SCENESETTER: PRIME MINISTER RUDD'S VISIT TO THE

S E C R E T CANBERRA 000267

SIPDIS

NOFORN

FOR THE SECRETARY FROM AMBASSADOR ROBERT MCCALLUM

E.O. 12958: DECL: 03/20/2018
TAGS: AS OVIP PREL US
SUBJECT: SCENESETTER: PRIME MINISTER RUDD'S VISIT TO THE
UNITED STATES

Classified By: AMBASSADOR ROBERT MCCALLUM. REASON: 1.4 (C)


SUMMARY
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1. (SBU) Prime Minister Kevin Rudd is coming to Washington
with a message that Australia will continue its friendship
and close cooperation with the United States across a wide
spectrum of issues, from non-proliferation and
counterterrorism to climate change and trade liberalization.
Rudd, a former diplomat and longtime Shadow Foreign Minister,
continues to ride a wave of popularity from his victory over
John Howard over four months ago. He has delivered on
campaign promises to roll back the previous government's
controversial industrial relations legislation, sign the
Kyoto Protocol and begin the process of withdrawal of
Australian combat troops from Iraq in mid-2008. He issued a
historic apology to Australian Aborigines on the first day of
the new Parliament and showed cool resolve in responding to
the recent crisis in Timor-Leste, swiftly dispatching troops
after the attempted assassination of President Ramos Horta.
Differences over Iraq and climate change aside, Rudd's
Australian Labor Party (ALP) maintains its strong commitment
to Australia's alliance with the United States, most recently
expressed during the February 23 US-Australia Ministerial
(AUSMIN) talks in Canberra, and Rudd will stress the
durability of the relationship and unity in confronting
common challenges.


2. (SBU) We can expect Australia's continued contributions to
military operations targeting the Taliban and al-Qaeda in
Afghanistan, and a continued non-combat role in Iraq. The
small size of its military - 52,000 personnel - and demands
of deployments elsewhere, most recently in response to the
attempted coup in Timor-Leste, mean Australia will likely be
unable to increase the level of its deployments for some time
to come. Despite this, we are confident Australia will
remain one of our closest allies and most reliable security
partners for the foreseeable future. Rudd has already shown
himself to be strongly supportive on tough arms control and
nonproliferation issues, including denuclearization of North
Korea and Iran. Rudd has declared Australia will not export
uranium to India because it has not signed the Nuclear
Nonproliferation Treaty, but has not yet decided whether
Australia will support an exception for the U.S.-India civil
nuclear agreement in the Nuclear Suppliers Group and IAEA.
End Summary.


U.S. Alliance
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3. (SBU) The Australian Labor Party (ALP) takes credit for
establishing the alliance with the United States during World
War II, which ultimately led to the 1951 Australia-New
Zealand-United States (ANZUS) Treaty. The ALP continues to
include support for the U.S. alliance as one of the three
pillars of the party foreign policy platform. (The other two
are comprehensive engagement with Asia and enhanced
cooperation with the United Nations. Rudd has made clear
Australia's commitment to the alliance, and was quick to
reach out to the United States in his election victory speech
- the only foreign country he mentioned. He met with the
U.S. Ambassador before meeting other foreign envoys, and his
key Cabinet ministers - Foreign Minister Stephen Smith and
Defense Minister Joel Fitzgibbon - met Secretary Rice and
Secretary Gates as their first order of business within weeks

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of being sworn in. During the AUSMIN Conference in Canberra,
Mr. Rudd hosted a dinner for Secretary Gates and Deputy
QMr. Rudd hosted a dinner for Secretary Gates and Deputy
Secretary of State Negroponte at his residence. Rudd

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stressed in his campaign that he would be more independent
from the United States than his predecessor, however, and has
already flagged some key policy differences.


Iraq
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4. (C/NF) Rudd and his defense and foreign affairs ministers
have already begun to engage with their U.S. and UK
counterparts to discuss withdrawal of approximately 515
combat troops comprising the Overwatch Battle Group from
southern Iraq in mid-2008, while leaving in place
approximately 1,000 defense personnel in the region,
including a 100-man security detachment for its diplomatic
mission in Baghdad, and naval and air patrol assets based in
neighboring countries that support operations in both Iraq
and Afghanistan. While the Australian combat troops have a
passive, back-up role to Iraqi security forces, rather than
an active combat role, they have served as an important
symbol of Coalition unity and of Australia's support of the
U.S. in the Global War on Terror. Beyond the redeployment of
the combat element, the Australians plan to remain engaged in
Iraq in reconstruction and other non-combat roles, and the
Cabinet has already begun to consider proposals for
additional training and technical assistance. In the
meantime, the GOA is working with the U.S. and Iraq on
deployment requirements after the current UN mandate lapses.


Afghanistan
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5. (C/NF) Unlike Iraq, there has been bipartisan support in
Australia for its troop commitment in Afghanistan, and the
Rudd government has reaffirmed that it plans to remain in
Afghanistan for the "long haul." Support for Australia's
combat role in Afghanistan is linked in part to the presence
of al-Qaeda and the Taliban, who trained bombers that killed
202 civilians, including 88 Australians, in Bali in 2002, as
well as to the impact of the Afghan drug trade on Australia.
The Australian government announced in mid-February it would
deploy an Operational Mentoring and Liaison Team (OMLT) to
help train the Afghan National Army's Second Infantry
Battalion and would consider additional civilian development
assistance, but is not currently contemplating increasing its
combat forces. Three Australian soldiers have been killed in
Afghanistan within the last year. Mr. Rudd will attend the
April 2-4 NATO Summit in Bucharest and is expected to make a
strong appeal for the NATO countries to contribute more to
the fight against the Taliban, both in the deployment of
their forces and in material aid to Kabul.


China
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6. (C/NF) An important dynamic in the U.S. relationship with
the new Rudd government is China. Rudd shares our position
that China needs to be encouraged to be a responsible
stakeholder in the international system, and he has
previously expressed his understanding for the importance of
cross Strait stability. Rudd views the Chinese export market
as a critical component of Australia's growth now and well
into the future. PM Rudd's background as a Mandarin-speaking
former diplomat who served in Beijing have led some to
believe that he might be overly sensitive towards China, but
he has assured the Ambassador that he does not view China
through "rose-colored glasses." Early signs are that the
Rudd government will be tough or tougher than its predecessor
on China's military modernization, transparency, and human
rights, judging by Rudd's statements and the inaugural
Strategic Dialogue with China on February 4-5. However, the
Australians also chose to tell the Chinese before telling us
of their opposition to continuing quadrilateral discussions
between the U.S., Australia, Japan and India. Rudd opposes
entering into a defense pact with Japan and to continuing
quadrilateral discussions between the U.S., Australia, Japan
and India in part because of Chinese sensitivities and is
visiting Beijing but not Tokyo on his first major foreign
trip.


Climate Change
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7. (SBU) The Rudd government's policy diverges somewhat from
ours in climate change, a topic that resonates strongly in
Australia where many see a direct causal link with a series
of recent, very severe droughts. PM Rudd ratified the Kyoto
Protocol within hours of being sworn in, a largely symbolic
and cost-free gesture, as Australia is already meeting its
Kyoto targets. He also attended the Bali meeting in December
2007 where he committed to working out a post-2012 climate
change framework and called for all developed countries to
accept binding limitations (viewed as a slap at us),while
Qaccept binding limitations (viewed as a slap at us),while
resisting pressure to commit to significant interim
reductions by 2020. Australia's position on the post-2012
framework is close to that of the United States. Rudd has
pledged that Australia would not sign a post-Kyoto framework
that does not include commitments to reduction targets by
developing countries such as China and India. Under Rudd,
Australia is committed to a cap and trade system which it
plans to have up and running by 2010.


8. (SBU) The government has set a target of using renewable
energy for 20 percent of its energy needs by 2020. Both
initiatives will increase the price of energy, but economists
estimate that, as a result, GDP growth would decrease by less
than one-half of one percent. Rudd believes in the
importance of clean coal technology to the global effort and
the special responsibility of Australia, the world's largest
coal exporter, to develop and share those technologies with
countries that depend on coal for a substantial part of their
energy needs, such as China and India. He would prefer to
concentrate on "getting coal right" instead of developing a
nuclear power industry. The Prime Minister recently told a
U.S. Congressional delegation the one missing element in the
global effort to cope with climate change was U.S.
leadership. He believes that if U.S. would commit itself to
achievable emissions targets, it would prevent China and
India from citing lack of U.S. participation as an excuse for
refusing to make commitments in a post-Kyoto agreement.


Defense Cooperation and National Security Policy
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9. (SBU) Australia is a large consumer of U.S. defense
hardware and technology, consistent with its objective of
interoperability. Foreign Military Sales (FMS) in 2007 were
USD3 billion. Australia has selected the Aegis Combat
Control System for its three air warfare destroyers that will
come into service in 2014, 2016, and 2017, respectively. The
F/A-18 aircraft is the principal combat aircraft of the Royal
Australian Air Force (RAAF),backed by the U.S.-built F-111
strike aircraft. The Rudd government recently affirmed the
previous government's decision to acquire 24 Boeing F/A-18F
Super Hornet fighters to maintain an interim strike
capability between the phase-out of the F-111s by 2010, and
the projected acquisition of up to 100 F-35 Joint Strike
Fighter aircraft during 2013-2020. Deliveries of the Super
Hornet would commence in 2010. The RAAF received in March
the last of four C-17 strategic airlift aircraft it
purchased, and is acquiring Boeing's Airborne Early Warning
and Control system (referred to as Wedgetail). Recent sales
to the Royal Australian Army include the M1A1 tank, as well
as Hellfire and JAVELIN missiles. The U.S.- Australia
Defense Cooperation Treaty was signed in September 2007 and
submitted to the U.S. Senate for ratification in December

2007. A hearing on the Treaty, along with a parallel treaty
with the United Kingdom, has not been set but is expected
shortly after the Easter recess. Australian industry hopes
implementation will streamline and increase defense
technology exchange and trade. The Australian Defense
Materiel Organization estimates a 50 percent reduction in
export licenses required following treaty implementation.
Australia is purchasing a Wideband Global SATCOM (WGS)
satellite that will be incorporated into the U.S. DOD's WGS
five-satellite constellation.


10. (S/REL AUS) At the February 23, 2008, Australia-U.S.
Ministerial (AUSMIN) consultations, the two sides agreed to
strengthen combined capabilities and U.S. military access to
Australia, referred to as Enhanced Defense Cooperation, with
a focus on three areas: enhancing the Joint Combined
Training Capability; prepositioning equipment for
Humanitarian Assistance and disaster relief (HA/DR)
operations in the region; and strengthening Intelligence,
Surveillance and Reconnaissance (ISR) access and cooperation.


Economy: Managing Success
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11. (C) After having branded himself an "economic
conservative" in the run-up to the election, Rudd is facing
the challenge of rising inflation. This is largely the
result of capacity constraints, particularly labor, as
Australia continues its 17th consecutive year of growth. The
Reserve Bank of Australia raised interest rates for the
fourth time in eight months at the beginning of March.
Unemployment is at a 33-year low and all signs point to
significant increases in resource prices that will ripple
through the Australian economy. Rising resource prices at
Qthrough the Australian economy. Rising resource prices at
the same time as slowing U.S. growth have encouraged many
Australians to believe that reliance on China has decoupled
their economy from the U.S. business cycle. Rudd has
simultaneously blamed his predecessors for mismanaging the
benefits of Australia's resource-driven economic boom while
stressing his own commitment to fighting inflation by holding
down government spending in order to increase the already
large budget surplus. Rudd's goal in playing up the
inflation problem appears to be to avoid the perception that
he is out of touch with the problems facing Australians while
reassuring markets that he is committed to sound economic
policy.


Other Issues
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12. (SBU) Finally, Australia under Rudd will likely continue
to be a strong ally of the United States on
counterproliferation and arms control issues. He is likely
to continue Australia's strong support for our position on
the North Korea and Iran nuclear issues. He has announced
his opposition to exporting Australian uranium to India
because it would weaken the NPT, which India has not signed.
However, he has not yet decided whether to support consensus
in the Nuclear Suppliers Group and the IAEA on granting an
exception for India, as a non-NPT member, which is a
precondition to concluding the U.S.-India civil nuclear
agreement with the United States.