JOHN KEY ELECTED NEW OPPOSITION LEADER

C O N F I D E N T I A L WELLINGTON 000935

SIPDIS

SIPDIS

NOFORN

STATE FOR D (FRITZ),EAP/FO, AND EAP/ANP
NSC FOR VICTOR CHA
SECDEF FOR OSD/ISD LIZ PHU
PACOM FOR J01E/J2/J233/J5/SJFHQ

E.O. 12958: DECL: 11/27/2016
TAGS: PGOV NZ
SUBJECT: JOHN KEY ELECTED NEW OPPOSITION LEADER

Ref A) Wellington 928 B) Wellington 923

Classified by DCM David J. Keegan, reasons 1.4 (B) and (D).

Summary
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1. (SBU) SUMMARY: John Key has won the leadership of New Zealand's
main opposition party, the National Party. In an uncontested
election, Key replaced Dr. Don Brash who resigned last week after
three turbulent years at the helm. National also elected a new
Deputy Leader and Finance spokesman: the influential Bill English, a
former party leader himself. Labour may well find the National Party
a more difficult adversary now, as this new leadership is less likely
to commit the gaffes of its predecessor. Ultimately, however, it's
National's new message that will determine its support among voters,
and while a Key-led National will likely be more moderate than
Brash's party, it has yet to articulate its vision. End Summary

Key chosen to led National in uncontested ballot
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2. (SBU) On Monday November 27, the National Party caucus officially
chose John Key as its new leader, three days after Dr. Don Brash
resigned the leadership to take responsibility for his latest
political gaffe - a failed effort to block a muck-raking journalist
from publishing a book based in part on his leaked personal emails.
Although some commentators had predicted a contested leadership
battle, Key emerged unscathed from what was a relative bloodless
transition of power. The former party leader and Education spokesman
Bill English will serve as National's Deputy Leader.

English decides against challenge, becomes Deputy Leader
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3. (SBU) English reportedly thought about challenging Key, but in the
end decided not to contest the leadership. Although he had
previously intimated that he was not interested in serving as Key's
second in command, English endorsed Key in return for securing the
Deputy Leadership. Key apparently convinced incumbent Deputy Leader
Gerry Brownlee not to fight to retain his position. As part of this
negotiated deal, English asked Key for the finance portfolio as well,
and Key granted the request. (Reportedly, in addition to wanting the
powerful finance slot for its own sake, English desired the extra
position because it makes his portfolio exactly equivalent to that of
Deputy PM and Finance Minister Cullen.) Brownlee's ceding of the
slot was orchestrated to dispel suggestions that there were divisions
within National's caucus over who would get the Deputy's job.
Another major factor behind Key's decision to force Brownlee to make
way for English is that Key needed the backing of English's own
faction of supporters, most of whom are influential frontbenchers.

What the new leadership means for National
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4. (SBU) National's new leadership team is considered the dream
ticket by many political observers. It brings together arguably the
two top performers in the National Party: the media-genic Key and
the strategically savvy English. Moreover, the new leadership will
likely bring a more moderate tone to National's politics, in contrast
with what many voters (and some in the party's caucus) saw as Brash's
Far Right radicalism. The uncontested leadership transition has
enabled National to display unity in a time of change. National has
had four leaders since Prime Minister Helen Clark took office in
1999, creating an impression of instability that has dogged the
party. English has already stated that this new leadership is likely
to be in place for several elections.

What the new leadership means for Labour
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5. (SBU) The Key/English ticket is the one combination Labour fears
the most. Gone now are the vulnerabilities in National's leadership
that Labour so adroitly, and effortlessly, exploited. Key is more
politically astute and disciplined than Brash. English has the
gravitas and political and intellectual acumen that Brownlee lacks.
Unlike most of their caucus colleagues, both Key and English have
frequently bested their Labour opponents head-to-head in political
debate. Moreover, both men are more likely to appeal to the much
coveted centrist vote, especially women, than their predecessors.
Labour is fully aware of the combined threat it now faces. Some
months ago, an advisor in the Prime Minister's Office confessed to
Post that a Key-English ticket is Labour's "worst nightmare."

What the new leadership means for the US-NZ relationship
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6. (C/NF) Key has not yet fully articulated his personal positions on
matters of foreign policy, but will reportedly deliver a speech on
defense later in the week, which is expected to come shortly before
he announces who will be National's spokesmen for Foreign Affairs,
Defence and Trade. Key has worked in the United States and speaks
favorably of the U.S. He has been friendly to Mission New Zealand
and was scheduled to travel to Washington on the Voluntary Visitor
Program earlier this year until he had to cancel to help deal with
(or take advantage of) a political crisis involving Dr. Brash. We
expect we will continue to have a good working relationship with
National under his leadership.

Brash's future still undecided
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7. (SBU) Brash's political fate is uncertain. On resigning his
leadership he stated that unless the new leader offers him a
portfolio of significant weight, he is unlikely to hang around. Key
is expected to start allocating portfolios later in the week, and
Brash is by no means guaranteed of acquiring the sort of significant
portfolio which would tempt him to stay in parliament. Before he was
made leader in 2003, Brash, a former Central Banker, said that he
entered politics to be Finance Minister in a National Government.
With English now in finance, this goal will almost certainly go
unrealized. A problem for Key is that Brash's continued presence in
Parliament at the time when a book scathing of him has just been
launched (ref B),would hamper Key's aim of marketing National as new
and improved under his leadership. If Brash does decide to leave,
the number of National's parliamentary seats will remain unchanged.
As a List MP, Brash will simply be replaced by the next person on the
party list, Wellington accountant Katrina Shanks.

McCormick