US embassy cable - 05PARIS7787

C O N F I D E N T I A L SECTION 01 OF 03 PARIS 007787 
 
SIPDIS 
 
DEPT FOR E, EB, EUR/ERA, EUR/WE 
 
E.O. 12958: DECL: 12/31/2014 
TAGS: PREL, ETRD, FR, ECON, PGOV, EUN 
SUBJECT: MFA EUROPEAN DIRECTOR NOT OPTIMISTIC ON EU BUDGET 
DEAL 
 
 
Classified By: Pol/MC Josiah Rosenblatt for reasons 1.4 (B & D). 
 
1.  (C) Summary:  MFA EU Affairs A/S-equivalent Briatta told 
us November 15 that he was not optimistic the EU would reach 
a budget deal by year's end, in part because of Blair's 
weakened domestic standing, and notwithstanding the UK's 
fears of increasing isolation within the EU and growing 
unhappiness among its natural allies, the new member states. 
If no deal is reached, Briatta feared that the UK would 
become even more intractable once its EU presidency has 
ended.  He insisted that the proposal brokered by Luxembourg 
PM Juncker in June was acceptable in substance to the UK and 
that French willingness to engage in a bottom-up review of EU 
financing in preparation for the next seven-year budget cycle 
beginning 2014 was an acceptable quid pro quo; but he 
believed the UK was attempting to leverage French isolation 
on the Doha round into additional concessions, which he said 
would not work.  Briatta predicted that EU doldrums would 
continue for some time given member states' internal and 
economic problems, including France's need to make heavy 
investments in the wake of the current civil disorder. 
However, he did not believe Romanian and Bulgarian accession 
would be delayed, notwithstanding Commission warnings.  On 
Turkish accession, he said passions had died down for the 
time being, but said it would be up to Turkey, when and if 
negotiations were ever concluded, to convince the French 
electorate, in particular France's Armenian diaspora, that it 
should join the EU.  End summary. 
 
2.  (C) Pol/MC and Deputy met November 15 with MFA 
AS-equivalent for EU affairs Gilles Briatta to discuss 
prospects for a budget deal in time for the December 15-16 
European Council (summit) meeting in Brussels.  Briatta was 
unaccompanied.  Discussions also touched on the state of the 
EU, accession dates for Romania and Bulgaria, and 
Turkey-Cyprus in the context of Turkey's beginning accession 
negotiations. 
 
EU budget and the UK rebate 
--------------------------- 
 
3.  (C) On prospects for an EU budget deal by the end of the 
year, Briatta said he was not optimistic.  The weakening of 
PM Blair's domestic standing since Hampton Court, in his 
view, had made an already difficult situation worse.  Saying 
that the issue boiled down to who would pay for EU 
enlargement, he termed UK intransigence untenable, including 
among the new member states who were otherwise the UK's 
natural allies.  Briatta also claimed that the UK was 
increasingly isolated in its stance on the budget issue, 
since those member states initially opposed to the Juncker 
compromise of June (the UK, Netherlands, Sweden, Spain, and 
Finland) were no longer real obstacles. 
 
4.  (C) Asked where French compromises on the Common 
Agricultural Program (CAP) fit into the mix, Briatta was 
emphatic that France had already offered the UK a face-saving 
deal: France could agree to a bottom-up review of EU 
financing and "put everything on the table," including the 
CAP, in time for the next seven-year budget cycle beginning 
2014, if the UK would agree to phase out its rebate during 
the current budget cycle of 2007-2013.  Briatta said France 
agreed that spending needed to have a more logical basis and 
be less automatic.  He argued that the CAP was of diminishing 
financial interest for France, but that it nonetheless needed 
a few years to prepare its farmers for the changeover. 
Moreover, it would take a number of years to conduct such a 
bottom-up review in any case.  Briatta also claimed that 
paying for enlargement would ultimately prove cheaper than 
maintaining the CAP and the rebate. 
 
5.  (C) To POL/MC's question as to why the UK had not reached 
the same conclusions, Briatta claimed that Blair had 
privately admitted at one point that he would have accepted 
the Juncker compromise had he understood better. 
Unfortunately, he said, the UK's position would only harden 
if no deal were reached in December, since it would no longer 
be constrained by the consensus-building burden of the EU 
presidency.  Gordon Brown's waiting in the wings to succeed 
Blair also did not bode well.  He surmised that the UK 
strategy now, built on the assumption that France could not 
wage war on two fronts simultaneously, consisted of trying to 
leverage mounting international pressure on France on WTO 
Doha round negotiations to force French concessions on the 
budget.  This would not work, however, Briatta contended. 
France believed Mandelson was more cognizant of French red 
lines, and France would not budge on the CAP. 
 
6.  (C) Briatta contended that the current economic 
difficulties of the large EU member states, in particular 
Germany, were also a factor in the UK's isolation; no one was 
in the mood to help out the UK.  France's response to the 
civil violence in its suburbs would mean heavy investments, 
money that France was no longer prepared to hand over to 
Brussels.  The new German government, he said, would be even 
more committed to not going above one percent funding 
threshold.  He noted ironically that failure to reach a 
budget deal would not affect CAP payments, which were 
obligatory, while other funding would suffer.  Indeed, 
failure to reach a budget deal could potentially lead to an 
overall increase in EU spending.  In the absence of a 
seven-year budget, he continued, the European Parliament 
would have the last word on annual budget decisions, which 
risked an "explosion" of the EU's budget.  This explained, he 
said, why the six net contributors continued to put down 
markers on limiting the budget. 
 
State of the Union 
------------------ 
 
7.  (C) Pol/MC asked how strong a blow a budget impasse would 
represent for the EU more generally, given the failed 
referenda on the European constitution and the failed summit 
of June.  Briatta responded that EU machinery would continue 
to function as always, adding that France was not interested 
now in a renegotiation of the EU constitutional treaty.  He 
saw a "pause" as useful and even necessary following the 
"quantum leap" of the last round of enlargement, although it 
was important for new members that the interregnum not last 
too long.  His main concern was that Poland would become a 
problem, given its pressing needs for reforms and 
infrastructure. Asked about the crisis of confidence in the 
EU, Briatta responded that he saw this essentially as a 
member state problem.  Europe could not be a substitute for 
member states' confidence in themselves.  The problem was 
that such confidence was currently lacking. 
 
8.  (C) Asked about relations between "old" and "new" Europe, 
Briatta said France had some problems explaining its 
restrictions on free circulation of labor, especially in 
light of UK willingness to accept new member state workers. 
New member states, he said, were more concerned in principle 
about "second-class status" than immediate economic benefits. 
 But the UK position on the budget had led many new member 
states to realize how complicated Europe was; for example, a 
recent Spanish decision to open its labor market to new 
members in 2006 was motivated to a large degree by the desire 
to offset illegal (Muslim) immigration with European Catholic 
migrants.  Briatta conceded readily that France needed to do 
more to convince its population of the advantages of more 
contact with the citizens of new member states, including an 
opening of France's labor market.  Most French citizens did 
not realize that France was the largest investor in Poland, 
for example.  Interior Minister Sarkozy, he said, was the 
only politician who recognized the need to move forward on 
this front; President Chirac, he said, has candidly explained 
to France's partners that free labor movement was politically 
impossible for the time being. 
 
Romania and Bulgaria 
-------------------- 
 
9.  (C) Briatta termed "bizarre" the Commission report on 
Bulgaria and Romania; superficially it appeared to be a 
warning to the two countries that their accessions might be 
delayed, but the details suggested that accession would 
nevertheless occur on schedule for January 2007.  Indeed, he 
believed that accession would occur on schedule.  He said 
that France favored rapid accession, especially for Romania 
given its large markets and French interest in investing in 
Romania, just as it had in Poland.  (The dimensions of 
Franco-Polish trade and investment -- France is the top 
foreign investor in Poland -- is not widely recognized in 
France or Poland.)  This was a strategic interest for France, 
which was well positioned especially in the areas of public 
works and transportation.  The only problem was the 
association in many minds of Romanians with Roma and crime. 
Bulgaria, on the other hand, was too small and unfamiliar to 
be viewed as problematic, and there were no lobbies either 
for or against Bulgaria in France. 
 
Turkey-Cyprus 
------------- 
 
10.  (C) Briatta said that interest in Turkey had waned since 
the opening of accession negotiations.  He defended France's 
decision to make an issue out of Turkish non-recognition of 
Cyprus prior to the opening of accession talks, arguing that 
the GOF had demonstrated to the parliament and the French 
public (in the wake of France's rejection of the EU 
constitutional treaty) that France could make a difference 
when it chose to do so.  He personally made a point of trying 
to impress on Turks that the key to winning a positive French 
vote in an eventual referendum (Note: now required by the 
French constitution) on Turkish membership would be to 
recognize the Armenian genocide; this was an issue for the 
Armenian diaspora in France, he said, not for Armenia.  It 
was also be important for NGOs interested in torture and 
women's issues to impress upon EU publics that Turkish EU 
membership was the best way to ensure Turkish respect for 
human rights.  This was not a job for the GOF, he insisted; 
too much GOF intervention would only lead to another 
referendum defeat. 
 
11.  (C) Despite France's growing economic interests in 
Turkey, and its long history with Turkey, Briatta lamented 
that mutual understanding between French and Turkish leaders 
remained limited.  (Note:  Without saying so, he implied that 
things had changed with the election of Erdogan and his 
party's less secular vision of government.)  Briatta cited 
the example of a Turkish AKP parliamentarian (with whom he 
had recently met) who did not realize that France was a 
secular state.  He said the Turks had also viewed Chirac's 
call for a "cultural revolution" (in the context of reforms 
needed for EU membership) through the historical optic of 
West European imperialism.  Briatta dismissed an eventual 
role for French companies in promoting Turkish membership 
with the French electorate, citing deep-seated, widespread 
French suspicion of capitalism. 
 
 
Please visit Paris' Classified Website at: 
http://www.state.sgov.gov/p/eur/paris/index.c fm 
Hofmann