EU PRESIDENT BARROSO'S JANUARY VISIT: THE VIEW

C O N F I D E N T I A L USEU BRUSSELS 004207

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E.O. 12958: DECL: 12/22/2016
TAGS: CVIS EAID ECON ELAB ENRG EUN PGOV PHUM PREL
SUBJECT: EU PRESIDENT BARROSO'S JANUARY VISIT: THE VIEW
FROM BRUSSELS


Classified By: USEU POLMINCOUNS LAURENCE WOHLERS, FOR REASONS
1.5(D) AND (E)


1. (C/NF) European Union Commission President Jose-Manuel
Barroso's January 8 trip to Washington is an opportunity to
marshal Commission support for action over the next six
months in accelerating political and technical cooperation on
energy and climate change, completing the Doha Round, and
making progress on our common foreign policy agenda in the
Middle East, Afghanistan, Balkans, and Africa. Publicly,
Barroso will likely play the role of the harmonious second
fiddle to the German presidency on these issues. However,
their views are not always identical, with Barroso generally
espousing more pro-market views, particularly in regards to
energy security. Barroso's Washington trip, therefore, will
be an opportunity to develop common strategies with the
Commission on the issues of greatest strategic importance.


2. (C/NF) Two years after taking office, Barroso has a clear
sense of his policy priorities, developed a reputation as an
effective communicator, and shaped (by EU standards) a
cohesive leadership team within the Commission. However,
Barroso's real achievements on internal EU questions since
his last trip to Washington have been limited, hampered by
divided leadership in key member state capitals, continuing
member state interference with Brussels in the absence of
constitutional stability, and his own lack of a strong power
base. In the near term, therefore, there are real
constraints on his ability to prevent the debate on the
constitution or sensitive internal EU matters from shifting
away from Brussels and directly into European capitals.
Nevertheless, given the coming Portuguese EU presidency and
forthcoming leadership changes in several member states,
Barroso could be better positioned to influence EU policy in
the longer term.


3. (C/NF) Counterintuitively, Barroso and the Commission
have in fact been front and center on the improved working
relations between Europe and the United States on a number of
key fronts, including homeland security and better strategic
coordination of assistance (the latter involving the EU's
combined $55 billion in overseas assistance). In this
context, Barroso is likely to use the agenda for his visit to
reinforce a number of objectives he is already pursuing.
First he will launch a major new energy initiative in
January, and will look to bolster his presentation by
matching as many of his goals with ours as possible. This
includes relations with Russia -- although Barroso publicly
defers to the Council's lead on Russia, diversification of
energy supplies (and diminishing Russia's stranglehold on
European gas and oil markets) is a critical part of his
energy strategy. On Doha, which increasingly dominates
political thinking here, Barroso may be interested in a joint
signal to negotiators to break through existing obstacles.
On the Middle East, the EU Commission plays a strong role in
certain areas, including supporting the Siniora government
and in steering international resources in a way that
circumvents Hamas; Barroso will want to discuss how to
continue that engagement.


4. (C/NF) The meeting also provides a vehicle to highlight
outstanding critical tasks in US-EU counter-terrorism
cooperation. Finally, Barroso will likely raise EU member
states' concerns about the visa waiver program and may have
questions about the President's new VWP initiative. END
SUMMARY

The Barroso Vision: a drive to "reform from the center"
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5. (C/NF) Two years into his mandate, Barroso's vision, if
not necessarily his means to achieve it, is clear. Gone is
the grand, expansionist, and persistently theological
Eurocrats' obsession with "the European project". As
Barroso's aides note, even the constitutional question
interests him only from a pragmatic perspective -- until it
is settled he understands that the Union cannot move on.
Move on to what? The Barroso vision is pragmatic:
developing a more competitive, innovative, and flexible
Europe better prepared to cope with rapid change in the
global environment. Barroso's people describe it as
"reforming from the center", and believe that the EU toolbox
can help force change on old guard, member-state mindsets.

But where's the mandate? Not Delors' EU anymore
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6. (C/NF) Although Barroso is widely acknowledged to be a
more competent and clever president than his two
predecessors, this has not stopped the flow of policy
influence out of the Commission towards the Brussels-based
Council machinery, the individual member states, and the
budget-controlling Parliament. Barroso's team freely admits
that, as an outsider from a small member state, he lacks a
core power base in the EU. But they also note that in the
new EU of 27, policy decisions inevitably result from
closed-door horse-trading in which the Council and the member
states, not the Commission, are the key players. Indeed, the
German presidency has been blunt in signaling its intentions
on two key issues: institutional reform, which it clearly
hopes to keep outside of the "Brussels machinery", and
energy, on which it has taken an ambiguous stance, claiming
to want reform but frustrating Barroso's reform agenda. This
unfavorable power balance may account for the fact that
Barroso has publicly focused his energies on the
uncontroversial objectives of making the "Brussels machinery"
more efficient and responsive to the average European
citizen.

Some leverage nonetheless
--------------


7. (C/NF) Barroso is not without leverage, however. First,
compared to the fractious Council and Parliament, Barroso has
the most cohesive team in Brussels. While it's not a model
of camaraderie, it does generally adhere to the President's
lead, thus allowing the Commission to drive internal EU
policy development in Brussels. Second, Barroso has
considerable deal-making ability -- he relishes working
behind the scenes, as he has done successfully on the
Services agreement and the recent Turkey deal. His aides say
he will play a similar role on the Constitution -- working
quietly to pull people towards a centrist deal (for Barroso,
the substance of the deal is far less important than getting
the institutional question done and off the table). Third,
Barroso compensates for his lack of a core power base by
assiduously building alliances. Rather than fighting the
Council's growing clout, for example, he has directed his
staff to build collaborative ties between the two;
particularly on foreign policy issues where the Council has
the stronger mandate but the Commission most of the funding.

Time on his side?
--------------


8. (C/NF) Aides say that, over the next calendar year,
Barroso is determined to push forward greater EU political
consensus in three key areas: energy security and
sustainability, EU institutional reform and enlargement, and
trade and economic growth (including Lisbon reforms). To be
sure, Barroso's relationship ith Chancellor Merkel will be
tested on all of these issues. Nevertheless, his ability to
push his agenda may improve with time. For one thing, the
Portuguese presidency during the ltter half of 2007 will be
a natural platform or policy cooperation. Political forces
in key member states may also work to his advantage, with the
possible election of a political soul-mate in France and the
end of the long political transition in the UK. Moreover,
Barroso continues to cultivate relationships with the new
member states who, although they do not yet punch their
weight in EU circles, are generally closer to Barroso's
thinking on energy security questions, the value of market
forces, and the need to stand up to Russia.

KEY ITEMS FOR THE JANUARY MEETING
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Energy
--------------


9. (C/NF) Energy reform may be the issue to which Barroso is
most personally committed. His aides say that Barroso
believes that energy security is important not just for its
own sake, but because the development of a flexible and
innovative energy market is the key to overall economic
reform. He wants the Commission to take an active role in
completing the EU's internal energy market, which would
include three main elements: 1) create a more unified EU
foreign energy policy (viz. Russia); 2) promote energy
efficiency, develop alternative fuels; and 3) keep open the
option of more nuclear power for the EU.


10. (C/NF) On January 10, the Commission will present a
series of proposals on the internal market, coal, nuclear
power, geopolitical energy policy, energy efficiency and
biofuels. But the Germans have already signaled opposition
to the Commission's goal of breaking up Europe's largest
energy companies into more competitive units. They have also
rejected the Commission's global warming targets. The
Commission has taken a harder line toward Russia on energy
than has Germany. Still, there are areas of consensus, such
as the need to develop cleaner and more efficient
technologies.


11. (C/NF) USEU has worked closely with the Barroso cabinet
over the past year in shaping an ambitious energy work plan,
and the Commission and Germany share a constructive agenda
for engaging the U.S. on energy policy. Following up on the
energy goals of the June 2006 Vienna Summit, the Germans
presented a paper in December proposing more intensive
collaboration on research and development projects. The U.S.
should be able to work with both. Barroso's aides believe
that the immediate focus should be on implementing the
numerous projects we already have in the pipeline: biofuels,
energy efficiency and carbon capture and storage. They also
support an intensified dialogue on the Caspian region. On
these specific issues, there is a remarkable amount of
agreement among the Barroso-led Commission, the German
presidency, and the U.S. We need to ensure, however, that the
internal turf battles between the Commission and the member
states do not prevent us from making practical progress with
the EU on energy co-operation.

Trade
--------------


12. (C/NF) Barroso's visit comes at an important time for
Doha negotiations. There is a sense in the EU that there has
to be significant movement on the DDA in the next two months
in order for there to be a deal in the short term. This
belief arises from the combination of the expiration of the
Administration's Trade Promotion Authority at the end of
June, the need to begin work on the U.S. farm bill, and the
French elections in May. Aides say that Barroso personally
believes strongly in the need to achieve a new WTO round for
the good of the global trading system. Our own impression,
however, is that Barroso tends to prefer to defer to
Mandelson on the specifics of negotiations, which is why the
latter came to the Vienna summit and will attend this
meeting. Barroso may solicit our views on how to deepen the
transatlantic economic relationship. The German Presidency
provides an excellent opportunity to accelerate our existing
regulatory cooperation and other elements of our
transatlantic economic agenda. While immediate emphasis
should be on practical progress over the next six months, we
should be open to exploring further ambitious plans for the
future, including evaluating German ideas on how to deepen
the transatlantic market.

Economic Growth and Reform
--------------


13. (C/NF) Barroso and the Commission remain committed to the
Lisbon agenda of economic reform, despite the current
economic upswing in the Eurozone. Barroso aides have
indicated that he may ask about U.S. views on Chancellor
Merkel's ideas for accelerating regulatory cooperation as a
means to deepen Transatlantic economic integration. Barroso
is reportedly sympathetic to calls for completing the
transatlantic market by 2015, but does not want to get out
ahead of the United States.

Foreign Policy
--------------


14. (C/NF) Barroso's foreign policy priorities can be
divided into three general categories: critical to the
future of the Union; critical to the Euroatlantic
relationship; and deeply important due to historical reasons
and personal interests. The stabilization and integration of
the Western Balkans into Europe falls squarely into the first
category. Barroso and the German Presidency are acutely
aware that EU credibility could be damaged by failure of the
ESDP mission in Kosovo. Afghanistan, Iran, and the Middle
East fall into the second category. Barroso certainly
understands the geostrategic importance for the Euroatlantic
community of helping to achieve peace and stabilization of
these volatile areas. However, policy success or failure
would not necessarily create a crisis of political legitimacy
for the EU. Africa and Darfur in particular, would fall into
the third and final category. Barroso's own policy advisors
have noted his deep personal commitment and interest in
bringing about peace and development in Africa.


15. (C/NF) Middle East/Afghanistan: Although the
Council/Solana have the foreign policy lead on the Middle
East, Commission monies and trade authorities have in reality
a powerful imprint on the EU's presence in the region.
Barroso leaves the public lead here to Commissioner
Ferrero-Walder, who is heavily engaged both substantively and
publicly. The European Commission has been the biggest donor
to the Palestinian Territories, having allocated euros 2.6
billion since 1994. Similarly, for Afghanistan the
Commission has made good on their euro 1 billion pledge at
the Tokyo Donors' Conference and is now planning euros 150
million for each of the next seven years. Since the fall of
Saddam Hussein, the Commission has made euros 720 million
available for Iraq reconstruction and will have an additional
euros 160 million for the Iraq Compact. In some cases, as in
the creation of the Temporary Implementation Mechanism for
the Palestinian territories, the Commission has made de facto
foreign policy. In others, such as a September visit by
Commission officials to Syria to engage moderate Syrians, the
Commission has eventually pulled back in deference to strong
Council views. Nevertheless, the Commission clearly feels
pressure from a number of member states (as well as some of
its own working level officials) to take a more pro-Arab
line, and it will be important to signal to Barroso the
importance of reinforcing a common approach between the EU
and the US.


16. (C/NF) Russia/FSU: There is a confusing interplay of
responsibilities between the Council and the Commission on
relations with Russia/the FSU. Barroso's Commission,
conscious of the vulnerability of smaller states to Russian
pressure, generally takes a harder line on energy and is also
more willing to support Moldova and Georgia with money and
resources. The Council remains divided: as the Lahti dinner
with Putin made clear, certain member states, including
France and Germany, take a more accommodating stance toward
Russia. This affects the Commission's ability to explore
ways to change the current dynamic on so-called frozen
conflicts. In recent months, the Commission has also made
considerable efforts to strengthen its assistance packages
and cooperation agreements (including on energy),with
Russia's neighbors. In the absence of any EU offer to offer
a membership perspective or seriously address trade and visa
barriers, however, the Commission's efforts may be
insufficient to counterbalance enormous political and
economic pressures the neighbors face from Russia.

Justice and Home Affairs
--------------


17. (C/NF) Barroso's visit offers an opportunity to obtain
his assurance that he will continue to help us to resolve key
CT and security-related issues, including terrorist financing
(use of SWIFT),PNR, and privacy. We should make clear our
expectation that Barroso and the Commission will take
responsibility on security and show stronger leadership,
including through public statements on the need to find a
reasonable, legal balance on security and privacy issues.

Visa Waiver Program
--------------


18. (C/NF) Barroso will feel compelled to raise the Visa
Waiver Program, as the EU leadership does at every
opportunity. The European Commission and member states
continue to press for the admission of nine of the new member
states, plus Greece. The President's recent Tallinn
declaration to seek greater VWP entry flexibility from
Congress was widely welcomed by a still agitated EU, who want
to see the specifics behind the proposal and swift action.
The next Commission report (expected in April) on EU visa
waiver privileges with a variety of countries may focus
especially on the United States.

All Roads (Eventually) Lead Through the Commission
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19. (C/NF) Internal EU business will absorb much of
Barroso's attention over the next six months. Starting with
the 50th Anniversary of the Treaty of Rome in late March, the
French (and possibly UK) elections in April, through to the
end of the German Presidency in June, Europe-wide debate at
all levels will intensify over future of the Constitutional
treaty, European integration, and the EU institutions. Even
so, Barroso's visit to Washington is a timely opportunity to
solidify Commission support for key U.S. objectives in the
Transatlantic relationship. As Commission President, Barroso
has far more influence over economic and trade policy
formulation than EU foreign policy strategy. However, even
in the latter case, the Commission's control of money and
people mean that it is frequently vital to the implementation
of those policies. This makes him an indispensable partner,
during the German Presidency and beyond.

MCKINLEY
.