US embassy cable - 05PARIS4235

C O N F I D E N T I A L SECTION 01 OF 02 PARIS 004235 
 
SIPDIS 
 
E.O. 12958: DECL: 06/15/2015 
TAGS: PREL, FR, EUN 
SUBJECT: CHIRAC TO PRESS HIS ATTACK ON THE BRITISH REBATE 
AND SEEK ENLARGEMENT SLOWDOWN AT EUROPEAN COUNCIL 
 
 
Classified By: Political Minister Counselor Josiah Rosenblatt for reaso 
ns 1.4 (b) and (d). 
 
1.  (C) Summary: President Jacques Chirac, licking his wounds 
in the wake of French voters' rejection of the EU 
constitution May 29, will attempt to negotiate results at the 
June 16-17 European Council that bolster his sagging 
popularity at home and demonstrate that he "heard the 
message" of the referendum revolt.  Having secured German 
Chancellor Schroeder's support for a defense of the Common 
Agricultural Policy (CAP), and having established Prime 
Minister Blair's unwillingness to compromise on the rebate 
unless the CAP is also on the table, Chirac will attempt to 
isolate the UK and blame any failure to agree on the 
2007-2013 EU budget on Blair's "intransigence."  Chirac is 
also likely to seek a slowdown on future enlargement 
decisions, and to insist on Turkey's strict compliance with 
EU conditions before accession talks can open.  Chirac, 
according to British Embassy sources commenting on his June 
14 meeting with Blair, appeared to be angling for a "pause" 
in the enlargement process in return for agreement to "pause" 
the constitutional ratification process sought by Blair.  End 
summary. 
 
2.  (C) With his popularity ratings at an all-time low in the 
wake of French voters' rejection of the EU constitution May 
29, President Chirac heads to the Brussels European Council 
June 16-17 determined to salvage what he can from the 
European crisis the French "no" precipitated.  Chirac wants 
above all to demonstrate to voters at home that he has "heard 
the message" of the referendum and is serious about 
addressing voters' concerns.  Conveniently ignoring 
considerable evidence that part of what the French public 
voted against was Chirac, himself, the president has focused 
on voters' fear for their jobs and social welfare benefits, 
and their unhappiness over the EU's most recent, 10-member 
enlargement.  His priorities will therefore be to ensure that 
there is no erosion of benefits channeled to France from the 
EU (mostly in the form of subsidies to French farmers), to 
limit new EU spending, and to insist that member states hold 
the EU's enlargement process on a tight rein. 
 
3.  (C) MFA Unit Chief for the Future of Europe Philippe 
Setton and Prime Minister de Villepin's advisor on European 
economic affairs Rainier Daussonville told us June 14 that 
Chirac may be prepared to move off France's earlier 
insistence that the 2007-2013 EU budget increase be held to 1 
percent of EU GDP, if he is satisfied that the cost of 
financing the most recent enlargement is being shared 
equally.  This implies, according to Setton, that French 
flexibility on the budget increase will be tied to the UK 
conceding part or all of its euros 4.6 billion rebate. 
Chirac put the "British check" squarely in his sights during 
his joint press conference with Schroeder in Paris June 10 
when he told reporters that "our British friends have to 
realize ... that things are evolving and that, consequently, 
there is a greater necessity for equity in the charges each 
of us supports.  Something that has consequences for how one 
might assess the technique, antiquated today, of the British 
check."  Setton explained that economic conditions today in 
Britain are completely different than they were in 1984, when 
the rebate was voted.  Today, with low unemployment and a 
reasonable rate of growth, the UK economy is among the 
healthiest in the Union. 
 
4.  (C) Chirac will resist Blair's attempt to reopen the 2002 
decision to defer any revision of the CAP until 2013.  With 
France receiving 21 percent of the agricultural subsidies 
doled out to EU member state farmers under the program, and 
with few if any other member states prepared to follow the 
British lead on this issue, Chirac has no incentive to 
compromise.  To do so would be politically impossible for 
Chirac, Setton pointed out.  Moreover, according to Setton, 
the French believe that most member states agree with France 
that the British rebate is no longer justified.  If the UK 
were prepared to compromise on the rebate, France could move 
closer to the Luxembourg presidency's compromise proposal of 
a 1.06 percent of GDP spending increase for the 2007-2013 
budget, Setton told us.  Chirac bolstered his case when 
Schroeder declared his "complete agreement" with Chirac on 
the CAP during their June 10 summit in Paris.  In a meeting 
which British Embassy contacts here described as cordial 
throughout, Chirac told Blair June 14 of his unwillingness to 
reopen consideration of the CAP.  The only concession Chirac 
might be prepared to make would be to accept another 
compromise proposed by the Luxembourg presidency that would 
exempt the 10 new member states from financing the CAP, 
redistributing those costs among established member states. 
 
5.  (C) Chirac's second priority for the Council will be to 
ensure that EU members states have full control over the 
enlargement process and that the EU move much more 
deliberately toward any future enlargement.  While France may 
be prepared to omit mention of specific enlargement processes 
in the Council declaration, Chirac will spend time airing his 
concerns privately in the Council corridors.  Our British 
Embassy contacts told us that Chirac was very negative in 
assessing the potential impact on European public opinion 
that opening membership negotiations with Turkey on October 3 
would have.  They believe that Chirac may be looking for a 
way to delay the start of negotiations.  Some of this 
determination to go slow on enlargement was reflected in new 
Foreign Minister Philippe Douste-Blazy's lengthy interview 
with center-right leaning daily Le Figaro June 13. 
Douste-Blazy told the newspaper that he believed a framework 
already existed for admission of Romania and Bulgaria, and 
that, as long as they met the conditions, there would be "no 
cause to question their entry."  He contrasted this, however, 
with Turkey's situation, saying that it "should be clear that 
we will be very vigilant (in insisting that) there will be no 
opening of of negotiations with Turkey unless it respects the 
conditions imposed by the European Council." 
 
6.  (C) Finally, Chirac now appears to be prepared to join 
consensus, if one emerges, on the need for a "pause" in the 
ratification process.  While at Schroeder's side, conscious 
that the Germans had already ratified the constitutional 
treaty, Chirac stuck to his public line June 10 that the 
decision to continue with planned referendums or 
parliamentary decisions on the constitution should belong to 
the member states concerned.  Privately, according to our 
British Embassy contacts, Chirac told Blair that it might be 
best not to proceed with a process that risked producing 
additional no's from (potentially) Luxembourg, Denmark and 
others that would only deepen the European crisis.  Chirac, 
our contacts said, seemed to be aiming for a British 
commitment to support a "pause" on enlargement and for the 
suspension Blair seeks of the constitutional ratification 
process. 
 
7.  (C) During his intervention in the National Assembly June 
15, Chirac's new Prime Minister and long-time protege 
Dominique de Villepin evoked all of these issues in detailing 
the French position going into the European Council. 
Villepin noted that France could not/not agree to increase 
its EU contribution to 1.24 percent of GDP per year (per the 
Commission proposal), noting that the move from 1 percent to 
1.24 percent, while seemingly miniscule, would equal around 
1.2 billion euros a year, or almost 10 billion euros for the 
entire budget cycle.  He also warned against implementing 
parts of the treaty piecemeal, noting that the French people 
had rejected the treaty.  In his closing remarks, he also 
said that the failure of the constitutional treaty had posed 
the question of the ties between enlargement and deepening of 
European relations.  "We all know," he said, "that the 
rapidity of (the May 2004) enlargement, even if it responded 
to a veritable historical imperative, nonetheless really hit 
our fellow citizens ... this sentiment was expressed on May 
29, and we must take account of it."  The French, he said, 
"want to know in what kind of Europe they will build their 
future and what will be its frontiers." 
 
Comment 
------- 
 
8.  (C) His stinging defeat in the referendum and his 
plummeting popularity rating leave Chirac with few options 
but to project himself as the protector of French interests 
at the European Council.  He calculates that most member 
states agree with France on the need to eliminate or scale 
back the British rebate and he assesses that Blair has little 
support for reopening the CAP.  He is, therefore, likely to 
hang very tough on both issues -- even if the result is a 
failure to reach compromise on the 2007-2013 EU budget in 
Brussels.  Perhaps recognizing that such a failure will not 
sit well with new member states, Chirac is likely to make 
known his willingness to accept a spending increase very 
close to the Luxembourg presidency's 1.06 precent compromise 
proposal.  He may also, in extremis, be willing to concede an 
exemption to the new members on financing the CAP.  In 
return, he will want agreement on the need for a pause to 
reflect on the most recent enlargement and to consolidate 
before future expansions.  This is likely to have 
implications, if not for Bulgaria and Romania, then certainly 
for the Balkan states, Ukraine, Georgia and other former NIS 
states, and above all, for Turkey.  End comment. 
WOLFF