EU BUDGET, ENLARGEMENT TOR PRIORITIES FOR SLOVAKIA

C O N F I D E N T I A L BRATISLAVA 000959

SIPDIS


E.O. 12958: DECL: 12/05/2015
TAGS: PREL ECON EU LO
SUBJECT: EU BUDGET, ENLARGEMENT TOR PRIORITIES FOR SLOVAKIA

REF: STATE 217518

Classified By: DCM Lawrence R. Silverman for reasons 1.4 b and d.


1. (C) Pol-Econ chief presented reftel points to Zuzana
Dutkova, Division of European Affairs at the Slovak Republic.
Dutkova did not comment on the points. Rather, she said
Slovakia's absolute priority is to get an EU budget passed.
Slovakia has been willing to compromise, even to the point of
angering some of its V-4 neighbors, because it sees the
passage of the budget and the mechanism for disbursing funds
as more important than preserving the total amounts now
proposed for the new member states. They also want to work
with UK PM Blair (with whom they largely agree on budgetary
issues),rather than publicly criticize him.


2. (C) Milan Jezovica, foreign policy advisor to Prime
Minister Dzurinda, told the DCM December 5 that the Slovaks
have indeed taken a more pragmatic view of the issue, based
on wanting Tony Blair to succeed. Jezovica said the EU needs
to get the budget passed, and Slovakia is skeptical the
Austrians could do it under their presidency. He related
that at the meeting with Blair in Budapest last week, the
Czechs and Hungarians put up a fight and then backed off; the
Poles did not relent. (Comment: We note that the Czechs
appear to have accepted Blair's 12/5 compromise, but the
Poles and Hungarians continue to oppose.) The Slovaks are
opposed to the Polish approach and stance. Dzurinda did not
want to make a scene at the press conference on Friday, so he
did not show a public difference with the Poles. However,
the Slovaks say that, unlike their V-4 neighbors, they do not
want to cut off their nose to spite their face. Joszef
Berenyi, MFA State Secretary in charge of EU affairs,
provided an analogy to the DCM (and the press): If someone
offers you 10,000 euros to row across the Danube, do you take
the risk, not really knowing whether you'll survive or get
paid even if you do? Or do you cross the river via the
bridge for 10,000 euros, knowing that when you get to the
other side, the guy is only going to pay you 9000? You
should cross via the bridge and take the 9000, because you're
much more likely to be able to collect.


3. (C) Jezovica said that, unlike his counterparts, Dzurinda
had decided to focus on accessibility to the funds, rather
than fixating on the amounts (which Slovakia predicted would
be cut in any case). Berenyi, who is also a Blair fan, was
more specific. The Slovaks asked for non-monetary
concessions from Blair and the EU in exchange for going along
with some cuts:

-- Raising the maximum proportion of each project that could
be financed with EU funds from the current 75% to 85%, at the
discretion of the recipient country;

-- Allowing funding to be used for housing, something now
prohibited by the EU. This would help the GOS fund the
housing for Kia-related employees in Zilina;

-- Lengthening the time period of grants from 2 to 3 or 4
years. Berenyi said the funds remaining after 2 years have
to be repaid if they have not been spent yet; and

-- A refund of VAT, which would be particularly valuable to
the regions and towns.


4. (C) On December 1 we learned that Slovakia had refused
join other new member states in signing a letter to Blair.
Jezovica clarified this decision within the GOS. Originally,
the V-4 (including Slovakia) agreed to do a relatively mild
open letter on the issue as an op-ed piece, but the Financial
Times, after getting more information via leaks from some
governments, no longer considered the open letter newsworthy.
When this failed, the ten new member states put together a
sharper private letter, reportedly at Polish and Czech
urging. The Slovaks declined to sign this letter, not
wanting to "slap Blair in the face before hearing from him"
in Budapest, according to Jezovica. He added that the
Slovaks had tried to calm down the Poles before the Budapest
meeting, but the Poles and Czechs "seem to see us as
traitors" on this issue.

Enlargement a Top Priority
--------------


5. (C) Regarding the agenda for the December 12 GAERC,
Dutkova said enlargement was a priority for Slovakia. Some
members, such as France, want to link the enlargement process
to ratification of the constitutional treaty and the budget.
However, for Slovakia enlargement is a separate, important
issue for the EU to deal with. The GOS sees potential EU
membership as an indispensable motivating tool for reform in
the Balkans and Ukraine, particularly. Dutkova called Prime
Minister Dzurinda's November statement in Germany, when he
spoke about the EU taking a pause from enlargement, an
"unhappy interpretation." That statement was not

representative of Slovakia's policy.

VALLEE


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