PETERS REVEALS MAJOR EFFORT TO EXPAND NZ DIPLOMACY

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SIPDIS

SIPDIS
SENSITIVE

STATE FOR STATE FOR EAP/ANP
PACOM FOR J01E/J2/J233/J5/SJFHQ

E.O. 12958: N/A
TAGS: PGOV PHUM KDEM NEW ZEALAND
SUBJECT: PETERS REVEALS MAJOR EFFORT TO EXPAND NZ DIPLOMACY


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1. (SBU) Summary. On April 16, New Zealand Foreign Minister
Winston Peters announced an ambitious funding and staffing boost for
MFAT which will pave the way for a significant expansion of New
Zealand's presence around the world. The new funding come after
decades of under-resourcing of New Zealand's foreign policy
apparatus and will enable its Foreign Service to be more effective
in opening new markets, supporting expanded security commitments,
and as an international actor. However, the new funding did not
receive opposition endorsement and its future could be subject to
doubt if there is a change of government at the election later this
year, as some expect. End Summary.

Peters Unveils Major Step Up in NZ's Foreign Policy
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2. (SBU) On April 16, Foreign Minister Winston Peters addressed
the New Zealand Institute of International Affairs, with a speech
titled Stepping Up: New Zealand's Foreign Policy Footprint, and
announced that MFAT needed more resources to meet the growth of
international challenges confronting New Zealand. As such, Peters
announced that in the next Government budget, due to be presented on
May 22, MFAT's budget baseline will be increased by NZ$523 million
in new operating funding and a capital injection of NZ$98 million
over the five years 2008-12. That amounts to a cumulative figure of
NZ$621 million over five years. The current annual MFAT operating
budget is currently NZ$278 million and its annual capital
expenditure budget is NZ$35 million.

More Diplomats
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3. (SBU) The new funding will allow MFAT to increase diplomatic and
support staffing at New Zealand's diplomatic posts and headquarters
in Wellington from 212 now to around 320 over five years. This
amounts to total increase of around 50 percent, or an average of
roughly 20 people per year. The total number of MFAT diplomats and
support personnel is expected to grow from 613 now to about 850 in
2012, an increase of around 40 percent.

The Purpose behind the Numbers
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4. (SBU) Peters cited a number of policy imperatives driving MFAT's
expansion:

--THE PACIFIC.

* To strengthen New Zealand posts in Port Moresby, Honiara and Suva.

* To contribute more to the Pacific Security Fund.

--ASIAN REGIONALISM.

* To create an ambassadorship to ASEAN.
* To contribute more to the Asia Security Fund.
--TRADE.
* To provide more resources to New Zealand embassies in Tokyo,
Beijing, New Delhi, and Riyadh to increase momentum towards FTAs
either being negotiated or considered.
* To enlarge the MFAT Americas Division in Wellington to increase
momentum for an FTA with the United States.

--SCANDANAVIA.

* To open a new embassy in Stockholm to coordinate foreign policy
and human rights with the like-minded Nordics.

--AFGHANISTAN.

* To strengthen the New Zealand Embassy in Tehran to allow better
coverage of security issues in Pakistan and in Afghanistan, where
New Zealand has a major deployment.

--ENVIRONMENT.

* To develop specialized climate change negotiation roles within
MFAT.
* To develop a greater number of specialists in the areas of
sustainability, biodiversity, fisheries and international law.

--CONSULAR.

* To increase capacity to serve and protect New Zealanders overseas
in times of crisis.


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Reason: Fear of Being Ignored
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5. (SBU) One obvious driver for this funding increase appears to be
one born of necessity. Peters reminded the audience that during the
1990s "the government took the pruning shears to New Zealand's
Foreign Service, forcing on it a decade-long decline in funding, in
real terms, of more than 30 per cent." Peters also noted that MFAT
"still has fewer staff today than 20 years ago, and those staff seem
to be working permanently in overdrive."


6. (SBU) An even more important driver behind the funding increase
would appear to be the fear of New Zealand becoming a marginal actor
in international affairs should it not expand its international
presence. Peters talked about renewing and expanding New Zealand's
"strong international reputation" in the years ahead. More
revealing, Peters asserted in response to a question after his
formal remarks that New Zealand faced a clear choice of whether "to
engage more effectively or risk becoming a country with third world
status."


7. (SBU) MP Peter Dunne, former Chair of the Parliamentary Foreign
Affairs, Defence and Trade Select Committee, and now Minister of
Revenue, told post that he believes that this budget announcement
signalled that New Zealand is looking to play a more active role in
international affairs. Dunne thinks that New Zealand is "thin on
the ground" particularly outside the Pacific. Peter Cozens, the
Director of the Centre for Strategic Studies, told post that he
believes that the desire to expand diplomatic presence reflects
Prime Minister Helen Clark's own internationalist aspirations.

Long-Term Political Future of New Funding Uncertain
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8. (SBU) The opposition National Party's reaction to the budget
announcement was far from an endorsement and Dunne believes that
there is no guarantee that a National-led Government will adopt the
MFAT funding program. Even though the convention of
bi-partisanship in foreign policy is generally uniformly embraced by
New Zealand political parties, Opposition leader John Key has made
it clear that a National-led Government - the party is consistently
well ahead of Labour in the polls - will cap the number of
bureaucrats at the current 36,000. Dunne believes National leader
John Key's commitment to capping the core public sector could rule
out even a partial adoption of the new budget.

Timing Allows Peters a Sole Political Glory
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9. (SBU) It is customary that budget announcements of this scale
are made on Budget day itself by the Finance Minister, Dr. Michael
Cullen. Dunne believes that there are two reasons why the Clark and
Cullen consented to allow Peters to make this advance announcement.
Firstly, it mollifies Peters, a key political ally of Labour who
disapproves of the quality of the FTA with China, by allowing him to
take the full credit himself and package the funding increases as
his own. Dunne thinks that there is another reason behind the
timing of the budget announcement. He believes that the advanced
announcement will mitigate the risk of attention been taken away
from the expected centrepiece of Cullen's May Budget - the
long-awaited tax cuts, which Labour considers important to its
re-election prospects. In terms of budget process, the details of
the new budget are required to be disclosed to the cross-party
Foreign Affairs, Defence and Trade Select Committee where it
examines the estimates immediately following the May Budget's
introduction to Parliament. Dunne believes that the Budget will
pass scrutiny without any problems.

Increased Operations a Challenge for MFAT
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10. (SBU) Dunne suspects that the driving force behind the budget
increase was MFAT CEO Simon Murdoch and not Peters. He believes
that Murdoch energetically, yet quietly, lobbied his minister to
boost the budget and the result shows that Peters is, in the words
of Dunne, "well house trained" by his officials. Nonetheless, Paul
Willis, the MFAT official charged identifying where the new
resources should be allocated, believes that the goal of training
and implementing the extra MFAT staff is a "significant challenge"
as a major, and difficult, re-vamp of existing support
infrastructure must first be made.

COMMENT
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11. (SBU) This budget is a sizable for New Zealand's tightly-formed
Foreign Service. Its ambition seems to track the current frame of
mind of Clark, who is eager for her country to blaze a trail in many
different fields - from the goal of becoming the world's first
carbon-neutral nation to being the first development country to sign
a FTA with China. Although National has a number of reasons not to
endorse the expanded MFAT budget, Key's foreign affairs inner circle
is dominated by former diplomats and internationalists who would
likely endorse an expanded diplomatic presence of the kind.
Moreover, given the Peters has stated that the funding will be part
of his party's negotiation strategy post-election, Key will more
than likely adopt it if he needs to court Peters' support in order
to govern. End Comment

Keegan