ID: 09THEHAGUE399
DATE: 2009-07-06 15:30

VZCZCXRO8226
PP RUEHAG RUEHDBU RUEHPW RUEHROV RUEHSL DE RUEHTC #0399/01 1871530
ZNY SSSSS ZZH P 061530Z JUL 09
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC PRIORITY 2984
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S E C R E T SECTION 01 OF 04 THE HAGUE 000399
SIPDIS
STATE PLEASE PASS TO NSC
E.O. 12958: DECL: 07/14/2019
TAGS: ECON, EFIN, MOPS, OVIP, PINR, PREL, NL
SUBJECT: NETHERLANDS: LEAD TOPICS FOR PRESIDENT'S JULY 14 MEETING
WITH DUTCH PRIME MINISTER BALKENENDE - SECOND OF THREE CABLES
REF: THE HAGUE 395

Classified By: Charge d’Affaires Michael F. Gallagher
for reasons 1.4 (b) and (d).

Mr. President:

1. (C)
As indicated in our overview cable, Dutch Prime Minister
Balkenende hopes to limit discussion to four major topics
during his meeting with the President: Afghanistan/Pakistan;
the economic crisis/G20; Middle East Peace Process/Iran; and
climate change. He will also mention the New York 400
celebration, hoping you will agree to see the Crown Prince at
the White House in September. These are discussed discussed
below. Other possible topics are discussed in a separate cable.

--------------------
Afghanistan/Pakistan
--------------------

2. (C)
Balkenende will share his expectations on what the Dutch can
contribute in Afghanistan post-2010. We have recently asked
the Dutch to remain in Uruzgan after 2010 to run the PRT in
Tarin Kowt but not, necessarily, to remain as lead nation in
Uruzgan. We also want them to continue to supply enablers and
trainers for the ISAF mission as well as providing financial
assistance for ISAF initiatives.

3. (U)
The Netherlands, past and current efforts put them at the
forefront of our Allies. The Dutch have been in Afghanistan
since December 2001. They are the lead nation in Uruzgan with
PRT Tarin Kowt and combat elements. They are also mid-way
through their second one-year command of Regional Command
South (RC-South) at Kandahar. Their commitment includes 1,800
personnel and such critical enablers as F-16s, helicopters,
intelligence assets, special forces, and medical units.
In addition, they have devoted more than 220 million euro (USD
305 million) in aid to Afghanistan since 2006. On short
notice, they hosted the March 2009 UN Conference on
Afghanistan which gained international acceptance of our
strategic review. They are also proud of their growing
international reputation for their implementation of a 3-D
approach (defense, development and diplomacy) in Uruzgan.

4. (S)
We understand Balkenende, Foreign Minister Verhagen, and
Defense Minister van Middelkoop have been drumming up support
in the Cabinet for continued deployment in Uruzgan beyond
2010, scaling back to about 500 troops (providing force
protection for PRT operations in effect), relinquishing lead
nation status but still providing enablers and development
assistance. The stumbling block so far has been the Labor
Party leader, Wouter Bos, Deputy Prime Minister and Finance
Minister. Several factors make an extension a difficult
decision for Bos. A majority of the Dutch public does not
strongly support the military deployment, and several
politicians have pledged to pull Dutch troops out of Uruzgan
in 2010. Many MPs are also concerned about the effect the
deployment has on military readiness and recruitment -- Dutch
forces have a shortfall of approximately 7,000 personnel (out
of a total of 43,000, a 16% shortfall). The Dutch media report
that the ISAF mission is not successful in bringing security
to the region and that Dutch aid is ineffective (the Labor
Party holds the development portfolio in the Cabinet as well).
There is also a growing sentiment that the Dutch have done
enough and it is time for other countries, such as Germany and
France, to do more.

5. (S)
FM Verhagen recently told us, as well as U.S. Ambassador to
NATO Daalder, that the Labor Party could probably support
staying in Afghanistan in some role, just not in Uruzgan (a
step that makes no sense given the depth of Dutch experience
in Uruzgan). Labor Party staff indicated a willingness to
continue some sort of mission in Afghanistan (even in Uruzgan)
if the issue were framed in terms of continuing Dutch
development and stability efforts. Balkenende, the Foreign
Minister and others expressed to us their frustrations caused
by their Labor partners, and have asked our help in bringing
Labor around.

6. (S)
In the President’s discussions with Balkenende and with the
press (at the end of the meeting), the President may

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want to stress: - our appreciation for the long-standing and
significant Dutch contribution in Afghanistan, specifically in
Uruzgan; - we see the Dutch as a valued partner in Allied
efforts to address a common threat in a dangerous region; -
while it is an internal decision by the Dutch whether they
stay in Afghanistan, we hope they will continue with other
Allies in ISAF as it implements its new strategy; and -
(perhaps most importantly), we hope they will continue their
stability and development efforts in Uruzgan to build upon the
Dutch achievements there.

7. (C)
The Dutch welcomed the new U.S. strategic link between
Afghanistan and Pakistan, but they keep a low profile on their
generous aid programs in Pakistan. They have pledged 86.7
million euro (USD 120 million) in development aid over the
next three years, as well as 3.5 million euro (USD 4.9
million) in immediate aid for Pakistan,s internally displaced
persons. The Dutch are perplexed, however, by Pakistan,s weak
democratic credentials and disorganized aid programs.
Nonetheless, Foreign Ministry contacts have indicated
Balkenende may be prepared in the meeting to announce
additional aid to Pakistan.

----------
Guantanamo
----------

8. (S)
In the President’s private meeting, he may want to ask
Balkenende to accept Guantanamo detainees, but recognize
Balkenende and other Cabinet members have already said
publicly the Netherlands will not/not accept detainees.
In a July 5 radio interview, Balkenende said he expected the
President to ask the Netherlands to consider taking some
Guantanamo detainees, “We have already said no to this
request, but we will discuss the issue. There are legal
obstacles to taking in these prisoners. Still, he left the
door open, saying it was a complex issue and he is willing to
discuss it, possibly in a European context. On June 30, FM
Verhagen told us privately the Netherlands “will accept
detainees if that,s what it takes to close Guantanamo.” Taking
detainees would be difficult and could cause the government to
fall because the decision would strengthen the Dutch turn to
the right, giving Wilders ammunition to feed the flames of
Dutch anti-immigrant fears. Given these constraints, the Dutch
have looked for other ways to be helpful. FM Verhagen is
funding a two-year study of the nexus of human rights,
humanitarian law, and use of force, with an eye toward
resolving the knotty legal issues surrounding Guantanamo. The
Dutch may also be willing to support funding to transfer of
detainees to third countries.

-------------------
Economic Crisis/G20
-------------------

9. (SBU)
The Dutch financial sector was hit hard by the global
financial crisis, due in part to exposure to U.S.
mortgage-backed securities and other toxic assets. The
government responded assertively with several measures to
assist banks and their customers, most dramatically by
nationalizing the Dutch operations of Fortis Bank and spending
a controversial USD 36 billion to bail out the new Fortis/ABN
AMRO entity, the Netherlands, largest bank. The contagion in
the financial sector has spread throughout the Dutch economy,
now in recession since the first quarter of 2009. After four
consecutive years of GDP growth, the Q2009. After four
consecutive years of GDP growth, the economy is expected to
shrink by 4.75 percent in 2009. Exports are expected to
decline 16.75 percent this year - a precipitous drop for the
Netherlands, small, open economy which depends on foreign
trade. Unemployment is rising and likely will reach 9.5
percent by 2010. Balkenende,s government introduced three
economic stimulus packages between November 2008 and March
2009, including subsidies for clean energy projects, corporate
tax breaks, expanded export credit insurance facilities, and
accelerated infrastructure projects. The Cabinet remains
committed to an incremental, cautious approach of giving these
stimulus measures time to work before embarking on new ones.
Meanwhile, the budget surplus that the Netherlands enjoyed in
recent years has disappeared as a result of the stimulus
programs, with a

THE HAGUE 00000399 003 OF 004

deficit of 6.7 percent of GDP expected by 2010. Balkenende now
faces the difficult question of how to promote economic
recovery while keeping the deficit in check.

10. (SBU)
Balkenende remains a staunch believer in international
cooperation as the only means of bringing about economic
recovery at home and abroad. In keeping with the Dutch
tradition of multilateralism, Balkenende supports the work of
the G20 and expanded roles for the IMF and World Bank. The
Dutch champion much broader financial regulation - and
standards for corporate responsibility. They are keenly
interested in the plight of developing countries in the
economic crisis and continue to push the EU, UN, and
international financial institutions to develop programs to
address this issue. This focus is in keeping with the strong
Dutch tradition of assistance to the developing world. The
Dutch provide a fixed 0.8 percent of GDP - over USD 7 billion
- in development aid annually, making the Netherlands the
world’s fourth largest aid donor as a percentage of GDP and
the sixth largest in absolute terms. Balkenende will seek the
President’s views on the pace of economic recovery and how the
Netherlands can play a constructive role, particularly to
assist developing countries.

11. (C)
Balkenende considers participation in the G20 a critical
measure of the Netherlands, international stature and will
push hard for an invitation to the Pittsburgh summit. This is
THE key deliverable he hopes to secure from this meeting.
(Note: Finance Minister Bos asked Treasury Secretary Geithner
for a G20 invitation during their June 29 meeting in
Washington; the Secretary indicated the White House would make
a decision after the July 8-10 G8 summit. End note.) Dutch
participation in the Washington and London summits were major
wins for the Netherlands; Balkenende will argue that the Dutch
deserved those invitations, and that the practice should
continue. The Dutch point out the Netherlands is the 5th
largest economy in the EU, the 16th largest in the world, and
has the world,s 11th largest financial center. The Dutch are
particularly supportive of the G20,s calls for
anti-protectionist trade and investment policies, reform of
financial supervisory structures, including a prominent role
for the new Financial Stability Board, increased supervision
of hedge funds, and more restrictive remuneration policies.
Balkenende will argue that the Netherlands, open financial
sector has been significantly damaged by the crisis; the Dutch
have the knowledge and experience to play a constructive role
in G20 efforts to reform the international financial
architecture and spur economic recovery; the precedent for
their G20 participation has already been set; and they,
therefore, deserve a seat in Pittsburgh.

--------------
Climate Change
--------------

12. (C)
Balkenende is keenly interested in climate change and pushes
the Netherlands to address the issue through ambitious,
coordinated, global action. We expect him to praise renewed
U.S. leadership on climate but he probably will not stray from
the common EU position -- still hoping for a more aggressive
medium-term U.S. mitigation target. The GONL has committed to
a 30 percent reduction in greenhouse gas (GHG) emissions by
2020 relative to 1990. Qgreenhouse gas (GHG) emissions by 2020
relative to 1990. They want other top emitters to display a
“comparable effort” in mitigating climate change, but they
privately acknowledge that even a 20 percent U.S. cut by 2020
is unrealistic. We share much common ground with the Dutch on
this issue. They see an international carbon market, heavy
private sector involvement, and broad access to clean
technologies as key parts of the solution. They support robust
financing for developing countries that undertake serious
mitigation commitments, and will insist such aid be allocated
efficiently, accountably and transparently.

13. (C)
Balkenende will likely explain how tackling climate change is
vital to the Netherlands, as over 60 percent of its population
and economic activity is located below sea-level. The
devastation of Hurricane Katrina was a wake-up call for the
Dutch. Yet despite their best intentions, Dutch rhetoric far
outstrips their deeds. Yale,s 2008 Environmental Protection
Index ranked the Netherlands 55th worldwide, placing it in the
bottom fifth of EU countries. (Note: The

THE HAGUE 00000399 004 OF 004

United States ranked 39th. End note.) The latest UN figures
reveal the Netherlands reduced its total GHG emissions by only
2 percent between 1990 and 2006, leaving it a steep hill to
climb to achieve its ambitious 30 percent target by 2020.
Local energy experts admit the Netherlands has no chance of
achieving the EU,s 20 percent renewable energy target by 2020.

----------------
Middle East/Iran
----------------

14. (C)
The Dutch are eager to play a constructive role in the Middle
East Peace Process. The Dutch participate in the Gaza maritime
interdiction initiative to stop arms smuggling. Along with the
Danish, the Dutch have proposed resurrecting the EU Gaza-Egypt
border monitoring mission. At the same time, the Dutch push
for greater access for humanitarian aid in Gaza, and they are
substantial donors to Gaza economic development and governance
initiatives, providing 72 million euro (USD 100 million) in
2008. FM Verhagen makes regular trips to the region (he was
last in Israel at the end of June) and is considering hosting
a 2010 conference in support of peace efforts. They will be
anxious to find ways to support our efforts in the region.
They also welcome the U.S. decision to engage Syria and have
been holding off expanding their ties with Syria until there
is greater human rights progress.

15. (S)
On Iran, the Dutch are tough-minded and have pushed the EU to
prepare a coordinated response to Iran,s crackdown on
protestors and the media. On the nuclear issue, the Dutch
strongly support the UN sanctions regime and quickly follow up
on efforts to curtail proliferation activities. Before the
election crisis, the Dutch embassy in Tehran reported that
sanctions were starting to work. The embassy also noted that
acquiring nuclear capacity enjoyed wide support throughout
Iranian society. The Dutch are willing to deepen
U.S.-Netherlands cooperation on information sharing on Iran.

---------------------------------
New York 400 - Crown Prince Visit
---------------------------------

16. (SBU)
The Dutch government is spending almost $10 million this year
to highlight four hundred years of Dutch-American friendship.
This commemorates the 400th anniversary of the exploration of
Manhattan and its river system by Henry Hudson, an English
seaman working for a Dutch company. The quadricentennial
(known as “NY400”), with programs in New York and Amsterdam,
weaves our shared history into what will be our shared future,
expanding awareness of our similarities: our pioneering spirit
and the values of freedom, democracy, openness, creativity,
entrepreneurship, diversity and tolerance. In September, Crown
Prince Willem-Alexander and his wife, Princess Maxima, will
visit New York to participate in NY400 activities. The Prime
Minister will ask if you can receive their Royal Highnesses at
the White House. The Dutch stress the Crown Prince will likely
be king soon (it is widely anticipated Queen Beatrix will
abdicate within a year) and this would be an opportunity for
the President to meet the Crown Prince in the context of the
NY400 festivities. The Crown Prince is a champion around the
world for clean water and sanitation as a public health
initiative.

17. (U)
A cable with brief discussion of other potential topics is being
sent septel.

GALLAGHER