YOUR OCTOBER 11 VISIT TO IRELAND

C O N F I D E N T I A L SECTION 01 OF 03 DUBLIN 000417 SIPDIS E.O. 12958: DECL: 10/04/2019 TAGS: PGOV PREL ECON EFIN PINR EI SUBJECT: YOUR OCTOBER 11 VISIT TO IRELAND DUBLIN 00000417 001.2 OF 003 Classified By: Ambassador Daniel M. Rooney. Reasons 1.4(b/d). ¶1. (C) Summary: Your visit comes just after the Irish approval of the Lisbon Treaty and before a series of difficult tests for the Irish government. Before the end of the year, Irish Prime Minister Brian Cowen must come to agreement with his coalition partner, the Green Party, on a new program for government, push through hotly-contested legislation designed to further shore up the Irish banking sector, and deliver a harsh budget. Failure on any of these issues would likely bring down the government early next year. That said, a change in government would not alter the good relationship we enjoy with the Irish people or our close cooperation with the Irish government on the issues that are most important to us. End Summary. The Celtic Tiger -- R.I.P. -------------- ¶2. (C) After over a decade of heady growth the Irish economy tumbled farther and faster than most other economies during this global recession. This has led to a bit of soul-searching among the policy elites about what went wrong and how it can be fixed. The "man-on-the-street" isn't searching the soul but, rather, is simply angry. This anger has manifested itself in tumbling poll numbers for the government and an increase in industrial actions. That said, Ireland today is economically much better off than it was before its Celtic Tiger period. And, while the Cowen government took some time to get its bearings, it is moving forward with initiatives to get the Irish economy back on track. Recently, the economy has shown signs of bottoming out and some forecasters are predicting a return to growth as early as mid-2010. This would be good news for Cowen because he still faces many short-term political challenges. Government Woes: Lisbon Referendum and Beyond -------------- ¶3. (C) The government successfully navigated the first of these challenges -- a successful Lisbon Treaty referendum vote (reftel). With Irish approval of the Treaty secured, Cowen's government (comprised of his own party, the centrist Fianna Fail (FF),and the Green Party) must now come to an agreement on the government's new platform. Some Greens feel that FF has taken them for granted and may seek a "better deal" than the one they negotiated when they entered government in May 2007. The Greens have some bargaining power because they have enough votes in parliament to bring down the government if it left the coalition. However, there is a strong possibility that the Green Party would not win any seats if a general election were held in the near future. Given that, most observers do not expect the Greens to precipitate an election. The Greens' opening position in the talks include securing promises from FF that cuts to secondary education be rolled back, that social welfare payments not be reduced, that the number of members of parliament be reduced, and that a universal health care plan be introduced. These will all be difficult for FF to agree to. ¶4. (C) Later in October, the government must pass legislation to set up the National Asset Management Agency (NAMA) which would be the repository of all property loans currently on the Irish banks' books. Because the purpose of NAMA is to free up the banks to start lending again, the agency has become a lightning rod for those who blame bankers and property developers for Ireland's financial mess. In particular, many of the Green Party's rank-and-file are angry at their party's leadership for signing on to the legislation and have pushed for the legislation to be changed. ¶5. (C) The biggest challenge will be the introduction of the government's budget in December. Against the backdrop of double-digit unemployment, a contraction in GDP of eight percent in 2009, and a lack of credit in the economy, the government has promised its EU partners that it will bring its 11 percent budget deficit (as a percentage of GDP) down to three percent by 2013. To do this, the government must "find" USD 6 billion through spending cuts and tax increases next year in order to cut into the approximately USD 30 billion budget deficit. The spending measures will be most difficult politically for the government and will give the opposition an opportunity to pick off backbenchers in an effort to force an early general election. ¶6. (C) We expect the NAMA legislation to pass and the Greens and FF to reach a satisfactory accommodation on the new platform for government. The budget is the most likely of the three to lead to a change in government. Even if this doesn't happen, we expect a shake-up in the ministerial ranks DUBLIN 00000417 002.2 OF 003 that may reach to Cowen himself. Excellent Bilateral Cooperation -------------- ¶7. (C) Whether there is a change in government or not, we expect Ireland to continue to cooperate closely on the issues of most importance to us. This cooperation includes, among other things, the September 26 arrival in Ireland of two Guantanamo detainees, the continued use of Shannon airport as a transit point for U.S. military flights, and the beginning of full pre-clearance operations at Shannon and Dublin airports for both commercial and general aviation flights to the U.S. Issues the Irish May Raise -------------- ¶8. (C) Because the Irish economy is a front-burner issue and it depends heavily on U.S. economic fortunes, the Irish will be interested in President Obama's efforts to revive the U.S. economy and may ask about the Administration's views on the taxation of U.S. multinationals, a group that is well-represented in Ireland. They will thank you for the role that the U.S. government continues to play in the Northern Ireland peace process and for naming Declan Kelly as the new Economic Envoy to Northern Ireland. They will be interested to hear what steps Kelly will take and will seek your views on completing the devolution of policing and justice to the Northern Ireland authorities. The Irish will reiterate their pitch to regularize the status of the Irish residing illegally in the U.S. We have told the government that this issue can only be addressed within comprehensive U.S. immigration reform. ¶9. (C) Since the issue of alleged renditions broke in 2004, the Irish have publicly stated that they have accepted USG assurances that no rendition detainees 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 detainees without sufficient probable cause. However, with a new Administration, the Irish may seek reassurances that renditions will not occur. In a September 28 meeting, Green Party leader John Gormley pressed the Ambassador on this issue without success. Possible Issues to Raise with the Irish -------------- ¶10. (C) Irish FM Martin discussed with you in March his government's fight against hunger. The Irish have committed to spend 20 percent of their assistance budget on food security and recently sent their Aid Minister to the Partnering for Food Security meeting in late September. While the government's belt-tightening will preclude increases in the overall aid budget, the Irish would welcome the opportunity to be included in international efforts on this issue. ¶11. (C) The Irish have been very receptive to President Obama's public remarks on climate change and renewable energy. We believe that we can 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, especially post-Copenhagen. ¶12. (C) On the push side of the ledger, we are awaiting a response from the Irish on two draft data-sharing agreements that must be in place for Ireland to remain in the visa waiver program. The first is a State Department-led effort to reach agreement on sharing information on known or suspected terrorists. The second deals with data-sharing on criminals and is led by the Department of Homeland Security. Our Irish contacts told us that both agreements are under review by the Irish Attorney General's office. ¶13. (C) Embassy Dublin assesses that specific individuals resident in Ireland have facilitated terrorist acts outside of Ireland against American and allied interests. The U.S. Government appreciates the assistance it has received from the Irish Government in countering terrorist activity. However, we hope cooperation in the future can lead to the elimination of terrorist activity facilitated from Ireland which affects American and allied interests. President Mary McAleese -------------- ¶14. (C) President McAleese: McAleese is the first Irish DUBLIN 00000417 003.2 OF 003 President born in Northern Ireland and has been in the position since 1997. She was elected unopposed in 2004 to another seven-year term. The President * a largely ceremonial position * acts as the guardian of the Irish Constitution. Known as a bright, intelligent force, McAleese engages in many of the all-island issues, as well as the Irish economy, and is very well-respected on both sides of the border. McAleese will be keen to discuss the Northern Ireland peace process and North-South economic issues. The President's husband, Dr. Martin McAleese, also plays a key behind-the-scenes role on Northern Ireland. Prime Minister Brian Cowen -------------- ¶15. (C) Prime Minister (Taoiseach) Brian Cowen: Since taking office on May 7, 2008 following the scandal-forced resignation of Bertie Ahern, the fortunes of Cowen and his party (Fianna Fail) have been on a downward trajectory, with approval ratings falling from 42 percent in May 2008 to 20 percent in September 2009. Cowen's personal approval rating is just 23 percent, an improvement from a recent low of 15 percent. While the approval of the second Lisbon Treaty referendum is a huge political victory for Cowen, he is still struggling to overcome his perceived mismanagement of the ongoing sharp economic downturn and mounting labor unrest. Foreign Minister Michel Martin -------------- ¶16. (C) Formin Martin: Michel (pronounced &Mee-haul8) Martin assumed office in May 2008, when Brian Cowen became Prime Minister. He was previously Minister for Enterprise, Trade and Employment. As FM, Martin was out front in the push to secure a Lisbon Treaty victory. Martin is seen as one of the front-runners to replace Cowen as PM should there be a ministerial shuffle within the government. While he may raise economic issues, Martin,s focus will be on following up with you on food security and global hunger, as well as the security situation in Northern Ireland and the announcement of Declan Kelly as Economic Envoy. ROONEY