YOUR OCTOBER 11 VISIT TO IRELAND

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SIPDIS

E.O. 12958: DECL: 10/04/2019
TAGS: PGOV PREL ECON EFIN PINR EI
SUBJECT: YOUR OCTOBER 11 VISIT TO IRELAND

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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

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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
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14. (C) President McAleese: McAleese is the first Irish

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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
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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