lock": UN-authorized mission, 
Government/Cabinet-level decision, and vote of Parliament). 
The use of Shannon places great pressure on the government, 
and elements of the public see this use as a violation of 
neutrality.  During the Reverend Jesse Jackson's recent trip, 
the press quoted him as saying that the use of Shannon by US 
military aircraft puts Ireland "in the line of fire" from 
terrorist organizations.  Parliamentarians raised this with 
the Taoiseach on November 23. Parliamentarians regularly 
question the government on the number of flights allowed and 
on allegations that prisoners have traveled through Shannon 
en route to Guantanamo.   Shannon airport has not been used 
to transit enemy combatants to or from the detention center 
at Guantanamo, and it will not, without US consultations with 
the Irish government.  Also, on December 1, Irish courts will 
pass sentence on a protester convicted of damaging a US 
aircraft at Shannon. 
 
----------------------------- 
Northern Ireland Negotiations 
----------------------------- 
 
5.  (SBU) Negotiations on a final settlement for Northern 
Ireland continue to be a hot topic.  Parties are reviewing a 
joint proposal from the Irish and UK governments that would 
restore Northern political institutions over the coming 
months.  This proposal builds upon progress that was achieved 
in the September Leeds Castle talks, where Sinn Fein signaled 
the IRA's willingness to cease paramilitary activity and 
decommission weapons as part of a final deal.  Northern 
Ireland is the fastest growing region in the UK, and a 
political settlement would help to accelerate growing 
inter-Ireland trade and investment. 
----------------------------- 
Ireland and the War on Terror 
----------------------------- 
6.  (SBU) The US embassy and Ireland enjoy a good working 
relationship and information sharing in the ongoing war on 
terror.  On November 23, the Taoiseach announced that the 
Irish national police are monitoring Al-Qaeda operatives in 
Ireland and one Irish citizen has been designated as a 
terrorism financier by the US authorities.  Without UN 
designation, currently there is little the Irish government 
can do in terms of prosecuting suspects of terrorism 
financing because legislation to criminalize international 
terrorism has been hung up in the Irish Parliament for over 
two years.  Ireland is party to five of the twelve UN 
Conventions Against Terrorism, but human rights and privacy 
concerns have stalled movement on legislation to allow 
Ireland to become party to the remaining seven.  This 
legislation is being discussed currently, and is expected to 
pass before the year's end. 
 
-------------------------------------- 
Ireland -- A Confident EU Member State 
-------------------------------------- 
 
7.  (SBU) Ireland's economic and diplomatic successes have 
boosted the country's standing in the EU and have given Irish 
citizens unprecedented national confidence.  In less than a 
generation, Ireland has grown from one of the poorest EU 
Member States to one of the richest (in GDP per capita), 
largely on the strength of government policies that espoused 
open trade and investment, low corporate taxes, good labor 
relations, low government debt, and prudent use of EU support 
funds.  Although the Celtic Tiger stumbled somewhat with the 
post-9/11 global slowdown, a surge in housing construction 
has Ireland on track to achieve roughly 5% annual GDP growth 
in 2004, the highest in the EU.  Moreover, Ireland won high 
marks in Europe for its recent EU presidency, which saw the 
accession of ten new EU member states, the successful 
negotiation of the EU Constitutional Treaty, and the launch 
of the U.S.-EU Trans-Atlantic Economic Partnership.  These 
accomplishments have contributed to Ireland's self-image as 
an effective broker within the EU and a role model for new EU 
Member States. 
 
------------------- 
Links with the U.S. 
------------------- 
 
8.   (SBU) While Ireland is a player in the EU and continues 
to benefit from EU markets and support funds, Irish leaders 
attach equal importance to relations with the United States. 
Beyond long-standing cultural ties, U.S. trade and investment 
have been the twin engines of the Celtic Tiger economy. 
There are roughly 570 U.S. firms operating in Ireland, 
employing over 90,000 people and accounting for a third of 
Ireland's annual exports.  These firms include most major 
biotechnology, IT, and financial services companies, which 
use Ireland as a gateway to EU markets.  Last year, new U.S. 
investment in Ireland reached $9 billion, compared with $3.8 
billion in China.  The central role that U.S. businesses have 
played in Ireland's economic transformation, however, is a 
story not often told by the Irish media, which tend to take a 
negative view of the United States, particularly our efforts 
in Iraq. 
KENNY