WHAT HONEYMOON? PM CLARK'S NEW COALITION SHOWS

C O N F I D E N T I A L SECTION 01 OF 02 WELLINGTON 000902

SIPDIS

STATE FOR D (FRITZ),EAP/FO (STEPHENS) AND EAP/ANP
NSC FOR VICTOR CHA
SECDEF FOR OSD/ISA ELIZABETH PHU
PACOM FOR J2/J233/J5/SJFHQ
AIT FOR DAVID KEEGAN

E.O. 12958: DECL: 11/21/2015
TAGS: PGOV PREL NZ
SUBJECT: WHAT HONEYMOON? PM CLARK'S NEW COALITION SHOWS
SOME STRAINS

Classified By: DCM DAVID BURNETT,
FOR REASONS 1.4 (B) AND (D)


1. (C) SUMMARY: Less than two months into her new
Government, the local press has quoted PM Clark's coalition
officials as contradicting each other over foreign policy,
notably whether or not New Zealand needs to repair its
relations with the United States. (Foreign Minister Peters
says yes, Clark and Defense Minister Goff say no.)
Conflicting media signals are unusual from those under
Clark's command, and reflect the unprecedented arrangement
that has put opposition politician Peters nominally in charge
of foreign policy. The reports come on top of a bad week for
the PM that has seen her Finance Minister slammed for
resisting the tax cuts recommended by the bureaucrats who
work for him. But Clark is a master at management and is
unlikely to lose control of her party or government any time
soon. Meanwhile, the Embassy is taking seriously Peters'
attempts to reach out to us, and will be looking for ways to
leverage his efforts. END SUMMARY.


2. (C) Hints of trouble with Clark's new coalition began
with New Zealand media reports that during his first trip to
Australia as foreign minister, Peters had asked Australian
Foreign Minister Downer for help in improving the US-New
Zealand relationship. Peters denied asking for Downer's
help, and claimed he had been misquoted by the Australian
journalist who reported the story. Peters did, however, tell
NZ reporters that that New Zealand should look to improve its
relationship with traditional allies, including the United
States. He highlighted as an opening former Ambassador
Swindells' July 4 speech calling for a comprehensive
discussion about the relationship. Clark promptly told the
press that there is nothing in the US-NZ relationship that
needs fixing.


3. (C) The story resurfaced again on the margins of the APEC
meetings in Busan last week, when Defense Minister Goff
reportedly told the press that Downer had asked him to
explain who was speaking for New Zealand foreign policy.
Peters, meanwhile, told the press he had explained his role
fully to Downer. He also claimed to have asked Downer to
help New Zealand in its relationship with the United States,
and Downer was quoted in the media as having agreed. ("I'll
definitely be putting in a good word for New Zealand during
the course of this week with the Americans.") But this
putative accomplishment was sidelined by Downer telling
reporters that although he and Goff are good friends, he was
"a bit surprised" to hear that Goff had told the NZ press
about his inquiries. This admission also effectively drowned
out Peters' later claims that he had had a good conversation
with Secretary Rice.


4. (C) The NZ press, which has a testy relationship with
Peters, promptly seized on Downer's questions to Goff as
proof that the governing arrangement that leaves Peters out
of Cabinet and free to criticize Labour on issues outside his
portfolio is unworkable. For his part, Peters, who loathes
the NZ press, has stormed out of press conferences and called
the NZ Herald "treasonous" for having questioned his
authority on foreign policy during the Busan meetings. (FYI:
Peters also told Pol-Econ Couns earlier that the NZ press are
all Marxists and will never report honestly on anything he
does.)

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COMMENT
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5. (C) It may be that tensions between Peters, Goff, and
Clark are being overstated by the NZ media. For his part,
after returning to New Zealand Goff disputed press coverage
of his remarks, chalking the misreporting up to "bored
journalists trying to justify their airfares." He denied any
tension between himself and Peters, and said the media was
"hounding" Peters, whom he classified as capable of handling
the foreign affairs portfolio. Goff also claimed that he had
told FM Downer that the Government's arrangement with Peters
was akin to having his mother-in-law living nearby in her own
apartment, in that he got along with her but it was important
for everyone to have his or her own space.

6. (C) We believe, however, that there is genuine tension
between Peters and the rest of the Government. The coalition
arrangement that leaves Peters free to criticize Labour on
issues outside his portfolio is a recipe for problems, since
areas such as defense, trade, and immigration are closely
entwined with overall foreign policy. The grayer the areas
of distinction, the greater the chance of conflict between
Peters and his Cabinet colleagues -- especially Goff and PM
Clark -- in the weeks and months ahead. Add to this
structural tension Peters himself: as we have previously
reported, he is mercurial and often difficult to get along
with. National leader Don Brash recently told Pol-Econ Couns
that he was not altogether sorry not to have been able to
form a coalition government, because "Winston Peters really
is a nutter." It will be entirely in Peters' character to
push the Government on issues he cares about, and in a very
public way. For his part, Goff may be positioning himself as
the next Labour Party leader by attacking Peters, as the
party caucus is reportedly livid that Clark made Peters
Foreign Minister.


7. (C) PM Clark has been on travel, but has already begun to
try to recast Peters' remarks, calling him a "moderate." She
also claims that Peters is saying less on defense and trade
issues than he had before joining the Government. Clark is
a skilled manager, and it is unlikely that she will lose
control of her Government or party any time soon over Peters'
defections from the Labour line. Nevertheless, Peters'
unpredictability will put even the Prime Minister's
considerable spinning skills to the test. These first
dust-ups are also coming at a difficult time for the PM: a
Treasury report recently called on the Government to
implement broad tax cuts, a policy Labour specifically
rejected during the elections. The sudden death of Green
Party co-leader Rod Donald has also cost Clark a pragmatic
ally with both the Greens and the more leftist elements in
her own party. Nor will she ever be able to sweep her Peters
problem completely under the rug: National is keen to drive a
wedge between Peters and the rest of the Government, and will
use any chance to fan the flames. National MP (and former
WTO Ambassador) Tim Groser told DCM that he, National Foreign
Affairs spokesperson Murray McCully, and former diplomat John
Hayes are caucusing regularly to discuss how to embarrass
Peters, and through him, the Government.


8. (C) We believe that Peters is genuinely interested in
improving bilateral relations with the United States, and
during his introductory meeting with Ambassador McCormick
last week he made clear this was a priority. (FYI: Peters
purposely made sure that Ambassador McCormick was the first
Ambassador he met with as Foreign Minister.) The Embassy
will seek ways to leverage this interest, keeping in mind
that the real reins of power on foreign policy will remain
firmly vested with PM Clark and, to some extent, Minister
Goff.
McCormick