Identifier
Created
Classification
Origin
08DUBLIN662
2008-12-07 10:44:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Dublin
Cable title:  

SCENESETTER FOR VISIT OF CODEL DODD TO IRELAND

Tags:  PGOV PREL ECON ETRD EINV EAIR SENV MOPPS MARR 
pdf how-to read a cable
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P 071044Z DEC 08
FM AMEMBASSY DUBLIN
TO RUEHC/SECSTATE WASHDC PRIORITY 9625
INFO RUEHRL/AMEMBASSY BERLIN PRIORITY 0132
RUEHMD/AMEMBASSY MADRID PRIORITY 0094
RUEHBL/AMCONSUL BELFAST PRIORITY 0847
UNCLAS SECTION 01 OF 04 DUBLIN 000662 

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON ETRD EINV EAIR SENV MOPPS MARR
EI
SUBJECT: SCENESETTER FOR VISIT OF CODEL DODD TO IRELAND

UNCLAS SECTION 01 OF 04 DUBLIN 000662

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON ETRD EINV EAIR SENV MOPPS MARR
EI
SUBJECT: SCENESETTER FOR VISIT OF CODEL DODD TO IRELAND


1. (U) Embassy Dublin welcomes Senator Dodd to Ireland. The
Senator will arrive against a backdrop of an Irish Government
led by Prime Minister Brian Cowen that is facing economic
woes, uncertain relations with the European
Union following its rejection of the Lisbon Treaty in a
referendum in June 2009, and a successful peace process in
Northern Ireland that the Irish believe continues to advance.

--------------
Lisbon Treaty
--------------


2. (SBU) Looming large on the political landscape is the
Irish rejection of the Lisbon Treaty referendum on June 12.
Since then, Prime Minister Cowen has attended two European
Council meetings, where other EU Heads of Government agreed
that Ireland needed time to analyze the outcome of the vote,
consult internally and with other EU member states, and
devise a way forward for EU reform. A third meeting with the
European Council is scheduled for December 11-12, 2008. In
the first two meetings, the European Council laid down two
markers: the treaty ratification process would proceed
throughout the EU (currently Ireland is one of only two EU
member states to have not fully ratified the Treaty); and the
European Council would revisit the issue of Ireland's
rejection of the Treaty. Ireland is now on the hook to
suggest ways out of the dilemma.


3. (SBU) Cowen has been discretely floating the concept of
holding a second referendum in late 2009 with political
"opt-outs" to protect Irish positions on retaining an EU
Commissioner, neutrality, abortion, and taxation. However,
most other EU member states want the Lisbon Treaty to be
fully ratified before the June 2009 European Parliament
election so that the election can be held under new Lisbon
Treaty rules. Though Cowen hopes for patience and new,
constructive ideas from the European Council next week, he
will also be expected to propose a roadmap for the way
forward.

--------------

Difficult Economic Times Ahead
--------------


4. (U) Until the recent economic crisis, Ireland had one of
the fastest growing economies in the world over the past
decade. Ireland's Celtic Tiger transformation resulted from
a combination of low corporate tax rates, industrial peace,
pro-investment policies, fiscal responsibility, and effective
use of EU support funds. These factors (in addition to
staunchly pro-American business policies) have led over 600
U.S. firms to establish operations in Ireland; the stock of
U.S. investment in the country is, in fact, significantly
more than the U.S. combined total in the BRIC countries
(Brazil, Russia, India, and China).


5. (U) This year, Ireland's economy began to stumble. In
October, the government predicted a budget deficit of 6.5
percent of GDP and that the economy will contract by 0.8
percent in 2009. Those figures already look optimistic given
the government's early December announcement of a
worse-than-expected tax revenue shortfall. Based on those
numbers, private-sector economists are now forecasting a drop
in GDP this year and next of between two and five percent.
The government introduced an austere budget for 2009
featuring unpopular spending cuts (in health and education in
particular) and tax increases.


6. (U) In addition to the worsening macroeconomic picture,
the Irish banking system was on the verge of collapse prior
to the government stepping in on September 30 and
guaranteeing the liabilities of the six major Irish banks.
In spite of this guarantee, there is still a worry among
market watchers that the government will be forced to follow
some of its European neighbors and inject fresh capital into
the banking system. In recent comments, Finance Minister
Brian Lenihan indicated that he was exploring the possibility
of a capital injection. The Irish property market bubble
burst in 2008 (with prices falling by up to 40 percent in
some sectors of the market) prompting a worry that the banks
would end up holding a significant amount of impaired assets.


7. (SBU) Immigration. The Irish Government continues to
consult and lobby with Congress and Irish-American groups on
behalf of Irish residing illegally in the U.S., variously
estimated at between 5,000 and 50,000. A special unit of the
Department of Foreign Affairs, set up in 2006 to assist the
Irish Diaspora, assists Irish Ambassador to the U.S. Michael
Collins in this endeavor. While the Irish Government

DUBLIN 00000662 002 OF 004


understands that Irish illegal aliens will not be dealt with
separately from comprehensive U.S. immigration reform, the
Irish take this emotive domestic issue to heart. Irish
officials regularly express deep concern for these illegal
aliens and frequently ask the USG to regularize their status
as soon as possible. Ireland has also been a magnet for
inward immigration, attracting over 100,000 new arrivals
since the accession of ten new EU Member States in 2004.
With the economy's slowdown, however, leading economists are
predicting net migration out of Ireland for the next two
years at least.


8. (SBU) Special Visas. Ireland and the U.S. have
successfully negotiated a special visa category (a modified
J-1 visa) which will enable Irish citizens to live and work
in U.S. for up to one year (a duration longer than currently
available under existing visa regulations); and vice versa.
The Irish are impatient to have this new visa program
actually commence.

--------------
Changes in U.S. Tax Code
--------------


9. (SBU) The Irish government is concerned about previous
proposals from President-elect Obama that would reduce or
eliminate the tax advantage U.S. multinationals receive for
investing in low-tax jurisdictions overseas. With a
corporate tax rate of 12.5 percent a major contributing
factor, Ireland has attracted a stock of $87 billion in U.S.
foreign direct investment. These U.S. companies generate a
significant portion of the Irish economy's GDP, employment,
and exports. Both the Irish Finance and Foreign Affairs
Ministers have commented publicly that the government will
lobby against any such change to the U.S. tax code, which
they see as a direct threat to Irish economic well-being.

--------------
Northern Ireland
--------------


10. (U) The USG and the Government of Ireland continue to
work together to support economic growth in the North and
North-South Cooperation. The Irish have told us that the
USG's consistent position that devolution of policing and
justice is an important and integral part of the Northern
Ireland peace process contributed to an agreement between
Sinn Fein and the Democratic Unionist Party (DUP) in November
2008 on how to achieve devolution. The Irish were also
highly appreciative that the USG supported a major investment
conference in Belfast in May 2008.

--------------
Rendition Allegations
--------------


11. (SBU) On October 29, the Government of Ireland
established a Cabinet-level committee to review Ireland's
human rights policies - giving it a mandate to approach the
transition team of the incoming Obama Administration to
review Irish concerns about renditions, the detention
facility at Guantanamo Bay, and intensive interrogation
techniques which are considered torture (such as
waterboarding). The Committee will also review appropriate
authorities to ensure that the national police force (Garda)
and airport authorities have sufficient powers to search and
inspect all aircraft transiting Ireland which are suspected
of being involved in renditions, perhaps through
strengthening the Air Navigation and Transport Acts. The
creation of this committee was, in part, at the behest of the
Green Party coalition partner in government. While formation
of the committee is likely to provide greater government
oversight of human rights concerns, we do not expect it to
result in aircraft inspections or otherwise adversely affect
U.S.-Irish relations.


12. (SBU) Since the issue of alleged renditions broke in
2004, the Irish have publicly stated that they have accepted
USG assurances that no rendition prisoners have transited
Ireland. Top Irish officials, including the Prime Minister,
have declared that they would take the USG at its word and
not pursue inspections of U.S. aircraft suspected of
transiting Ireland with rendition prisoners without
sufficient probable cause. As recently as December 2007,
then Prime Minister Bertie Ahern and then Foreign Minister
Dermot Ahern categorically rejected Opposition and Irish
Human Rights Commission calls for random inspections of U.S.
aircraft. Current Prime Minister Brian Cowen, then Minister
of Finance, supported this position.

DUBLIN 00000662 003 OF 004



--------------
Guantanamo Bay Detainees
--------------


13. (SBU) The United States continues its effort to resettle
17 Uighurs, 4 Uzbeks and other detainees at Guantanamo that
cannot be returned to their home countries due to inhumane
treatment concerns. The State Department is working with a
number of European countries in an effort to put together a
group of countries to step forward and resettle detainees as
a humanitarian gesture. We have been told in previous
approaches that Ireland is unwilling to consider accepting
detainees. It would be extremely helpful if Ireland would
consider joining the European group in discussing the
possible resettlement of these detainees.

--------------
U.S.-Irish Strategic Relationship
--------------


14. (U) Cowen announced on July 17 in New York that Ireland
would conduct a strategic review of relations between the
U.S. and Ireland, to be led by Irish Ambassador to the U.S.
Michael Collins. Irish officials have clarified that the
purpose of the strategic review is to look beyond the U.S.
cooperation on the Northern Ireland peace process, identify
Ireland's key interests in the
U.S., and determine if the Irish government's resources are
being best deployed in support of those interests.

-------------- --------------
Aviation Pre-Clearance at Shannon and Dublin Airports
-------------- --------------


15. (U) DHS Secretary Chertoff and Irish Transport Minister
Noel Dempsey signed the completed U.S.-Irish Pre-Clearance
Agreement in Washington on November 17. The agreement will
allow for U.S. customs clearance at Shannon and Dublin
airports in addition to the already existing immigration
clearance. If all goes as planned, full pre-clearance
(immigration and customs) will begin in Shannon in 2009 and
in Dublin in 2010. Shannon airport officials have indicated
they will break ground on the new U.S. Customs and Border
Protection facility on January 5, 2009 and will open the
facility on July 1, 2009.

--------------
Environment/Energy Initiatives
--------------


16. (U) Embassy Dublin has a very active relationship with
the Irish government on environment and energy issues. We
worked with various Irish agencies to put together an ocean
energy workshop in Galway in July 2008, which was attended by
several U.S.-based companies. We are also putting together a
series of visits by U.S. government and private sector
experts, the first of which is a visit by a DOE official to
discuss the USG's public sector energy efficiency program.
We believe that we can effectively partner with the Irish on
the nexus of environmental/energy issues (including climate
change, ocean/wave energy, methane capture, and clean coal
technologies),which would be useful in our broader
engagement with Europe going forward. Ireland is very active
in this area given that they are well above their Kyoto
Protocol and EU commitments to reduce emissions and they are
worried about their energy security. Ireland has extremely
limited indigenous fossil fuel sources of energy.

--------------
Global and Regional Efforts
--------------


17. (SBU) The U.S. and Ireland have worked closely and
effectively on issues of shared concern, especially through
Ireland's participation in multilateral organizations such as
the UN and the EU. Ireland recently resettled ten Cuban
refugees sheltering at Guantanamo. Ireland's military
neutrality, however, remains an important cornerstone of its
foreign policy, and will need to be considered when proposing
bilateral initiatives.

Iraq/Access to Shannon Airport. The USG appreciates
Ireland's steadfast support in permitting U.S. military
transits at Shannon and Dublin Airports (over one million
troops since 2003; 262,000 in 2007),which backstop U.S.
actions in the Gulf region, despite the unpopularity of this
policy domestically. Ireland has also made a commitment of
over three million euros to the EU's reconstruction efforts

DUBLIN 00000662 004 OF 004


in Iraq.

Irish Peacekeeping/Darfur/Chad. The Irish Defense Forces
have nearly 800 troops serving in multilateral peacekeeping
missions in Kosovo, Chad, Bosnia, Afghanistan, and elsewhere.
Ireland is contributing 455 troops to the ESDP EUFOR mission
to Chad, which is led by an Irish General, and sees this
peacekeeping effort as contributing to the situation in
adjacent Darfur. The Irish Government prefers not to expand
its military engagement in Afghanistan, though it will
consider additional development and humanitarian assistance
there.
FAUCHER