Identifier
Created
Classification
Origin
07PARIS1334
2007-04-04 16:10:00
UNCLASSIFIED
Embassy Paris
Cable title:  

OECD: State of Play on Enlargement and Enhanced Engagement

Tags:  EAID ECON ETRD OECD 
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FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6213
INFO RUEHSS/OECD POSTS COLLECTIVE
RUEHEG/AMEMBASSY CAIRO 0973
RUEHBJ/AMEMBASSY BEIJING 1463
RUEHBR/AMEMBASSY BRASILIA 1849
RUEHNE/AMEMBASSY NEW DELHI 1092
RUEHML/AMEMBASSY MANILA 0240
RUEHMO/AMEMBASSY MOSCOW 5805
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RUEHRB/AMEMBASSY RABAT 1034
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RUEHTV/AMEMBASSY TEL AVIV 0628
RUCNDT/USMISSION USUN NEW YORK 1200
UNCLAS PARIS 001334 

SIPDIS

FROM USOECD PARIS

SENSITIVE - NOT FOR INTERNET DISTRIBUTION
SIPDIS

STATE FOR E, EEB, EUR, G, IO/S AND S/P, NSC FOR MCCORMICK

E.O. 12958:N/A
TAGS: EAID ECON ETRD OECD
SUBJECT: OECD: State of Play on Enlargement and Enhanced Engagement
- Approaching Time to Take Decisions

REF: (A) PARIS 1116 (B) PARIS 827 (C) PARIS 525 (D) PARIS 160

UNCLAS PARIS 001334

SIPDIS

FROM USOECD PARIS

SENSITIVE - NOT FOR INTERNET DISTRIBUTION
SIPDIS

STATE FOR E, EEB, EUR, G, IO/S AND S/P, NSC FOR MCCORMICK

E.O. 12958:N/A
TAGS: EAID ECON ETRD OECD
SUBJECT: OECD: State of Play on Enlargement and Enhanced Engagement
- Approaching Time to Take Decisions

REF: (A) PARIS 1116 (B) PARIS 827 (C) PARIS 525 (D) PARIS 160


1. (SBU) Summary: As we approach the April ECSS and May
Ministerial Council Meeting, elements of an OECD enlargement and
enhanced engagement (EE) package are emerging. Members appear ready
to bless opening accesion negotiations with Chile and Israel,
although some continue to express concerns about the latter's
like-minded qualifications and Mideast regional sensitivities. A
consensus also seems to be forming to invite Secretary General (SG)
Gurria to initiate discussions with the BRICS -- Brazil, Russia,
India, China, and South Africa -- with the goal of expanding the
Organization's cooperation with those countries. One major question
affects both enlargement and EE: should Russia be offered the
accession or enhanced engagement track? The other outstanding issue
is how to deal with the aspirations of the EU-8. And whatever
decisions are taken on a final package will have financial
implications: Members continue to debate how to cover the costs of
enlargement and EE as well as ensuring the long-term financial
sustainability of the Organization. The U.S. will need to be
prepared to address each of these issues in the coming weeks during
key discussions by the Council (April 12),the ECSS (April 19-20)
and, eventually, the Ministerial (May 15-16). End Summary.


2. (SBU) SG Gurria continues to promote an enlargement and Enhanced
Engagement (EE) package based on his informal paper, elements of
which the Council has debated over the past three months (Reftels).
This package would include opening discussions with five countries
(Chile, Estonia, Israel, Russia and Slovenia) on accession, drawing
closer to four other major emerging economies (Brazil, China, India
and South Africa) via individual programs of Enhanced Engagement,
and expanding OECD outreach to key countries in Africa, Asia, Latin
America and the Mideast.

--------------
Chile and Israel
--------------


3. (SBU) Of the five countries named for accession in the SG's
informal paper, OECD Members appear ready to bless initiation of

accession discussions with Chile and Israel. Chile is almost
universally regarded as prepared now to begin the accession process,
and some Members have called for putting Chile on a fast track.
Regarding Israel, several delegations have in the past raised
concerns about its like-mindedness, with questions about the
inclusiveness of Israel's economy as well as about its human rights
practices. In addition, there is a desire to avoid alienating other
countries in the Mideast. That said, strong U.S. support for both
Chile and Israel has helped move their candidacies along. There is
no country prepared to stand up on its own and say "no" to Israel,
and this currently includes New Zealand and some of the EU member
states that had earlier expressed human rights concerns.


4. (SBU) Nevertheless, given the sensitivity of Israeli membership,
Mission believes it wise to continue voicing strong support for
Israel at every opportunity in order to preclude any OECD Member
from contemplating blocking Israel's candidacy for political or
other reasons, e.g., human rights concerns, Arab state
sensitivities, getting the "right package," etc. The latter is
particularly relevant with respect to gauging the willingness of EU
members to link or hold hostage the candidacies of either Chile or
Israel to those of the eight non-OECD member EU countries (EU-8).

--------------
Russia
--------------


5. (SBU) When it comes to Russia, the U.S. has stood out as the
principal obstacle to offering the Russians an accession track at
this time. Support from France, Germany, Italy, the Nordic
countries and Turkey has strengthened the SG's arguments that OECD
membership will bolster reform elements in Russia and may provide
the last chance to embrace Russia in the OECD's set of rules, best
practices and standards. USOECD continues to question Russian
like-mindedness in Council discussions, while other Members
including Australia, Canada and the UK have also raised concerns.

That said, UK Ambassador Lyscom now seems ready to join France and
other EU states in further opening the door to Russian membership.
We are prepared to deploy the approach suggested in the Secretary's
draft reply to FM Lavrov's letter requesting serious attention to
Russia's long-standing membership aspirations, and request
authorization to that effect prior to Council's next discussion on
April 12.

--------------
EU-8
--------------


6. (SBU) The second challenge facing Members is how to treat the
eight EU member states that are not members of the OECD. The SG's
informal paper includes Estonia and Slovenia as candidates with
which to open discussions "with a view to Membership," including
preparing a "roadmap" setting out terms and conditions for the
accession process of each. The Council remains divided between
Europeans who are pushing to bring in as many EU member states as
possible and the APEC countries, which have questioned the regional
implications of such an approach. We understand that the current EU
agreed position (taken at the March 28 COREPER) is to support
Estonia and Slovenia joining in a first round of accession, followed
by admission of at least one EU Member State in each subsequent
round. For this reason, USOECD and other non-European Members are
skeptical about language on enlargement that would legitimize
"sequencing" for the EU-8. As reported in Ref A, the German Permrep
(as EU President) has begun pushing for a quick decision that would
lock in Estonia and Slovenia and language on sequencing.


7. COMMENT AND RFG: USOECD to this point has been skeptical
regarding the EU-8 candidates, but has not categorically opposed
consideration of these countries as candidates for accession, as
have some APEC delegations. We believe, however, that obtaining EU
consensus for the accession of both Chile and Israel may well entail
agreement to have at least one EU Member State invited to begin
accession negotiations, though this will not appease other APEC
members. We also sense that getting the EU small- and mid-size
countries to sign on to a revised financing scale that includes a
minimum base fee (see para 11 below) may require offering membership
to a second EU Member State. We believe that APEC pressure to
resist new EU Members will tend to support our position on financing
and recognize there may only be a limited trade-off with Israel for
EU candidates. Mission requests guidance with respect to EU-8
membership and the question of sequencing. END COMMENT AND RFG.


-------------- --------------
Emerging Consensus on Enhanced Engagement with BRICS
-------------- --------------


8. (SBU) The SG's informal paper embodies his desire and that of a
number of Members to portray the OECD's relevance in terms of naming
as many countries as possible as part of a Ministerial document.
This is particularly true with respect to the number of candidates
invited to begin accession negotiations. The Japanese Ambassador,
for example, has stated that an enlargement package without Russia
would be relatively "insignificant," and other Ambassadors have
pointed to the need for a robust enlargement if the OECD is to
remain relevant. From the Mission's point of view, the goal of the
current enlargement and EE exercise should be to expand relations
with those countries that play an increasingly significant role in
the global economic arena. EE as it is being defined would provide
a framework for broader, more intensive cooperation with the
selected partners, designed to increase their policy convergence
with OECD principles, encourage like-minded views on issues of
common concern and increase their attractiveness as future potential
OECD Members.


9. (SBU) Over the past several weeks, Ambassador Morella and her
Canadian counterpart, Jocelyne Bourgon (who has just left post),
have been consulting with a small group of colleagues on an
alternative to the SG's informal paper. Ambassador Joan Boer
(Netherlands),who chairs the External Relations Committee (ERC),
has incorporated the group's ideas into a draft proposal that would


focus on conveying the OECD's commitment to reach out more globally
through enlargement, enhanced engagement and outreach activities to
increase its policy impact and influence. In this draft, the SG
would be empowered to launch enhanced engagement discussions with
each of the five BRICS (including Russia, whose special relationship
would be recognized) and to open accession negotiations with the two
countries -- Chile and Israel -- that have consensus support, and
possibly two EU member states, still to be identified. Text
treating the proposal to also invite the SG to open discussions with
the EU Presidency and EU member states regarding how to develop
closer relations and cooperation between with the OECD and the EU is
bracketed. Finally, the proposal would empower the SG to explore
ways to develop and deepen regional programs, in particular with
respect to Southeast Asia (at Japanese insistence). Second-tier
countries -- including Argentina, Egypt, Indonesia, Malaysia,
Morocco and Thailand -- that are listed in the SG's informal paper
would not be named in the alternative text.


10. (SBU) COMMENT: Given what we know about the current positions
on enlargement, it is hard to imagine that an accession package
limited to Chile and Israel could be agreed. For example, France
and others will push hard to include Russia, and although divisions
exist among EU delegations regarding how to treat the EU-8, there
seems to be general EU support for starting accession negotiations
with two (i.e., Estonia and Slovenia). As noted above, whether or
not EU Members would be willing to publicly veto the candidacies of
Chile and Israel if no EU countries are named remains to be seen.
END COMMENT.

--------------
Financing Issues
--------------


11. (SBU) How to finance enlargement and EE, in whatever form it
emerges as a final package, will be a key concern. Divisions remain
between larger Members, which cover their recurring costs, and the
small- and medium-sized countries, that don't and argue that the
OECD (and enlargement) should be funded like any other multilateral
organization; i.e., based on the principle of capacity to pay. The
April 2 meeting of the Special Group on Financing made no progress,
with delegations holding to well-known positions. It has become
evident that Members are awaiting the composition of an enlargement
package before agreeing to a new financing scheme, not only for
enlargement for for the long-term sustainability of the
Organization. Mission's sense is that these countries accept the
fact that they will have to increase their contributions, but they
will want to see something in return. Again, as we have noted
above, the willingness of these smaller, but still relatively
affluent states (most of whom are EU members),may depend on how
many EU members are offered an accession process. For the moment,
the financing discussions remain stuck, and Danish Ambassador Smidt,
Chair of the Special Group, will present to Council on April 12 the
same basic proposal he gave them at its last discussion on March 20
(see Ref A).

MORELLA