VISIT OF EUR PDAS CHARLIE RIES TO THE HAGUE

C O N F I D E N T I A L SECTION 01 OF 05 THE HAGUE 002959

SIPDIS

EUR FOR PDAS RIES
STATE PASS TO USTR FOR NOVELLI

E.O. 12958: DECL: 11/21/2013
TAGS: PREL ETRD ECON PTER NL
SUBJECT: VISIT OF EUR PDAS CHARLIE RIES TO THE HAGUE

REF: STATE 318789

Classified By: Ambassador Clifford Sobel for Reasons 1.5 b & d

Summary
--------------

1. (C) During meetings in The Hague November 19-20 in advance
of the Dutch EU presidency (July - December 2004),EUR PDAS
Ries stressed the importance of
early and close U.S.-Dutch consultations to avoid surprises
and needless conflicts. On specific areas of potential
cooperation, Ries pushed for improvements in the way the EU
handles terrorist finance issues, discussed possible common
U.S.- EU interests in the area of deregulation and expressed
the USG's interest in further cooperation on security and JHA
issues in light of recent progress on CSI and PNR. Dutch
officials welcomed the idea of improved US-EU consultations,
noting the importance the Netherlands has traditionally
placed on solid transatlantic relations. They also stressed
their close collaboration with the Irish on the two
countries' presidencies in 2004 and speculated that the
various institutional changes the EU would undergo next year
- a new parliament, a change in the Commission, ten new
member states, and the impact of the new constitution - might
give the holder of the presidency greater room for maneuver
in some respects, while hampering it in others.


2. (C) On Pillar 2 issues, the Dutch welcomed the U.S.
initiative to promote democracy in the greater Middle East
and commented on the sensitivity of the decision on whether
to start accession negotiations for Turkey, a decision to be
taken by the end of next year. They reiterated their
interest in making good transatlantic relations a focal point
of their presidency, and cited other possible areas of
cooperation, including Africa and the Russia near abroad.
Both the Dutch employers' association and economy ministry
expressed their strong interest in getting Dutch business
more involved in Iraq, including access to USG contracts,
while a senior finance ministry rep noted the difficulty that
Minister Zalm had had in trying to pry development assistance
money away from MFA's development minister for the Madrid
donors' conference.


3. (C) Dutch officials agreed with Ries that, following the
assessment of the Justice/Home Affairs Tampere Agenda in the
Irish semester, they had an opportunity to shape EU border
asylum, and law enforcement policies in the years ahead.
Dutch officials expressed willingness to hold bilateral
discussions on the US-EU security and border control agenda.
On other current issues, Ries was pressed on steel and FSCs,
although, on the latter, ICS Economics Ministry DG Bruinsma
said that the Netherlands would oppose the Commission's plan
for automatic retaliation starting March 1. The Finance
Ministry also raised the bilateral tax treaty negotiations,
commenting that as such a good friend the U.S. and major
investor, The Netherlands should enjoy the same advantages
as Japan, Mexico, and the UK.
End summary.

MinFin Treasurer-General van Dijkhuizen
-------------- --------------

4. (SBU) In a meeting with the top civil servant in the
Ministry of Finance, Treasurer General Cees van Dijkhuizen,
Ries and van Dijkhuizen agreed that the transatlantic
financial relationship has been steadily improving with
issues such as corporate governance and accounting standards
that had initially caused tension now on the path to
resolution. Ries noted that the USG was looking forward to
working with the Netherlands during its upcoming EU
presidency. Noting the Dutch desire to promote
implementation and enhancement of the Lisbon agenda during
its presidency, Ries offered that the United States would be
interested in exploring the possibilities of a "transatlantic
Lisbon" that explored cooperative ways to promote innovation
and productivity.


5. (SBU) Van Dijkhuizen agreed there was potential for
working together but cautioned that the Commission and some
member states were sensitive about working too closely with
the USG - some had in the past even objected to using the
United States as a point of comparison. He mentioned that a
process for discussing liberalization and deepening of
financial services trade (building and expanding on the OECD
barriers study) might be a forum for cooperation and offered
that Finance Minister Zalm had already raised the issue with
UK Chancellor Brown. Van Dijkhuizen also pointed out that
the possibility for new initiatives during the Dutch
presidency would be limited by the lame duck Commission and
brand-new European parliament.


6. (C) Ries reiterated the points in the Secretary's letter
to EU Foreign Ministers on designation of Hamas-related
charities (reftel) emphasizing that for the flow of Hamas
funds to be cut off, Hamas financiers need to be shut down.
Commenting on the issue of designations more broadly, Ries
emphasized the importance of the EU designating more quickly
and effectively. He noted that some EU members are requiring
a higher standard of evidence for designation than is called
for in UNSCR 1373 and the internal EU requirement for
unanimous consent in the case of designations has hamstrung
the entire process. Ries asked whether a better but more
compartmentalized flow of intelligence information might go a
long way toward addressing the current problems. DCM added
that provisions for appeals might also speed up the
designation process. Van Dijkhuizen indicated the Dutch
support the EU having a robust and effective designation
process and expressed interest in the idea of a technical
committee to review intelligence and make recommendations to
the clearing house. However, he noted the many obstacles in
the way of improvements including the multiple bureaucracies
involved in each member state and the EU requirement for
unanimity on third pillar issues. He welcomed the U.S. and
Netherlands keeping in touch on this issue and continuing to
exchange ideas on possible solutions. He subsequently
proposed a meeting to discuss clearinghouse designation
processes to include other relevant Dutch ministries.


7. (U) Ries asked van Dijkhuizen to keep a close eye on the
development of the EU chemicals directive (REACH) noting that
enactment of the draft directive in its current form would
present obstacles to economic growth, burden business, and
cause tremendous job loss. Van Dijkhuizen noted that a Dutch
priority both domestically and in the EU is to reduce
unnecessary regulatory burdens and red tape.


8. (U) Van Dijkhuizen noted the importance of successful
completion of bilateral tax treaty negotiations pointing out
that Japan and the UK already have more favorable tax
treaties with the United States than that being negotiated
with the Netherlands. He noted that the Netherlands planned
to raise this at the political level. The Ambassador noted
that another bilateral negotiating session has been planned
for December and that we were hopeful on the possibilities
for progress.


9. (C) Van Dijkhuizen apologized for the "paltry" Dutch
financial contributions to Iraq construction noting that the
Finance Ministry was in favor of increasing the amount, but
is blocked by the Development Cooperation Minister. He said
Minister Zalm would continue to press his colleague, Minister
van Ardenne, on this issue.

MFA State Secretary Nicolai
--------------

10. (C) MFA State Secretary Atzo Nicolai, who holds the title
of Minister for European Cooperation when abroad, told Ries
that the Dutch were cooperating closely with the Irish on a
common program for 2004, to be unveiled in early December, as
well as with the subsequent four presidency countries on a
more integrated multi-annual plan of action. Both the Irish
and Dutch would emphasize reinvigorating the Lisbon agenda,
on which little has been accomplished, in the Dutch view.
Ries commented that he had recently met with a group of MEPs
on a broad range of issues, but the one that had most engaged
them was deregulation - and specifically the US experience in
evaluating and analyzing proposed regulatory actions.
Regarding the next EU budget cycle, Nicolai said that a top
Dutch priority would be to reduce the Netherlands' net
contribution in relation to GDP, which is twice that of
Sweden, the second-highest net payer. He also noted that the
Netherlands has always been one of the strongest supporters
of CAP reform and reducing agricultural subsidies. While
acknowledging the Netherlands' financial pressures, Ries also
expressed the hope that the next EU budget would provide
adequate funding for foreign affairs issues, the need for
which has just been made clear by Iraq.


11. (C) Nicolai said that the institutional changes in the EU
and Commission in '04 would provide the Presidency with some
latitude, but that the lame duck commission and other factors
would be obstacles. EU enlargement would also be a major
preoccupation during the Dutch presidency, Nicolai commented,
with negotiations progressing with Romania and Bulgaria and
increased attention being given to the candidacy of Croatia.
Turkey would present a particularly difficult and sensitive
issue, however. If the Commission's evaluation of Turkey's
performance against the Copenhagen criteria were unambiguous,
it would of course simplify the decision on whether to begin
formal negotiations, due to be taken by December 2004. But
in the more likely case that the Commission's report proves
to be inconclusive, the decision would be much more difficult
and sensitive, also because of domestic political concerns.
With regard to Cyprus, Ries suggested the possibility of a
'virtuous circle' - i.e., that a suggestion from the EU that
progress toward a Cyprus settlement would be rewarded might
encourage such a step from the Turks. Nicolai responded that
a Cyprus settlement would be necessary but not sufficient for
the EU to start negotiations with Turkey and that Turkey
would need to recognize Cyprus. It would be inconceivable for
an EU member state not to recognize another member state.


12. (SBU) On other, more current issues, Ries noted that the
US and EU were close to an agreement on PNR, were making good
progress on Galileo in The Hague this week, and had just
initialed a CSI agreement the previous day in Brussels. He
emphasized the importance of getting that agreement ratified
more quickly than the six weeks estimated by the Commission
in order to proceed with bilateral deals, most notably with
Greece, in view of the upcoming Olympics.

MFA Deputy Political Director Schaper
-------------- --

13. (SBU) Over a luncheon hosted by the Ambassador on second
pillar issues with senior MFA officials headed by deputy
Political Director Herman Schaper, Ries commented in more
detail on the consensus reached the previous day in Brussels
between the Secretary and the 25 foreign ministers of the
enlarged EU on an improved process of US-EU policy planning
consultations. Ries said that it would be important to have
a mix of policy planners with operational people in order to
make the process effective, but the precise modalities of
such consultations were still to be determined. Regarding the
Dutch Presidency, he commented that, based on his experience
the most effective presidencies were those that took
responsibility to get things done, and that were open to
regular, quiet consultations with the U.S. that made it
possible to prefigure mutually acceptable outcomes.


14. (C) On specific country and regional issues, Schaper said
that the Netherlands was very open to U.S. ideas on the
greater Middle East and wants to stimulate thinking within
the EU about promoting reforms in the Arab world. The EU
should be looking at putting together programs to support
building civil society, internal development, advancing human
rights, assisting NGO's and improving the status of women.
The Dutch plan to host an EU seminar on religion and politics
in Tunis during their presidency. Ries noted that the US is
looking at what we could put forward on behalf of the greater
Middle East at the G-8 and the US-EU Summits. He noted also
that some have floated the idea of an OSCE-like institution
for the Middle East, but stressed that it was vital that the
international community not get bogged down in process to the
detriment of our substantive goals. In a brief discussion on
Iraq, Schaper raised the possibility of a special role for
Max van der Stoel in drafting the fundamental law (The Hague
2915).


15. (C) On other issues, Schaper said that Africa was a
special priority for the Netherlands, which is engaging in a
new effort to better integrate political and developmental
concerns. On Turkey, Schaper reiterated Nicolai's concerns
about the sensitivity of the enlargement decision, noting in
particular that the Cold War sense of strategic alliance with
Turkey in the Netherlands was giving way to more awareness of
cultural differences. He added that while there is resistance
in the cabinet to Turkish accession, new Dutch FM Ben Bot had
served as Ambassador in Ankara and thus would bring a special
degree of insight to the issue. Schaper said that the
Moldova situation demonstrates that Russia is "locking down"
again on its near-abroad, even as it relinquished its
traditional role in the Balkans. Schaper also raised the
issue of the EU assuming the NATO mission in the Balkans. He
suggested that benchmarks and a timetable might be developed,
particularly since the security situation went hand in hand
with EU discussions about an association pact. On security
issues, Ries cited the MLAT agreement, the initialing of a
CSI deal, and good progress on PNR and Galileo as evidence of
US-EU cooperation. Schaper agreed that the US and EU had made
some progress on important issues and showed interest in
moving forward "Third Pillar" issues in '04. On terrorist
finance, Ries noted the difficulties caused in the
designation process by the EU's rule of unanimity, and by the
evidentiary standards demanded by some member states,
requirements that went beyond those established in Security
Council resolutions.

Meeting at Business Association
--------------

16. (U) Chris Oudshoorn, director of economic issues at the
employers' association VNO-NCW, told Ries that his group was
working with its Irish counterparts in advance of the two
presidencies next year. The joint goal of the business
groups is to push their respective governments into moving
ahead on the Lisbon agenda by improving the regulatory
climate for business and completing the single market,
especially in services. Asked about the draft chemicals
directive, Oudshoorn commented that his group thought that
the revised draft was still too burdensome. Dutch business
is cooperating with business groups in Germany, Britain, and
other countries to get the directive amended further,
particularly in the direction of prioritizing its
requirements on the potentially most dangerous substances.
He reported that he had just met with the Dutch government
and was preparing a study for it on the real impact of the
directive on Dutch business. Oudshoorn estimated that the
actual burden imposed by the draft directive would be ten
times the Commission's estimate of 2.5 to 5.0 billion euros.


17. (SBU) Asked about Dutch business's interest in Iraq
reconstruction, Oudshoorn reported on his group's creation of
a 'Task Force Iraq' and on its fact-finding mission to the
region in September, a mission led by Economics Ministry
Director General Bruinsma. He expressed considerable
frustration about what he saw as the lack of support for
Dutch business interests from the MFA, where what he called
'developmental fundamentalism' reigned - i.e., a strong
preference for untied aid and assistance through multilateral
institutions. DCM advocated that Dutch business get active in
Al Mutana province, where the Dutch peacekeepers are located,
starting small so as to be able to build on demonstrated
success stories. Oudshoorn was also interested in the new
U.S. aid package for Iraq and queried Ries as to what access
there might be for companies from other countries,
particularly those with troops on the ground. Ries replied
that the lawyers had looked at the possibility of some sort
of preferential access for coalition partners but had
decided that that would violate WTO rules. He noted instead
that Iraq's own oil revenues were rising steadily and
commented that companies that got into the market early would
be best positioned to take advantage of the opportunities to
come.

Economics Ministry DG Bruinsma
--------------

18. (C) At the Economics Ministry, Director General for
International Affairs Dirk Bruinsma reported that Economics
Minister Brinkhorst, who had been a vice-chair at Cancun, was
very interested in restarting the Doha negotiations.
Minister Brinkhorst would be traveling to several Asian
countries - including Japan, China, India, and Malaysia - in
early 2004 and would push Doha at each stop. Bruinsma
commented that trade disputes such as steel, FSCs, and now
China were not sending the right signal to get Doha back on
track. He added, however, that the Netherlands would oppose
the Commission's automatic retaliation plan in the event that
the FSC problem is not settled to the Commission's
satisfaction by March 1.
Bruinsma said the Dutch presidency would convene an EU-Asia
economic ministerial in Rotterdam and a Euromed trade
ministerial in Turkey in fall '04. Bruinsma also expressed
support for the "rebirth" of the trans-Atlantic business
dialogue (TABD) and particularly the initiative on financial
services.


19. (C) Regarding the upcoming December WTO meeting in
Geneva, he reported that the 133 Committee would meet on
November 28 to review the Commission's negotiating position,
which would be followed by a December 2 discussion by member
state trade ministers. Bruinsma thought that the Commission
would continue to press for two of the four Singapore issues,
trade facilitation and transparency in government
procurement, but that investment and the environment would be
put off until later. Asked if a new negotiating mandate
would be necessary, Bruinsma said that the Commission
continued to operate on the basis of the November 1999,
pre-Seattle, mandate, since attempting to amend that mandate
would open up a Pandora's Box of unwelcome possibilities.


20. (U) On Iraq, Bruinsma reported that he had gone into
Baghdad in September on the margins of the VNO-NCW's trade
mission to the region. Some 700 Dutch companies had
registered their interest in getting involved in Iraq
reconstruction - some, now, as subcontractors to U.S.
companies, while others, notably Shell, were waiting to do
business with the new Iraqi government to be established next
year.

Justice Ministry DG Visser
--------------

21. (SBU) In a meeting with Ministry of Justice Director
General for International Affairs Rob Visser, Ries reviewed
recent positive US-EU developments on justice and home
affairs (JHA) issues such as cooperation agreements with
EUROPOL, and the recently concluded US-EU MLAT and
extradition treaty. Ries mentioned better terrorist
financing regulation, better coordination of border
management and security issues, cooperation with third
countries on CT issues, enhanced police cooperation on
synthetic drugs, and joint action on child pornography, TIP
and a Balkan witness protection program as possible areas for
further U.S.-EU cooperation on JHA issues. Noting that the
"third pillar" initiatives are largely presidency-driven,
Ries urged the Dutch side to help us understand what might be
possible to achieve in terms of integrating in the EU's
border control reforms, 3rd country cooperation, and law
enforcement.


22. (SBU) DG Visser said JHA issues would be one of the main
focuses of the Dutch presidency. He had already discussed
with the MFA the need to keep transatlantic considerations in
the mix. The 1999 Tampere Agenda review during the Irish
presidency opens the door for the Dutch to begin charting a
new agenda and the GoNL wants to factor US policies and
equities into the planning. The Dutch are interested in
biometric standards, asylum and migration issues (which are
increasingly supranational),and border control issues. Law
enforcement and police/justice affairs tend to "move at a
slower speed," but Visser said there was scope for EU-wide
measures. He noted that if the new EU constitution is
approved, the disappearance of pillars will give the Dutch
the opportunity to help form the structure that will guide
law enforcement and border security issues for the next 5-10
years.


23. (SBU) Ries agreed the EC and EU changes allowed for
creativity in addressing security issues and indicated U.S.
interest in joining with the Dutch in such forward thinking.
Ries and Ambassador Sobel discussed the possibility of
bringing together both policy and operational personnel (DHS,
Justice, State) with the Dutch for a fresh look at these
issues. Visser said he was interested in a bilateral meeting
with US experts on the JHA agenda in the runup to the
presidency. The Ambassador also suggested that it might be
helpful for Visser to visit Washington to meet with people on
these issues. Visser said he was interested and promised to
continue planning with US officials. Ries concluded by
saying that the work of the Dutch Presidency in these areas
could set out policy lines with an important impact in 2005
and beyond.













SOBEL