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S E C R E T SECTION 01 OF 03 WELLINGTON 000173 SIPDIS NOFORN STATE FOR EAP/FO/MDALEY AND EAP/ANP NSC FOR MGREEN AND CJONES USINCPAC ALSO FOR POLAD/JHOLZMAN E.O. 12958: DECL: 02/15/2014 TAGS: PREL, NZ SUBJECT: THE U.S.-NEW ZEALAND RELATIONSHIP: WHAT WE COULD NOT SAY IN THE MISSION PROGRAM PLAN REF: 03 WELLINGTON 0339 Classified By: Charge David R. Burnett; Reasons 1.5 (B and D) 1. (S/NF) SUMMARY: Since New Zealand walked away from the ANZUS pact in 1986, we have had growing doubts about its willingness and ability to contribute to regional security. New Zealand remains a relatively friendly, like-minded partner in many policy areas. But the ad hoc nature of the its security commitments, decline of its defense capabilities under successive governments, the current government,s view of multilateralism as a means to limit U.S. power, and its flirtation with China and France to limit U.S. and Australian influence in the Pacific raise questions about the extent to which we can count on New Zealand on security issues in the future. The March 9-13 visit of CINCPAC Fargo to New Zealand could make an important contribution to our dialogue with New Zealand on its commitment to and capacity for sharing regional security responsibilities, as well as the growing compatibility gap with our other South Pacific partner, Australia. The visit may have a direct bearing on release of the opposition National Party,s paper on U.S.-New Zealand relations and will follow a March 3 meeting between PM Clark and Australian PM Howard, events that are expected to raise these same concerns. End Summary. 2. (S/NF) COMMITMENT: New Zealand,s decision to sit out the invasion of Iraq was a reminder of how far its security policies and interests have drifted from those of its traditional allies since NZ walked away from the ANZUS pact in 1986 (reftel). Subsequent deployment of 60 combat engineers to Basra has allowed the current government to offset some of the damage done to its traditional relationships while continuing to place criticism of the Coalition in local media. But the drift in policy is more fundamental than just differences over Iraq. In laying groundwork for the visit of Chinese President Hu, the Clark government privately mooted that it was necessary for New Zealand to work more closely with other powers such as China and France to curtail U.S. and Australian influence in the region. During the visit of the Chinese Vice-Minister for Trade, NZ Trade Minister Sutton publicly claimed that China was New Zealand's most important and valued trading partner, a claim that left Australian officials here scratching their heads in wonder. Officials of the current government continue to tout the importance of using the UN and other multilateral organizations as a means of containing, rather than engaging with or influencing, the United States. 3. (S/NF) Meanwhile, beneath the political level, long-standing military and intelligence ties continue virtually unabated. One can make the case that restrictions levied by the USG on programs in those areas in the wake of New Zealand's 1986 withdrawal from ANZUS have been progressively weakened over the intervening years. Increased use of waivers to provide training or intelligence support for New Zealanders undertaking missions of interest to the United States makes sense. Indeed, in this Mission's view, any military-to-military or intelligence activity that can be shown to have net benefit to the United States is clearly worth pursuing. However, it is important to be aware that these activities are used in New Zealand's domestic political arena as a counterweight to opposition claims that the GNZ is neglecting the bilateral relationship or is letting New Zealand's strategic policies drift. This is why the GNZ routinely attempts to bypass normal diplomatic channels to press for further weakening of the restrictions imposed in the wake of the introduction of the anti-nuclear policy. 4. (S/NF) It is also useful to note that the degree of commitment expressed by military or intelligence counterparts is often stronger than that of their political masters. For example, in a discussion with State Counterterrorism Coordinator Cofer Black on Indonesia, NZ military and intelligence officials were enthusiastic about the possibility that they could augment U.S. and Australian efforts. However, the PM's senior policy advisor immediately interjected that past Indonesian repression in East Timor would make it impossible for New Zealand to engage in CT activities there. The same individual also agreed after lengthy discussion of various CT threats in the region that these matters were indeed serious, but said New Zealand's senior political leadership was far more concerned about food security than physical security. With commitment gaps like these, it is important that we take our cue on New Zealand's commitment to regional security from those who set the budgets and mandate the policies. 5. (S/NF) CAPABILITY: Successive governments have allowed New Zealand's defense capabilities to decline since the mid-1980s. We have been told by retired GNZ officials who were in senior positions in the Lange government at the time the anti-nuclear policy was instituted that one of the considerations favoring the policy was that it would lead to NZ withdrawing or being pushed out of ANZUS, thereby lessening the country's defense spending requirements at a time of fiscal and economic crisis. Defense budgets since that time have not even been adequate to cover replacement costs for basic coastal defense hardware. To its credit, the Clark government, after scrapping the previous government's agreement to buy F-16s, has moved to replace aging frigates, helicopters and light-armored vehicles. It has allocated NZ$3.0 billion over 10 years for this purpose. We have asked repeatedly at all levels where that number came from, and have never gotten a satisfactory answer. In any case, given this apparently arbitrary budget figure, the military has done its best to set priorities consistent with basic defense, a limited peacekeeping role and an occasional nod to its previous allies (e.g., sending an appropriately configured frigate to the Persian Gulf). Some of the new equipment, such as the LAV-IIIs, is less versatile than the equipment it is replacing. Other hardware will be limited in scope because it is meant to be used with systems that the NZDF will no longer have -- e.g., combat helicopters but no joint strike fighters. Finally, maintenance of the new systems is not fully accounted for in the acquisition and deployment costs covered by the NZ$3.0 billion budgeted. 6. (S/NF) Cuts in hardware and redefinition of the military's role as peacekeepers rather than peacemakers have made recruitment and retention more difficult. Fighter pilots have left the Air Force in droves. The NZDF is hard-pressed to come up with two rotations of troops for peacekeeping operations when even that is less than the minimum three rotations required for effective long-term operations. Only the elite SAS (three squadrons) is still fully equipped and funded for missions relevant to the new threats emerging in the region and beyond. The combat engineers in Basra and the PRT in Bamian Province have acquitted themselves well, but have been heavily dependent for transport and other support services on ourselves and the British. Closer to home, when the Australians asked the Kiwis for help in the Solomon Islands, New Zealand's initial offer was to keep an army company "on reserve" in New Zealand. Meanwhile, Fiji sent 400 or so troops. Finally, after great pressure from the Australians, the GNZ relented and agreed to send troops. After all that, according to the Australian High Commissioner (protect), due to an equipment breakdown, the troops had to be flown to the Solomons on Australian aircraft. 7. (S/NF) COMPATIBILITY: Given reduced commitment levels and declining capability, the ability to work with better-equipped, more focused forces would seem to be crucial to maintaining an appropriate level of influence in the region and beyond. This Mission does not expect a country of four million people to punch at the same level as the United States, or even Australia. However, the growing gap between what the Australians can do in the South Pacific and the ability of the Kiwis to help them do it is of great concern to Australia, and should be of concern to us as well. For example, we are pleased that New Zealand plans to equip its new frigates with communications systems compatible with our own. However, the contribution those frigates could make to peacekeeping operations in Melanesia or Indonesia is limited, and the military assets the NZDF could contribute to such operations will not be interoperable with either Australian hardware or our own. 8. (S/NF) OUR MESSAGE: We have already begun to raise the above concerns with the GNZ. Beginning with Admiral Fargo's visit, we would like to give them a higher profile in private and in public. In doing so, we must be careful not allow ourselves to be painted by the Clark government as bullies telling Kiwis how to spend their tax dollars. We would suggest the following themes: -- We value our long-standing military and intelligence relationship with New Zealand and the commonality of values on which that relationship is based. -- We are facing a world that has become increasingly uncertain since the end of the Cold War; we all need to know whom we can count on, for what, and when. -- Many decisions by successive New Zealand governments over the past 20 years beginning with, but not limited to, the anti-nuclear policy have raised questions about whether we can continue to count on New Zealand as a partner in ensuring the security of this region. -- While we may differ on any number of aspects of foreign policy, the security of this region is clearly of mutual concern. -- We look forward to continued consultations with the Government of New Zealand on your country's commitment to this vital objective, your capability to join with us and others to contribute to achieving our shared goals, and the compatibility of New Zealand's future contributions with those of its other partners. 9. (S/NF) Comment: We believe the message themes outlined above will reduce the Clark government's wiggle room on whether it prefers to work with us and Australia in the region, or against us. We also believe engaging in an honest dialogue on these themes will reassure New Zealanders that, while we sould like to be able to count on a New Zealand with greater capability, compatibility and commitment, we are not asking them to do more than their fair share. In sum, the creative ambiguity in our relationship since 1986 has permitted us to do a great deal together in areas of mutual interest, despite a major policy difference. It has also allowed New Zealand to drift farther and farther from its former alliance partners in its commitment to what should be shared foreign policy goals. It has permitted a generation of New Zealanders to believe our shared history began, and perhaps ended, with the Vietnam War. Worst of all, it has encouraged them to ignore any parallels between China's interest in the region today and that of Japan in the 1920s and '30s. 10. (S/NF) One of the most common questions we have run into in discussing the remote prospect that the GNZ might scrap all or part of the anti-nuclear policy is "If we were to do so, would you expect us to resurrect the commitments of ANZUS?" At present, we do not have a good answer to that question. Replying "Change the policy and we will see," is of scant help to those Kiwis who would like to see a closer U.S.-NZ relationship. This Mission believes a frank discussion of our mutual expectations on regional security commitments, capabilities and compatibility would be useful in furthering the bilateral relationship. If carefully handled, it could also make a fruitful contribution to the public discussion of the U.S.-New Zealand relationship sparked by the U.S.-Australia FTA negotiations. Burnett