CHANCELLOR MERKEL PREVIEWS G-8 SUMMIT

UNCLAS SECTION 01 OF 02 BERLIN 001071 SIPDIS SIPDIS STATE FOR EEB, OES, EUR/AGS, AND EUR/ERA USTR FOR MOWREY AND DONNELLY PLEASE PASS CEQ AND EPA E.O. 12958: N/A TAGS: ECON ETRD SENV ENRG PREL PGOV PL EU GM SUBJECT: CHANCELLOR MERKEL PREVIEWS G-8 SUMMIT ¶1. Summary: German Chancellor Merkel emphasized climate change, hedge funds, Africa, and closer cooperation with emerging economies as core themes for the June 6-8 G-8 Summit in her remarks before the Bundestag May 24. Merkel acknowledged the debate on climate change is contentious, but argued developed countries need to take a leadership role to encourage emerging economies to act. Merkel listed increased energy efficiency, alternative and renewable energies, as well as clean energy, as key solutions. In a May 25 newspaper interview, Merkel's chief of staff Thomas de Maiziere rejected attempts to put blame solely on the United States, saying Russia and emerging economies such as India and China are "difficult partners," as well. DeMaiziere said the U.S. was "willing to move" on energy efficiency and predicted this would test the EU's ability to keep up. Merkel did not anticipate issues involving hedge funds would be resolved at the Summit, adding Germany would pursue the issue beyond its G-8 presidency. On Doha, Merkel said the EU is ready to move forward if other WTO members are. End Summary. ¶2. German Chancellor Angela Merkel's speech before the Bundestag May 24 outlined Germany's agenda in the run-up to the G-8 Heiligendamm Summit, scheduled for June 6-8. Merkel told the audience that globalization presents G-8 countries with opportunities, not just challenges and risks. Germany, with eight million jobs dependent on exports, will benefit from free trade as much as developing countries and emerging economies. She noted that 45 percent of the German GDP stems from exports. Merkel identified seven core themes for Heiligendamm: Global Growth; Innovation; Cross-Border Investment; Social Standards for Globalization; Climate Change; Liberalization of Global Trade; and Africa. -------------- Outreach -------------- ¶3. Regarding cooperation with emerging markets, Merkel described the dialogue with the Outreach Five (China, India, Mexico, South Africa, and Brazil) as crucial. She noted there would be a meeting with representatives from those countries as part of the G-8 Summit on June 8. According to Merkel, there are no plans to expand the G-8 to G-13, but it is necessary to continue to carry on an "issue-oriented dialogue with these countries beyond the Heiligendamm Summit." Challenges such as climate change and IPR can only be tackled jointly, she noted. -------------- Climate Change -------------- ¶4. Merkel emphasized the need to reduce CO2 emissions and ensure that global average temperature increases do not exceed pre-industrial levels by more than 2 degrees Celsius. She conceded the tone of the climate change debate is controversial -- as was the case at the U.S.-EU Summit -- and said the G-8 needs to adopt a common position. The world,s leading industrialized countries need to take a leadership role; only then can they encourage emerging economies to follow suit. Merkel also stressed the need for more efficient, clean energy use in the form of new power plants, energy efficient buildings, and new fuels. ¶5. In a May 25 interview with Berliner Zeitung, Merkel's chief of staff, Thomas de Maiziere, warned against "premature judgment," saying he still expected "considerable movement at the Summit by all participants." He cautioned against an expectation of agreeing on specific results comparable to those produced by the Spring European Council meeting. De Maiziere rejected attempts to put all blame for the lack of progress on the United States, pointing to Russia and the emerging economies as difficult partners on the issue, as well. "In the area of energy efficiency the U.S. was willing to move" he said and predicted that this would test the Europeans' ability to keep up. At that point, de Maiziere said, "it would be all about technology and industrial capabilities." -------------- BERLIN 00001071 002 OF 002 World Economy / Global Growth -------------- ¶6. Turning to the "Global Growth" chapter, Merkel pointed out the important role of hedge funds for financial markets. She stressed the need for greater transparency in order to limit the risks of destabilizing effects associated with hedge funds and called for a "code of conduct" and standards for risk management. Merkel said she did not expect a quick solution at the Summit; nevertheless, Germany will pursue the issue beyond its G-8 presidency. In the May 25 Berliner Zeitung interview, de Maiziere rejected the notion that Germany's efforts on hedge funds had not produced tangible results. The German initiative raised the profile of the issue and placed it on the international agenda, he said, stressing "we have had more progress in the last three months (on hedge funds) than we had in the last three to four years." ¶7. On IPR, Merkel said that protection of intellectual property rights is important for fostering innovation. The G-8 members need to work with emerging economies to combat counterfeiting, piracy, and other IPR infractions. Merkel stated the G-8 must emphasize that foreign investment is a key component for growth and encourage countries to lower barriers. Merkel urged trading partners to continue opening their markets if they expect to have access to "our markets." Merkel told the audience that the G-8 needs to push for dialogue with emerging economies on the social aspects of globalization and send strong signals for establishing social standards. Merkel mentioned the ILO, OECD, and UN Global Compact as fora for establishing standards for corporate social responsibility. ¶8. On global trade, the Chancellor underlined the small window of opportunity to conclude the WTO Doha Round successfully and all of the members should be prepared to compromise to get a deal done. The EU is ready to move forward if other members are. -------------- Africa -------------- ¶9. Merkel stressed the need to deepen and widen cooperation with African countries. She announced the five founding countries of the New Partnership for African Development (NEPAD) -- Algeria, Egypt, Nigeria, Senegal, and South Africa -- would be present at the Summit on June 8. Merkel said she saw this as a sign for the support of good governance by the G-8. Merkel mentioned Africa's economic growth and described it as a continent that's "on the move." However, Merkel noted there is plenty of work to be done, citing recent elections in Nigeria and the demolition of poor neighborhoods in Zimbabwe as examples. ¶10. Merkel said Germany will honor its pledge to increase funding of development assistance (it aims for 0.7 percent of GDP) with a sizable portion going to improve health care systems in Africa, specifically in combating HIV/AIDS. Merkel noted Germany would free up an additional 400 million euros in 2007 to combat HIV/AIDS and would look for G-8 contributions to the Global Fund and replenishment conference. -------------- "A Human Face" -------------- ¶11. Merkel concluded by saying Germany's G-8 agenda demonstrates that Germany is aware of its responsibilities. By tackling global challenges, Germany hopes to show the world the G-8's "human face." TIMKEN JR