PM HOWARD DECLARES HE WILL SEEK 5TH TERM;

C O N F I D E N T I A L CANBERRA 001161 SIPDIS NOFORN SIPDIS STATE FOR EAP/ANP PACOM FOR POLAD E.O. 12958: DECL: 07/30/2016 TAGS: PGOV AS SUBJECT: PM HOWARD DECLARES HE WILL SEEK 5TH TERM; TREASURER COSTELLO TO STAY ON FOR 2007 ELECTION Classified By: CDA Michael P. Owens. Reasons 1.4 (b/d). ¶1. (C/NF) Summary: Prime Minister John Howard announced July 31 that he would contest the next election as Prime Minister, thus ending months of speculation about his intentions. Treasurer Peter Costello, who had established himself as a somewhat impatient heir apparent, called a press conference the afternoon of July 31 to announce that he would stay on as Deputy Leader of the Liberal Party and Treasurer to support the Government's efforts to win the next election. This effectively ends discussion of whether Howard would stay on for the next election and whether Costello would challenge him. End Summary. ¶2. (SBU) PM Howard faxed a letter to all Liberal MPs on the morning of July 31 to announce he would lead the Liberal Party into the next election (expected in mid to late 2007). A copy of the letter published in the press confirmed his long-stated position that he would continue to serve as long as the Liberal Party wanted him to be PM. After consultations with party members over the past few weeks, Howard concluded that the consensus was that he should continue in his current position and that Costello should continue as Deputy Leader and Treasurer. He said that he had phoned Costello on July 30 to advise him that he planned to stand for a fifth term. He paid tribute to Costello's crucial contribution to the success of the Government and acknowledged the challenge the Coalition would face in winning the next election. The PM confirmed his decision in a public announcement on the afternoon of July 31, saying that after extensive talks with colleagues, he believed there was "a very strong view" that the leadership team should continue at the next poll. ¶3. (SBU) In Costello's separate press conference, he confirmed that Howard called him on the evening of July 30 to relay his decision. He said he was "glad it has been settled" after weeks, months, or even years of speculation. He continued to maintain the importance of a smooth transition for the party, but acknowledged that "most people" did not support leadership transition at this time. When asked when a transition should take place, Costello said, "...don't ask me... I only know that it's not now... you have to ask him (Howard)." ¶3. (C/NF) Comment: Although somewhat unexpected in its timing, the end result of today's announcements was as expected by many political observers. PM Howard has the best chance of winning the next election, and Costello does not have the numbers in the party room to challenge him. In the press conference, Costello managed his trademark smile and seemed resigned to the reality of an indeterminate length of time before he can attempt to become PM. Costello's actions today will probably go over well with his colleagues and the wider public, who clearly see Howard as the better leader at this point. Regardless, Howard's decision to stay on gives other Liberal party leadership contenders time to build their credentials, thus decreasing the probability of Peter Costello ever attaining the top job. End Comment. OWENS