GERMANY'S EU PRESIDENCY - LOOKING AT THE ECONOMIC

C O N F I D E N T I A L SECTION 01 OF 03 BERLIN 002782 SIPDIS SIPDIS EUR/AGS, EUR/ERA, USTR FOR MMOWREY, SDONNELLY COMMERCE FOR PENELOPE NAAS E.O. 12958: DECL: 09/19/2016 TAGS: ECON ENRG GM PGOV PREL EU SUBJECT: GERMANY'S EU PRESIDENCY - LOOKING AT THE ECONOMIC AGENDA REF: BERLIN 1993 Classified By: Classified by EMIN Robert F. Cekuta for reasons 1.4(b) a nd (d). ¶1. (SBU) The American Chamber of Commerce EU's meetings on September 13 and 14 with officials responsible for Germany's EU presidential agenda at the Ministry of Foreign Affairs, Ministry of Economics and Chancellery provided a comprehensive preview of Germany's EU presidency economic agenda. Germany plans to split the focus of its presidency into two parts with the first three months concentrating on economic and political issues, i.e. economic competition and the internal market, in addition to the political agenda -- a re-energized Neighborhood Policy, strengthened relations with Central Asia, and a new Partnership and Cooperation Agreement with Russia -- reported reftel. Within these two themes, Chancellor Merkel intends to focus on better regulation and energy. The second part of Germany's EU presidency will focus on moving the EU's constitution forward. The Berlin celebration of the 50th anniversary of the Treaty of Rome will kick off Germany's efforts to revisit the question of the EU constitution. According to Dr. Uwe Corsepius, Director General for European Policy at the Chancellery, Chancellor Merkel intends to work this issue bilaterally with EU member states rather than through Brussels. End Summary -------------- -------------- The German Presidency - A Presidency in Two Parts -------------- -------------- ¶2. (SBU) The visit of the American Chamber of Commerce EU's advocacy group for the EU presidency included meetings with officials from various ministries -- MFA, Economic, Finance, the Chancellery, Agriculture, and Environment -- responsible for formulating Germany's EU presidency agenda. According to officials at the MFA and Chancellery, Germany plans to divide its presidency in two parts, the first part focusing on economic competition and the internal market; the second part focusing on EU constitutional reform. Dr. Uwe Corsepius, Director General for European Policy at the Chancellery, said the spring European Council meeting March 8-9 would highlight issues falling under economic competition and the internal market, namely energy and better regulation. Germany will then use the 50th anniversary celebration of the Treaty of Rome, which will take place in Berlin March 25, 2007, to kick off the second part of its presidency, which will address reforming the EU Constitution. As German officials envision the event, the declaration issued at the Berlin celebration will underscore EU values and will focus on what kind of European Union leaders envision for the future, laying the groundwork for EU constitutional reform. -------------- Agenda - "Less is More" -------------- ¶3. (SBU) Corsepius said Germany's approach to its presidency would differ slightly from other EU presidencies by using the principle of "less is more" to guide the formulation of its agenda. Corsepius stated Germany deliberately chose a limited number of topics where heads of state can play an active role and actually make decisions, rather than going down the road where issues are discussed by a cast of thousands with nothing coming to fruition. By limiting the agenda items and access, the German government hopes heads of state can achieve substantive results in Council meetings. -------------- -------------- Economic Priorities - Energy and Better Regulation -------------- -------------- ¶4. (SBU) Officials at each ministry stressed the importance Germany places on energy as part of its focus on internal market issues. Corsepius noted that Germany, until recently, had approached energy policy as exclusively a national sovereignty issue. However, the German government has recently come to see a need to deal with certain aspects of energy policy in a broader EU context. Corsepius said there are some areas where legislation/regulation at the EU level dealing with energy security would make sense. Other areas he mentioned for possible EU-level cooperation are energy efficiency, renewable energy sources, non-CO2 emitting engines, and energy market competition. (Note: Although guarded in his overall assessment of what Germany can realistically achieve in terms of deliverables for the U.S.-EU Summit, Corsepius mentioned renewables as an area where the U.S. and EU could make "progress, even if it's only a small amount." End Note.) He stated Germany is preparing an energy strategy to be issued in March 2007, and there will be a review of energy policy in March at the European Council meeting. ¶5. (SBU) Germany plans to address the EU internal market in the context of globalization and investment, according to Peter Tempel, MFA's Director General of European Policy, and to State Secretary Joachim Wuermeling, who handles Germany's EU presidency at the Ministry of Economics. Both officials stressed Germany would, through its presidency, take the opportunity to convince a skeptical public of the benefits of globalization, with Tempel noting that officials realize EU can only play an equal role on the world stage if it can compete economically. Therefore, officials stressed the importance of Germany communicating an EU strategy for globalization. This effort means actively engaging on topics like innovation, competition and working to fulfill the goals set out in the Lisbon Agenda. ¶6. (SBU) Better regulation is the linchpin to achieving more competition, innovation and sustained economic growth, according to officials in all AmCham EU's meetings with the various ministries. Chancellery officials noted Germans had a general feeling of over-regulation and lack of understanding of what Brussels does that benefits them. In order to win back citizens' trust, Germany wants to reexamine the level and costs of EU regulation on its citizens and economy, using Germany's own initiatives in this area as a guide. Corsepius suggested that these efforts would include looking at how to manage better information costs, i.e., what information could be harmonized and electronically catalogued. However, he acknowledged that making substantive changes -- "getting beyond nice speeches" -- would prove a challenge. -------------- Constitutional Reform Efforts -------------- ¶7. (SBU) The EU constitutional reform efforts will be the focus of the second half of Germany's EU presidency. German officials see the presidency as an opportunity to lead the debate on the future of the EU, with constitutional reform playing a central role in this process. According to Corsepius, Germany's efforts to tackle one of the EU's most complex issues are best served by a "capital-based approach." In other words, rather than allowing EU institutions into the decision making process, members need to keep discussions government-to-government. -------------- Intangibles -------------- ¶8. (SBU) German officials admit events beyond Germany's control, i.e., elections in other member states or a crisis in the Middle East, can easily hijack Germany's agenda for its EU presidency. Officials also attempted to draw a clear line between the EU presidency and Germany's G-7/8 presidency; while admitting maintaining parallel presidencies would prove challenging. According to State Secretary Wuermeling, Germany's goal is to have EU and G-8 issues complement, rather than contradict each other. Wuermeling pointed to IPR, innovation, energy and demand for raw materials as examples of Germany's efforts to put forth complementary issues in both fora. -------------- Comment -------------- ¶9. (C) Germany's agenda for the EU presidency is shaping up to be a bifurcated one -- one with a clearly defined, yet limited number of issues on the economic or technical front and another which is decidedly ambitious, though ambiguous, in its attempt to restart the EU's constitutional reform. Germany sees the EU presidency as an opportunity to put its stamp on how the EU addresses globalization and competes in the world market. The German government thinks that by keeping its economic agenda focused on a limited number of key, globalization-related issues, it can achieve tangible results. Germany, the top global goods exporter, has clearly reaped the benefits of globalization, even while its government has not effectively conveyed a clear, positive message to the public on why they need to embrace globalization. It needs to get out the message that EU countries can excel through participating in and shaping this economic system. While German officials try to keep expectations low for what its presidency will accomplish on the economic front, Germany nonetheless wants to try to get the constitutional process back on track, using the anniversary of the Treaty of Rome to jump-start efforts. Beyond issuing a declaration at the Treaty of Rome celebration, German officials, however, have yet to express a clear vision on how they plan to move the constitutional reform process forward. Convincing EU member states to begin taking another look at EU constitutional reform during the first half of 2007 -- at a time when key European countries will be holding elections -- could prove too ambitious. TIMKEN JR