A/S HILL LAUNCHES STRATEGIC DIALOGUE ON EAST ASIA

C O N F I D E N T I A L SECTION 01 OF 04 BRUSSELS 002203

SIPDIS

E.O. 12958: DECL: 05/23/2015
TAGS: PREL PINS PHUM ETRD XB EUN USEU BRUSSELS
SUBJECT: A/S HILL LAUNCHES STRATEGIC DIALOGUE ON EAST ASIA
WITH EU


Classified By: USEU Pol M/C Kyle Scott for reasons 1.4 (b) & (d)


1. (C) SUMMARY: On May 23-24 in Brussels, EAP A/S Christopher
Hill led an interagency delegation, including representatives
from State, NSC, OSD, JCS, and the intelligence community, in
a meeting with EU Troika officials to launch the U.S.-Europe
Strategic Dialogue on East Asia. A/S Hill also met on the
margins with High Representative Javier Solana and other EU
officials, including key Political and Security Committee
(PSC) Ambassadors. Both sides agreed that the Strategic
Dialogue would be a useful way to share assessments and, if
possible, develop common approaches to "managing" China's
rise. EU officials generally agreed that China's rise was
both an opportunity and a challenge, and that the U.S. and
Europe should engage broadly to ensure China's constructive
participation in a rules-based international system. The EU
welcomed Beijing's engagement with Taiwan opposition figures,
but agreed that it should be expanded to include the
governing party. The EU agreed that China's refusal to
factor in universal values such as human rights in its
external relations was a concern, as was its increasing
dominance in global resource markets. The U.S. and EU both
hoped that an inclusive regional architecture would emerge to
facilitate East Asian cooperation on economic, political and
security issues. The EU remains committed to supporting the
Six-Party Talks over North Korea but will not seek a direct
role for itself. Participants listed para 17. Parallel
meetings were held at NATO and are reported septel. END
SUMMARY

Objectives and Structure
--------------


2. (C) Ambassador Pierre-Louis Lorenz of Luxembourg (EU
Chair) opened by saying the objective of the Strategic
Dialogue was to "deepen trust, clarify security concerns, and
develop a long-term approach to China." A/S Hill said the
U.S. was looking to Europe for a serious discussion of how we
view the political, military and economic trends in East
Asia. The goal was to work together to ensure that East Asia
continues to see the rules-based international system as its
model of choice.


3. (C) EUR A/S Fried said that while the U.S. was a Pacific
power and Europe was not, we both played significant global
roles and had stakes in managing China's rise. We should
sustain and deepen our new Strategic Dialogue, using both EU
and NATO channels; at some point, we should also discuss
Japanese involvement. A/S Fried said we wanted a flexible
dialogue that might branch off with military and other
experts groups, as appropriate. Ambassador Lorenz said the
EU looked forward to continuing the discussion at the SLG,
Political Directors, and working group (COASI) levels, and
agreed that more frequent meetings among experts might be
useful.


4. (C) In a side meeting later, HiRep Javier Solana told A/S
Hill that he hoped this Strategic Dialogue would become an
important mechanism for better transatlantic understanding
about China and the region. "We have become trapped in an
unhealthy debate" over the arms embargo, he said. Solana
asked A/S Hill to "imagine a world in which the EU had
relations free of any sanctions against China." Even in that
case, he said, the EU would want to have a mechanism in place
to ensure that it did nothing to destabilize the Asia-Pacific
region. The Strategic Dialogue would be helpful in that
regard. The EU might eventually open up a similar channel
with Japan, he suggested. Referring to Solana's elliptical
reference to lifting the arms embargo, A/S Hill cautioned the
EU from taking any steps that could damage U.S.-European
relations on an issue of such strategic importance to the
U.S.

Engaging China
--------------


5. (C) After a general review of regional challenges, A/S
Hill said the key factor in all regional issues was China.
China's rise held some promise for the region, but we also
needed to keep our eyes open and be realistic about the
stakes. He said the best way to influence China's rise was
to "treat it like an adult" by engaging broadly with Beijing
and making our expectations clear. We should not soft-pedal
our support of universal values on human rights, democracy
and the rule of law. Nor should we let China think that, for
the sake of economic relations, we would tolerate coercive
behavior toward its neighbors. How we deal with China in the
next generation will determine what China becomes, A/S Hill
said; "it is critical to get this right." Ambassador Lorenz
agreed that "active engagement" with China was important, and
said "we should help China" overcome obstacles because the
stakes were too high to sit on the sidelines. European
Commission China Head of Unit James Moran characterized
EU-China relations as a "mature engagement" that included
everything from trade to nonproliferation. He said the EU
was working on a new contractual basis ("Framework
Agreement") for its relations with China that would, among
other things, require joint commitments on human rights,
counter-terrorism and nonproliferation.


6. (C) UK Asia-Pacific Director Sebastian Wood said he
perceived a "false dichotomy" in the transatlantic dialogue
between engagement and containment of China. But this missed
the point, which was rather for the U.S. and Europe to
"recognize together the inevitability of China's rise,
including militarily." We should decide together on red
lines and goals, Wood said, and then work to shape China's
preferences to ensure that when it does become a military
superpower, it can't just enforce its will on the region. We
were in a "race against time," he added. NSC China Director
Dennis Wilder underscored that U.S. policy on China was not
adversarial and that we were not seeking containment of
China. At the same time, China's behavior toward Taiwan
required the U.S. to maintain a credible deterrent to Chinese
aggression.


7. (C) In a later meeting with representatives to the EU
Political and Security Committee (PSC),French Ambassador
Silvie-Agnes Bermann cautioned that we should be "careful" in
our relations with China so as not to "provoke a backlash."
A/S Hill replied that if we avoided a "values discussion"
with China, its leaders would conclude that all we cared
about was economic benefits. German PSC Ambassador Reinhard
Schaefers agreed that China does not share our values on
things like human rights and nonproliferation. He asked
whether we should "contain them because they're not
calculable," or approach them through "detente and
engagement." A/S Hill said that we should use conditionality
in our relations with China and remain vigilant in defense of
our values. NSC Director Wilder said the U.S. wanted a
prosperous and growing, but also transforming, China.

China-Taiwan
--------------


8. (C) A/S Hill said the U.S. welcomed China's recent
engagement with Taiwan opposition figures but cautioned that
it could backfire if Beijing did not also follow-up with
direct engagement with Taiwan,s elected officials. (HiRep
Solana later agreed that this would be important, especially
as economic and people-to-people contacts have become so
significant in recent years.) NSC Director Wilder said that
while China was clearly maturing in many areas, it still
remained fully capable of falling back on coercion and
nationalism, especially with regard to Taiwan. The situation
was very delicate and the U.S. was in a constant balancing
act of deterring and reassuring both sides. Wilder recalled
how in 1996 the U.S. had to move two carrier battle groups
toward Taiwan in response to intimidating Chinese missile
launches. The humiliation engendered by this U.S. response
led China to conclude that it needed a modern military
capable of preventing the U.S. from interfering if it decided
to threaten Taiwan again.


9. (C) The Commission's Moran asked if there were ways the
U.S. and EU could work together on the signals we send to
Beijing and Taipei. Wilder said we should continue to insist
on a peaceful resolution of the situation. The EU's position
and firmness on the anti-secession law had been very
important, he said, and had taken the Chinese by surprise.
He said it would also be helpful if the EU could support
Taiwan's standing in international organizations. If the
leadership and people of Taiwan get discouraged and think the
international community is against them, they will radicalize
and push for independence. Council Director-General Robert
Cooper agreed, and said he "always found Taiwan reasonable."


10. (C) UK Director Wood said we should consult more on
China's pursuit of sensitive technologies, especially
dual-use items, so that the EU does not inadvertently provide
China with something that concerns the U.S. Such
consultations "seem critical," he said, and would help
European governments make better decisions under the EU Code
of Conduct on arms exports. But it should not be linked to
the arms embargo debate, he added. (NOTE: In the later
meeting with PSC Reps, French Ambassador Bermann delivered
the well-known French position that the Code of Conduct would
be more binding and comprehensive than the embargo, and
indirectly urged the U.S. to be more open to consultations on
these issues. She also doubted that China would ever attack
Taiwan and characterized the 700 missiles aimed at Taiwan as
"just a deterrent" to Taiwan independence.)

China's Regional Relations
--------------


11. (C) A/S Hill said that China's relations with neighbors
were improving but significant problems remained. For
example, China does not share our values on issues like human
rights, governance, or environmental protection and refuses
to raise these issues with countries in the region and
beyond. Overall, this lessens the impact of international
pressure on countries like Burma. China's recent treatment
of Japan was also unhelpful, and probably had more to do with
Japan's bid for a UNSC seat than any historical grievances.
At the same time, A/S Hill said, China's participation in the
Six Party Process had been largely positive and had even
served to improve, as a fringe benefit, U.S.-China bilateral
relations. FCO Far Eastern Group Head Denis Keefe worried
that Sino-Japanese relations were deteriorating and thought
the two had not made enough effort to improve their
relations. Commission U.S. and East Asia Director Richard
Wright said he was encouraged by PM Koizumi's "measured tone"
on tensions with China during the May 2 EU-Japan Summit.

Regional Architecture
--------------


12. (C) A/S Hill said the U.S. supports a regional
architecture that expands cooperation on issues such as
democracy, security, and counter-terrorism and that does not
exclude the U.S. The ASEAN Regional Forum, which includes
the U.S. and EU, seems very promising, he said. Council DG
Cooper agreed that architecture was important, and said that
if the regional "ambiance and architecture" demonstrated that
the way to succeed as a great power was through participation
in a rules-based system, then China's rise would be positive.
He termed China an "unsatisfied power" because of Taiwan and
because it was not the uncontested regional leader. A robust
regional architecture might provide a venue for safely
channeling China's leadership ambitions, he said. The UK's
Keefe said the U.S. and Europe should also examine China's
role in the UN and other global structures to ensure that our
engagement in those fora is consistent with our goals for
China.


13. (C) COMMENT: The EU, which poured its hopes for a
peaceful and prosperous future after WWII into the creation
of a regional architecture to moderate national ambitions, is
naturally drawn to the idea of replicating its experience in
East Asia. In all of A/S Hill's meetings with the EU, the
most consistent subtext was the European faith that regional
integration, through carefully planned architecture, offered
the best hope for a future of peace and prosperity in East
Asia. END COMMENT.

Resources and Trade
--------------


14. (C) Council Policy Unit Asia Head Tomasz Kozlowski asked
whether China was ready to take more responsibility for
constructive international trade and resource management. He
worried about the consequences of China's increasing
domination of resources, especially oil, in places as far
afield as Latin America. He was also concerned that China
was "investing all over the world without asking for any
political concessions in return." NSC Director Wilder said
the U.S. shared some of these concerns, and suggested that we
might set up a sub-group of the Strategic dialogue to explore
such issues.


15. (C) Commission China Head Moran said that China's
behavior and domestic European politics sometimes made it
hard for the EU to stand up to protectionist pressures, as
was now the case with textiles. He recognized the USG faced
the same difficulty with protectionist forces in Congress,
but said it was important that we both "stand up to our free
market principles." Wilder agreed, and said the President
felt strongly about supporting free market principles. But
at the same time, we needed China to be more helpful and to
do a better job with outreach in order to lesson the
constituent pressure on Congress.
North Korea
--------------


16. (C) In his meeting with HiRep Solana, A/S Hill noted that
it had been twelve months since the last round of the
Six-Party Talks. In the meantime, the North Koreans have
harvested more plutonium. The U.S. is considering what steps
would come next if we cannot get the talks back on track
soon. Key to this will be more effort from the Chinese to
use their leverage with North Korea. Solana noted that the
EU policy of supporting the Talks without actually
participating in them remains unchanged. He asked what the
EU could do to help, and A/S Hill suggested the EU keep
talking to the North Koreans about the importance of
returning to the Talks, and about human rights concerns so
that they realize this is a serious concern shared by many
countries.


17. (U) Strategic Dialogue Participants:

-- Luxembourg (current EU President):
Ambassador Pierre-Louis Lorenz, Ambassador for Asia and
Oceania
Georges Friden, Deputy Political Director
Henri Schumacher, Permanent Representation to the EU
Peggy Frantzen, Asia desk, Political Department
Anne Tescher, Asia desk, Political Department

-- UK (incoming EU President):
Sebastian Wood, Director for Asia-Pacific, FCO
James Morrison, Permanent Representation to the EU
Denis Keefe, Head of Far Eastern Group, FCO
(FNU) Hamilton, MOD

-- EU Council Secretariat:
Robert Cooper, Director General for Politico-Military Affairs
Annalisa Giannella, Personal Representative of HiRep Solana
for nonproliferation
Ralph Kaessner, Asia Adviser, Cabinet of HiRep Solana
Tomasz Kozlowski, Head of Asia Task Force, Policy Unit
(desk officers)

-- European Commission:
Richard Wright, Director for US, Japan, Korea, Australia &
Oceania
James Moran, China Head of Unit
Pierre Amilhat, South East Asia Head of Unit
Seamus Gillespie, Head of Unit for Japan, Korea, Australia, NZ
(desk officers)

-- US Delegation:
State EAP A/S Christopher R. Hill
State EUR A/S Dan Fried
State EAP/RSP Director Patricia Scroggs
State EUR/ERA Deputy Director Karen Volker
State PM/DTCP Deputy Director John Erath
State EAP Special Assistant Marc Koehler
State USEU DCM Michael McKinley
State USEU Political Minister-Counselor Kyle Scott
State USEU Poloff Van Reidhead
State USEU Poloff Margaret Diop
State Emb. Luxembourg Poloff Julie Breitfeld
NSC China Director Dennis Wilder
NSC Europe Director Tracy McKibben
DOD/OSD China Director David Helvey
JSC J-5 for China-Taiwan Lt. Col. John Anderson
Acting Dep. National Intelligence Officer for Asia Michael
Vance

(U) The EAP Front Office has cleared this cable.

Schnabel
.