ASEM IN CHINA: GLOBAL FINANCIAL CRISIS, CLIMATE

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 004145 SIPDIS E.O. 12958: DECL: 11/06/2028 TAGS: PREL PGOV ECON ETRD GM RU AF KN BM IR CH SUBJECT: ASEM IN CHINA: GLOBAL FINANCIAL CRISIS, CLIMATE CHANGE, IRAN, BURMA, DPRK Classified By: Deputy POLITICAL Section Chief Ben Moeling. Reasons 1.4 (B/D). Summary -------------- ¶1. (C) The seventh Asia-Europe Meeting (ASEM) Summit, in Beijing October 24-25, focused on the current global financial crisis but also covered climate change, Iran, the DPRK and Burma. ASEM leaders reached consensus on increasing regulation and transparency in global financial markets, as well as on expanding the mandate of the IMF. Contacts said discussions on climate change were "useful" in advance of the UN Climate Change Conference in Poznan, Poland December 1-12, but ultimately did not result in numerical targets. French President Sarkozy, acting as President of the EU, took a hard line on Iran and called for global solidarity to avert catastrophe. Despite some opposition from Asian nations, the final Chairman's Statement on Burma called for the inclusion of opposition parties in POLITICAL dialogue and the release of Aung San Suu Kyi. Russia and Australia have both applied to join ASEM, an issue that will be discussed at an ASEM Ministerial in Hanoi in 2009. Human rights discussions were "difficult," but included no mention of Chinese dissident Hu Jia. End Summary. "Positive Atmosphere" for Expanded Meeting -------------- ¶2. (C) China hosted the seventh biannual ASEM Summit in Beijing October 24-25. Representatives from all 27 EU members and 16 Asian countries attended the meeting, which was the first since this year's formal expansion of ASEM to include new members India, Pakistan, Mongolia, Romania and Bulgaria, as well as a representative of the ASEAN Secretariat. Ten Heads of State and 26 Heads of Government attended. Notable exceptions were Britain, which has never participated above the Foreign Minister level except when it hosted, and Burma, which attended at the Foreign Minister level after lengthy negotiations. Premier Wen Jiabao represented China for most of the Summit and President Hu Jintao participated only in the opening ceremony. MFA and European Embassy contacts agreed that the atmosphere was positive and no major disagreements arose at the meeting, partly because the financial crisis united members around a common agenda. UK Embassy First Secretary Gareth Ward noted that this year's ASEM meeting was "the best ever" in terms of substantive dialogue. Unity in the Face of the Global Financial Crisis -------------- --- ¶3. (C) Summit discussions focused on the global financial crisis, according to several contacts. French Financial Counselor Pierre Mongrue said participants were unanimous on the need to reform global financial institutions. UK Embassy Second Secretary Duncan Sparkes said there was little finger-pointing over the crisis and a spirit of "we're all in this together" prevailed. Leaders had agreed in advance to double the time devoted to discussion of global financial issues and changed a social dinner to a working dinner also devoted to financial issues. However, given that national leaders, not finance ministers, attended the Summit, discussions centered on "broad strokes" rather than specific technical measures, according to UK First Secretary Ward. Because any successful initiative will require U.S. involvement, participants viewed the Summit as a prelude to the November 15 G-20 financial meeting in Washington. ¶4. (C) According to French DCM Nicolas Chapuis, ASEM leaders reached consensus on five principal elements of a strategy to address the financial crisis: -- Establishing of rules to regulate flows of capital and increase transparency in global financial markets; -- Avoiding protectionist measures, including by reviving the WTO Doha round of global trade talks; -- Increasing the efficiency of international financial institutions and possibly finding a mechanism to purchase toxic financial assets; -- Expanding the mandate of the IMF, including its role as a regulatory body, and establishing an early warning mechanism within global financial markets; and -- Increasing the role of developing nations and ensuring BEIJING 00004145 002 OF 003 they are not excluded from discussions. The ASEM Chairman's Statement released at the conclusion of the Summit elaborated on the above five discussion points, calling for debt relief and debt sustainability, emphasizing the importance of the WTO, reaffirming a commitment to the Doha round and calling for active implementation of the UN's Millennium Development Goals. Climate Change, Global Food Security -------------- ¶5. (C) Though the global financial crisis consumed most of the leaders' attention, other topics included climate change, food security and food prices. European Commission President Jose Manuel Barroso said that the financial crisis must not become an excuse for not properly dealing with climate change. Participants did not discuss numerical targets, but the ASEM Chairman's Statement reaffirmed member nations' commitment to an "ambitious, effective and comprehensive" agreed outcome and underlined the need to act with "resolve and urgency" at the December 1-12 Climate Change Conference in Poznan, Poland and the 2009 Climate Change Conference in Copenhagen. Summit participants also discussed food security and global food prices. According to UK First Secretary Ward, some nations expressed anger at rising food prices. The Chairman's Statement called for "strengthened efforts" including food aid, "social protection activities" and trade facilitation to stabilize surging food prices. Iran -------------- ¶6. (C) French President Nicolas Sarkozy took a hard line on the topic of Iran, noting that, along with the financial crisis, Iran's nuclear program is the most serious global crisis. According to both French DCM Chapuis and UK First Secretary Ward, Sarkozy said that "all intelligence agencies in the world acknowledge that Iran is attempting to acquire nuclear weapons and ballistic missile technology." No progress has been made on the issue, Sarkozy said, and time is not on our side. The world is facing one of two tragedies: either Tehran will bomb Israel, or vice versa. Sarkozy called for global solidarity to avert war. UK Foreign Minister David Miliband supported Sarkozy, calling for a combined approach of both sticks and carrots. Chinese Premier Wen Jiabao stated that China remains committed to the EU 3-Plus-3 approach. Burma -------------- ¶7. (C) During a working lunch on global issues, Burmese Foreign Minister Nyan Win told other participants that the situation in Burma requires further dialogue and that the Burmese Government is open to dialogue. Sarkozy riposted that the Burmese regime's calls for dialogue are clearly hollow, given the Burmese refusal even to grant visas to relief workers in the wake of Cyclone Nargis. China called for a soft approach on Burma, and proposed that ASEM welcome the new Burmese constitution and elections in 2010, but the EU pushed for stronger language in the Chairman's Statement. Despite Chinese reluctance, the ASEM Chairman's Statement ultimately urged the Burmese Government to "engage all stakeholders in an inclusive POLITICAL process," and called for "an early release for all those under detention." According to British First Secretary Ward, the Burmese responded formulaically during the entire discussion, calling the matter "an internal affair in which progress has been made." DPRK -------------- ¶8. (C) The ROK led discussions on the DPRK. ASEM participants, in the Chairman's Statement, welcomed progress made by the Six-Party Talks. The ROK expressed support for infrastructure projects in North Korea, including a railway to link South Korea with the EU via the DPRK and Russia. The EU fought to include language in the Chairman's Statement alluding to UN Security Council resolutions, but the language was ultimately not included due in part to China's opposition to further "internationalization" of the issue. Japanese Prime Minster Taro Aso expressed concerns regarding Japanese BEIJING 00004145 003 OF 003 abductees. Other Issues: Afghanistan, Africa -------------- ¶9. (C) In a discussion of Afghanistan led by Pakistan, the participants agreed that problems there are POLITICAL and a solution should be POLITICAL rather than military. French President Sarkozy called for more engagement with Afghanistan's neighbors. Regarding Africa, German Chancellor Merkel called for expansion of the existing EU-China Dialogue on Africa to an EU-Asia dialogue on Africa. She noted that the current global financial crisis could affect private investment and official development assistance to Africa. Other participants stressed the importance of the UN's Millennium Development Goals and the importance of maintaining those goals, even in the wake of the financial crisis. Further Expansion? -------------- ¶10. (C) Chinese Senior ASEM Official Ambassador Wang Xuexian told PolOff that participants discussed further expansion of ASEM to include Russia and Australia. The two would presumably join the Asia side, UK First Secretary Ward said. According to the Chinese MFA, joining ASEM is a two-step process that first requires the full consensus of the continent to which a nation belongs, followed by the full consensus of the entirety of ASEM. Expansion to include Russia and Australia will be discussed at an ASEM Ministerial meeting in Hanoi in 2009. Human Rights -------------- ¶11. (C) EU Commission DCM Michael Pulch described the three and a half hours of discussions on human rights as "difficult" but noted that "relatively good language" emerged in the Chairman's Statement. Pulch noted that most European Parliament prizes are given in December, but the European Parliament took pains to announce the Sakharov Prize for human rights on the day before the ASEM Summit began, pointedly giving the prize to Chinese dissident Hu Jia. Despite this, the Sakharov Prize and Hu Jia were not mentioned even once during the human rights portion of the discussion, and the Chinese MFA waited until October 27, after the close of the Summit, to lodge a protest with the EU Troika. French DCM Nicolas Chapuis said that compared with the diplomatic furors ignited by past meetings with the Dalai Lama and protests at the Olympic torch relay, the Sakharov prize has had almost no effect on Sino-European relations. RANDT