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 .