U.S.- EU TROIKA DISCUSS DEVELOPMENTS IN ASIA

C O N F I D E N T I A L SECTION 01 OF 06 STATE 109388 SIPDIS E.O. 12958: DECL: 10/19/2019 TAGS: PHUM PINS PREL SUBJECT: U.S.- EU TROIKA DISCUSS DEVELOPMENTS IN ASIA REF: STATE 101838 Classified By: CLASSIFIED BY A/S KURT CAMPBELL FOR REASONS 1.4 (B) AND (D) ¶1. (U) Summary: EAP Assistant Secretary Kurt Campbell chaired the East Asia and Pacific session of the U.S.- EU Consultations on Asia (COASI) Troika in Washington, DC on September 11, 2009. Topics discussed included the U.S. overall approach to Asia, followed by North Korea, Burma, China, and Taiwan. The EAP portion of the COASI was the second of two days of meetings -- on September 10, the EU delegation met with SCA Assistant Secretary Robert Blake to discuss Southeast Asian issues (Ref). ¶2. (SBU) Other U.S. participants in the COASI meeting included: Mr. Joseph Donovan, Principal Deputy Assistant Secretary; Mr. Scot Marciel, Deputy Assistant Secretary; Mr. Henry Jardine, Director for Regional and Security Policy; Mr. Sung Kim, Special Envoy for the Six-Party Talks; Mr. Ted Mann, Director, Office of Taiwan Coordination; and Mr. Daniel Kritenbrink, Acting Director for Chinese and Mongolian Affairs. On the European side, the delegation was led by Mr. Klas Molin of the Swedish Presidency and currently the Director of the Department for Asia and the Pacific at the Swedish MFA. Other EU participants included Mr. Mats Foyer, Swedish Ambassador to North Korea; Ms. Emma Norlund, Swedish MFA desk officer for North Korea; Ms. Karin Olofsdottor, Deputy Chief of Mission for the Embassy of Sweden; Mr. Bogslaw Majeweski, Council of the EU; Mr. Francesco Presutti, Council of the EU; Mr. James Moran, European Commission; Mr. Franz Jessen, European Commission; Mr. Jose Luis Garcia Galan, Incoming Spanish Presidency, and; Mr. Jose Muriel, political officer, Embassy of Spain. Overall Approach to Asia ¶3. (SBU) A/S Campbell opened the &Overall Approach to Asia8 session by noting Asian concerns that the U.S. has lost its focus at a critical time, with China on the rise and as the footprint of Islam grows bigger in the region. Campbell stressed that now is the time to underscore our engagement with Asia beyond rhetoric, and offered the upcoming POTUS trip and Secretary Clinton,s two visits to Southeast Asia as evidence of increased U.S. engagement with the region. He pointed out that the U.S. has maintained a good attendance record at important meetings of late (a break from the past, when the U.S. missed six 
or seven recent meetings, damaging relations with our Asian partners). Campbell said that in this difficult economic climate, Asians are waiting to hear clear statements from the U.S. on issues they care about, namely, trade and economics. He predicted that as the economic recovery progresses, Asia will increase lending to the U.S and the U.S. will continue to spend. He noted the need to create more domestic demand in Asia, especially in China and Japan, but that governments are very dependent on export-led growth and are reluctant to change models (for example, domestic demand in Japan is currently 1/3 of domestic demand in Western Europe). ¶4. (SBU) Campbell touched briefly on relations with China, noting the Chinese have a profound desire to protect their investment in U.S. currency and are concerned about the inflationary pressures on the dollar. As China plays a bigger role in world affairs, our most important challenge will be to create an economic policy which will appreciate STATE 00109388 002 OF 006 this dynamic. However, he cautioned that while the U.S. is deeply committed to a good relationship with the Chinese, the American public may be unprepared for the multi-faceted aspects of the U.S.-China relationship. ¶5. (SBU) Campbell pointed to other areas in which the U.S. must focus in Asia, including: maintaining traditional partnerships and alliances; working with the new, untested government in Japan; working with allies to keep the Korean Peninsula nuclear free, and; preventing comparisons of the U.S.-China relationship with others in Asia (as none is more complex). ¶6. (SBU) Mr. Klas Molin, Director of the Asia Department at the Swedish Foreign Ministry, and leader of the EU delegation, noted that Europe watches the U.S.-China relationship closely. Further, while trade and investment are at the core of EU interests in Asia, issues such as climate change, non-proliferation, counter- terrorism and migration contribute to the evolving relationship between the EU and Asia. ¶7. (SBU) A/S Campbell then suggested that the EU could help in the area of institution-building in developing Asian countries. Mr. James Moran of the European Commission pointed out that the EU is often disappointed with the results of its cooperation with Asian partners, ASEAN members in particular. When Mr. Moran asked A/S Campbell,s view of incoming Japanese Prime Minister Hatayama, Campbell suggested that Hatayama,s PhD studies of European integration could lead to an increased interest in Japanese-EU relations. ¶8. (SBU) A/S Campbell noted that the U.S. and EU face five challenges in Asia: we must encourage further ASEAN integration (including increased Indonesian leadership and less dependence on Singapore); recognize of the importance of trade; help Japan play a stronger political role as opposed to just an economic one. He hoped the EU would become more involved in Asian affairs and development. Campbell also said we would need to deal with increased Indian investment and influence in Asia. ¶9. (SBU) A/S Campbell said that an important task for the future will be to re-establish geniality in our relationships with Asian countries and to reassert our leadership in the region. While China has been playing a much more effective game of late, it is not in Southeast Asia,s interest to be dominated by China. We understand, though, that any gap in U.S. presence will be filled by China. Southeast Asia is looking for options, and the U.S. must demonstrate to ASEAN that they can count on us. North Korea ¶10. (SBU) Mr. Sung Kim, the U.S. Special Envoy for the Six-Party Talks, opened the session on North Korea (N.K.). He noted that the overall situation remains bleak, and despite the North Korean &charm offensive,8 there have been no concrete moves on their side. However, Kim said that cooperation among the international community is good, and that even the Chinese have been helpful. Mr. Kim went on to say that he believed the sanctions were having an effect (thus, the N.K. &charm offensive8) but that we need to be open to dialogue and we hope to move forward in our engagement with N.K. A/S Campbell noted that food aid will be an issue (though there STATE 00109388 003 OF 006 is still debate over the size of this year,s crop shortage) and outlined four challenges to be faced: high demand worldwide for food aid; NGO,s growing frustration with the N.K. government; the N.K. tendency to act too late to request aid, and; &assistance fatigue8 on the part of South Korea. Campbell was careful to state that the U.S. does not withhold food as part of its approach to N.K. ¶11. (SBU) Mr. Molin noted the intense debate within Europe about sanctions and emphasized how important it is have eyes and ears on the ground. Mr. Mats Foyer, the Swedish Ambassador to N.K., said that, regrettably, the North Korean regime puts humanitarian issues at the bottom of its list of priorities, and the government fears a threat from the deteriorating economic situation and is consequently prepared to react strongly. Amb. Foyer noted that while the crop from last year was very good (due to good weather) even a good crop produces only 4/5 of the country,s needs. Thus remains a large deficit (with some regions experiencing larger gaps than others), and the experts still cannot predict an outcome for this year. While kitchen gardens provide some sustenance, groups such as women and children will remain vulnerable. Burma ¶12. (C) A/S Campbell started the Burma discussion by noting that the U.S. policy review of Burma is still underway, but close to completion. He said that senior levels of the U.S. government increasingly believed that sanctions against Burma and efforts to isolate the country (from both the U.S. and EU) have not produced the desired results, partly because of Burma,s growing engagement with China and India. He expected the reviews conclusions to be familiar to the Europeans. Under discussion was the possibility of engaging in high-level engagement with the Burmese, something the Burmese had requested. This could occur in a strategic context that sees Burma as a component of our relations with all of S.E. Asia. We also had concerns about the military relationship between North Korea and Burma. DAS Marciel noted that our previous U.S. views often had been too black and white. The U.S. needed to look more deeply at the issues that shape both Burma and our long-term strategy towards it. ¶13. (SBU) The EU representatives expressed general agreement with U.S. views. Mr. Molin of the Swedish Presidency said S.E. Asian regional consideration would be important. Laos, for example, had become a &Chinese vassal,8 something that concerned the Burmese. He agreed that China certainly must should play a positive role on Burma. Thailand also was important, in part due to its great dependence on Burmese gas. Molin asked, &What can we do?8 adding that the EU was skeptical of Burmese overtures. The EU was under &no illusions8 that any progress could be made in the near future. ¶14. (C) Campbell noted that Burma,s increased engagement with China and India had diminished the priority Burma placed on its relations with ASEAN countries. ASEAN countries also had concluded that issues involving Burma were holding ASEAN back. The topic of Burma has come to dominate ASEAN conversations with other countries, to the neglect of other issues. Campbell noted some ASEAN partners felt that STATE 00109388 004 OF 006 U.S. and ASEAN policies had failed to improve the situation in Burma. ¶15. (C) Regarding Aung San Suu Kyi (ASSK), A/S Campbell noted that the US had only one opportunity to meet with her in the last six years (during Senator Webb,s recent visit to Burma),and that our policy review was already under way when the incident with the American citizen &swimmer8 occurred. He related that our CDA in Burma had found ASSK &serene and well-briefed.8 He also noted that ASSK told Webb that poor economic policies, not sanctions were the cause of Burma,s economic problems. ASSK had told Webb that a dialogue between the government and the opposition would be useful. Campbell confirmed that the U.S. has no intention of lifting sanctions at this time. The Commission,s Moran then asked if the U.S. would insist on keeping ASSK &in the loop?8 Campbell explained that because ASSK plays such a large moral and public role in Burma, she would continue to be an essential part of our strategy. Majewski noted what he saw as an historical parallel between Burma and the Poland of 1982-83. He said that high level engagement with Poland had worked, &bit by bit8 and suggested a similar move towards engagement by the U.S. would be welcomed. If that was the U.S. policy, the E.U. would want to know how to assist. Campbell responded by noting disappointment in the U.N.,s inability to achieve progress and noted that some have put forward the possibility of a &working group8 between the U.S.-EU-Japan-China. The Burmese are likely to be wary of this framework, he said. Perhaps it is best to begin the dialogue on a bi-lateral basis. The Chinese were largely unwilling to discuss Burma in a constructive fashion. DAS Marciel stressed that it was important to keep U.S.-EU dialogue open, particularly if there are any new developments with ASSK. ¶16. (C) A/S Campbell observed that there were many issues with the 2010 elections. Marciel said it was too soon to comment on the upcoming elections. The U.S. did not want to legitimize &bad elections.8 Majewski responded that, &bad elections are better than no elections.8 Marciel replied that regardless of the outcome of the elections, there would be new players. We may be able to reach out to them. ¶17. (SBU) Moran asked if there will be any change of U.S. policy regarding assistance to Burma. Marciel said there are legal and policy restrictions that govern the types of assistance we can provide. China ¶18. (SBU) Acting China desk Director Dan Kritenbrink started off the topic by recapping the Secretary,s speech on U.S.-China relations the previous night at a reception in honor of visiting Chinese National People's Congress Chairman Wu Bangguo. He noted the Secretary's speech reflected bilateral themes highlighted at the July session of the Strategic and Economic Dialogue (S&ED),which had established both a framework for U.S.-China relations as well as an agenda for the bilateral relationship in the coming year. The S&ED had also served to energize a number of formal U.S.-China sub-dialogues that would be held this year, including a non-proliferation dialogue, a STATE 00109388 005 OF 006 counterterrorism dialogue, and a human rights dialogue. The S&ED had provided a useful forum for discussing a range of important issues such as North Korea, Iran, and Afghanistan/Pakistan, in addition to important global issues such as climate change and coordinating development assistance. Though the tone of the S&ED, and of the bilateral relationship, was positive overall, there were of course still several issues on which the two sides did not see eye-to-eye and which were the subject of frank discussions, including Taiwan, human rights, Tibet and Xinjiang. Our approach to human rights in China was one possible issue on which the U.S. and EU might be able to coordinate positions, Kritenbrink noted. He added that the United States wanted to indicate to Beijing that we welcome China's rise but that its rise also entails certain responsibilities. Kritenbrink dismissed any notions of a budding "G-2" relationship, noting there was absolutely no desire, nor ability, to establish such a relationship. ¶19. (SBU) The EU side noted they would like to hear more on the subject of Taiwan, while voicing concerns that Chinese efforts to clamp down on activists may only worsen due to several sensitive anniversaries in 2009, culminating in the October 1 celebration of the 60th anniversary of the PRC's founding. Regarding human rights, the EU noted that efforts at coordinated demarches on the part of the EU and U.S. had been rebuffed by PRC counterparts. However, the EU would continue working toward an EU-China human rights dialogue in the near future. ¶20. (SBU) On cross-Strait developments, Director for the Office of Taiwan Coordination Ted Mann noted that the general U.S. position was to not intervene in Beijing-Taipei interactions, but to welcome both in public and private the positive cross-Strait developments of the past year. We continue to welcome Taiwan,s involvement in world bodies, but again, we often find that the best approach is a low-key one. When we do get involved (such as with recent hurricane assistance) we try to be low-key, and the PRC seems to recognize and appreciate this. President Ma has transited the U.S. several times and has also been low-key, for which we are grateful and the PRC has been quiet. That said, the subject of U.S. arms sales to Taiwan remains an extremely sensitive issue. ¶21. (SBU) Mr. Jessen of the European Commission noted that for 2009, China continues to be preoccupied with the U.S. This good for the EU, as it allows the EU to reflect on where it wants to go in its relationship with China. Jessen noted that the EU wrote a letter of sympathy to President Ma after the recent hurricane and voiced the need for both the U.S. and EU to express support for Taiwan. He also thought the focus on Taiwan from the Chinese Mainland during the financial crisis was a good way to make sure the Chinese see the need for long-term engagement with Taiwan. On the Dalai Lama, although there were different views among individual EU member states, the EU had nonetheless developed a common set of talking points on this and other China issues, which had upset the Chinese. However, a recent visit to Brussels by Premier Wen Jiabao had been successful, and the EU felt the personal aspects of Wen's visit had been productive. Climate change remains a key issue, but the EU looks to the U.S. for leadership. The trade relationship between the EU and China remains strong, with EU exports to China growing. STATE 00109388 006 OF 006 However, there is some concern in the EU about Chinese overcapacity. PDAS Donovan noted that we need help encouraging the Chinese to rebalance trade. Donovan stated clearly that now was not the time for Europe to rethink its post-1989 arms embargo on China. Coordination for Economic Development and Aid ¶22. (SBU) As the meeting ran well past its appropriated time, there was little discussion on this topic. However, Mr. Molin brought up the subject of position papers, which the EU was unable to produce for this meeting. He apologized for this but noted the difficulties in getting all 27 member states to agree on common positions. He suggested that each side should digest what was discussed and we can then flesh out a way to work together. Molin added that each side could come back, in writing, with a checklist of topics for next time, to see what progress has been made on each. Comment ¶23. (SBU) In general, the EU delegation listened more than it spoke. While offering their views on various topics and updating the U.S. on their Asian engagement, the EU seemed mostly eager for U.S. leadership on EAP issues. It seemed clear to both sides (and was commented on several times) that the U.S. and EU appear to be on the same page, and there is a genuine desire to work together to achieve common aims. CLINTON