EB A/S WAYNE'S MEETING WITH GERMAN EU PERM REP

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 004129

SIPDIS

E.O. 12958: DECL: 09/24/2014
TAGS: PREL IZ TU CY EUN USEU BRUSSELS
SUBJECT: EB A/S WAYNE'S MEETING WITH GERMAN EU PERM REP
SCHOENFELDER


Classified By: Rick Holtzapple, PolOff, Reasons 1.4 (B/D)

SUMMARY
--------------


1. (C) In a September 21 meeting with Assistant Secretary for
Economic and Business Affairs Tony Wayne, German EU Permanent
Representative Wilhelm Schoenfelder observed that Iraq
continues to dominate US-EU relations. While clearly in
Europe's interest to contribute to stabilization,
domestically in Germany it would cause "major problems" to
get involved in-country. On Cyprus, Schoenfelder said it has
been "extremely difficult to get any signs of flexibility"
from the Greek Cypriots. He was optimistic an aid package
could be approved, if no money is spent on "contested
territory" or infrastructure on such land; but was less
confident a trade package could be agreed. On Turkey, unless
penal code reform is completed, the Commission could only
issue a "yes, if..." recommendation on opening accession
negotiations. Despite European public opposition,
Schoenfelder argued the EU had already gone too far to say
"no" -- the choices should only be between "yes" or "yes,
if..." Schoenfelder also shared his views on the EU's top
priorities over the next year. END SUMMARY.

IRAQ
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2. (SBU) Schoenfelder opened the meeting by saying that the
Iraq was still the dominant issue in transatlantic relations,
especially with European public opinion. It was important to
figure out how to change that. He acknowledged that the
transfer of sovereignty to the interim government was
important in addressing this, but that there remained serious
questions about when the Iraqis themselves could assume
responsibility for security and US troops could start pulling
out. It was in everyone's interest to contribute to
stabilizing Iraq, and Schoenfelder pointed to the EU
financial contribution and German efforts on training Iraqis
outside of Iraq. But he added that it would cause "major
problems" for the German government domestically to try and
do any such activities within Iraq.

CYPRUS
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3. (C) Schoenfelder recalled that he had been visited by a
Turkish Cypriot delegation (including the agriculture
minister and mayor of Nicosia) two weeks ago, and they had
made a good impression. He contrasted that with his
experience in the EU Perm Reps' Committee (COREPER),where
his Greek Cypriot colleague was being "extremely inflexible",
clearly on instructions from Nicosia. Schoenfelder
reaffirmed the rest of the EU's desire to end the isolation
of northern Cyprus, but admitted is was proving extremely
difficult, since financial assistance must be unanimously
agreed and legal arguments continued over whether trade
measures would also require consensus. The trade package
remains the more difficult one. Schoenfelder was optimistic
that, if the two pieces were decoupled the aid package could
be approved. But he underlined that even these measures
would be heavily constrained, as there was already agreement
within the EU that this aid would not be spent on
infrastructure projects in "contested territory"; and his
understanding was that as much as 85 percent of northern
Cyprus could fit in that category. He also acknowledged that
the Turkish Cypriots put more importance on the trade package
than on the financial assistance.
TURKEY
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4. (C) Schoenfelder said he understood the Commission's
position was clear, if Turkey did not complete the reform of
the penal code, then the best the Commission could do was to
issue a "yes, if..." recommendation, which could well mean
that the Commission would have to prepare a subsequent report
assessing any such reforms before the Council could take a
final decision on opening accession negotiations. This would
risk a delay in such a decision. Schoenfelder also gave a
rather negative assessment on the value of Turkish accession,
arguing that from the EU point of view it would only cause
great strains institutionally and on such policies as the
Common Agricultural Policy (CAP) and regional funds, and from
the German point of view it would only help stir up extreme
right-wing politics. Nonetheless, he said that the EU had
"passed the point of no return" in 1999 in Helsinki when EU
leaders declared Turkey a candidate country. Turkey would
not be satisfied with an offer of a "special relationship"
with the EU. So EU leaders could not simply say "no," the EU
had already gone too far for that, and Turkey was much too
important to treat that way. While it would be a difficult
decision, Schoenfelder felt the EU would have little choice
but to say either "yes" or "yes, but..." on opening
negotiations. (In subsequent discussions, Dutch and Polish
officials reaffirmed their commitment to push ahead for a
"yes" decision in December.)

EU PRIORITIES FOR THE COMING YEAR
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5. (SBU) Asked by A/S Wayne about key issues facing the new
Commission, Schoenfelder replied that the most important
issues facing the EU right now were not directly within the
Commission's competence. First was ratification of the EU
Constitutional Treaty; "in two years we'll know if we can do
it." Second was agreement on the EU's Financial Perspective
for 2007-2013. He forecast very difficult negotiations.
When A/S Wayne commented that this might present an
opportunity for significant revision of the CAP,
Schoenfelder's response was firm: "nobody will touch" the
agreement of October 2002 made by French President Chirac and
German Chancellor Schroeder setting the terms of CAP spending
for this period. In areas more within the Commission's
realm, Schoenfelder highlighted the Services Directive,
financial markets liberalization, and conclusion of the Doha
Round as top priorities.


6. (U) A/S Wayne has cleared this cable.

SCHNABEL