Viewing cable 08PARIS957, YOUR JUNE 14-16 VISIT TO PARIS
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|08PARIS957||2008-05-19 14:02||2010-11-30 21:09||SECRET||Embassy Paris|
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S E C R E T SECTION 01 OF 08 PARIS 000957 SIPDIS FOR THE PRESIDENT FROM AMBASSADOR STAPLETON DEPT PLEASE PASS TO DEPARTMENT OF AGRICULTURE EO 12958 DECL: 05/19/2018 TAGS ECON, FINR, KPAL, NATO, OVIP, PGOF, PREL, PTER, SENV, AF, CH, CO, FR, IR, IS, IZ, LE, LG, RS, SR, SU, YI SUBJECT: YOUR JUNE 14-16 VISIT TO PARIS PARIS 00000957 001.2 OF 008 Classified By: Classified by Ambassador Craig R. Stapleton, for reasons 1.5 (b) and (d) SUMMARY --------------------------- ¶1. (C) Mr. President, you will arrive in France as Nicolas Sarkozy begins the second year of a five-year term as President. You will meet a Sarkozy chastened by the experience of a first year marked by a sharp drop in his political stock at home, but during which he nevertheless reclaimed French leadership in Europe and moved France closer to the U.S. Sarkozy was elected in May 2007 on a platform of fundamental domestic reform, promising to unleash France’s economic potential and to adapt the country to globalization. He has undertaken a range of domestic reforms but the results have been somewhat disappointing -- to supporters who advocated more daring implementation of a more ambitious set of measures, and to a public that expected an immediate positive impact in household purchasing power. Though the public by and large continues to support Sarkozy’s reform effort, his personal popularity has plummeted, mostly as a result of his “unpresidential” parading of his personal life and his weakness for glitz -- an image he is now seeking to repair. ¶2. (C) Sarkozy was not elected on a foreign policy platform, but this is where he has thus far left his clearest mark, repositioning France to work alongside the U.S. to meet common challenges and leading Europe to its next institutional advance in the form of the Lisbon Treaty. While stressing France’s independence of action, Sarkozy has sought to enlarge French influence by working constructively with the U.S., setting aside France’s Gaullist vocation of tempering the United States’ “hegemonic” position in world affairs. This “repositioning” (Sarkozy’s term) vis-a- vis the U.S. is seen most clearly in Sarkozy’s articulation of the stakes for France, NATO and the West in Afghanistan, his commitment of more troops to NATO’s stabilization efforts there, and his declared intention to re-join NATO’s integrated military command structure in the context of an invigorated European effort on defense. Your visit provides an opportunity to support and give further impetus to Sarkozy’s refashioning of the U.S.-French relationship, and to demonstrate to the French public that Sarkozy was right in positing that a closer relationship with us increases France’s influence without undermining its independence. A discussion of France’s approach to key international issues closes out this message. END SUMMARY. SARKOZY’S LEADERSHIP: FRANCE ------------------------------ ¶3. (C) It remains to be seen if Nicolas Sarkozy will prove able to reform France economically and socially, unleash its competitive potential, and help it embrace globalization. Sarkozy was elected president in May 2007 on a wave of public recognition of the need for such change and enthusiasm for Sarkozy as the person to bring it about. After a year in office Sarkozy has undertaken many of the across-the-board reforms he promised, but the effect -- particularly with regard to the critical issue of purchasing power -- has yet to be felt by the French public. Widespread disappointment with the meager results of reform, along with dismay at Sarkozy’s penchant for a flashy, “unpresidential” lifestyle, has driven down Sarkozy’s approval ratings, now stuck below forty percent. Notwithstanding his personal unpopularity, Sarkozy’s reform policies still enjoy broad public support. It remains to be seen if he can summon sufficient authority to implement a package of reforms that will produce the desired impact by the end of his term. Sarkozy believes he can: You will be meeting an embattled, but determined president, who remains primarily focused on delivering what he promised in his campaign -- modernizing and economically liberating France -- and who is determined to succeed, deploying the considerable, largely unchecked powers of the French Presidency. ¶4. (C) Sarkozy’s first year in office is the story of how a spectacularly successful presidential candidacy gave way to a PARIS 00000957 002.2 OF 008 spectacularly unpopular presidency. The collusion and antagonism between Sarkozy and the media are key, persistent themes of this story. For the first six months of his administration (May - October) Sarkozy enjoyed the longest political honeymoon and best polls of any French Presidency on record. He dominated the French political landscape, personally driving all government policies and setting the tone for the media’s coverage of his national and international presidential activities. Then (from November through February), in a major miscalculation in image management, Sarkozy paraded for media coverage his billonaire-life-style affair with former supermodel and current First Lady Carla Bruni-Tedeschi, whom he married within weeks of meeting her following his divorce from his second wife, Cecelia Sarkozy. The media that he had drawn in to project himself as a hyper-energetic, no-nonsense reformer dedicated to solving the problems of ordinary French people, took its vengeance, portraying Sarkozy as a vulgar, insecure celebrity-worshipper focused only on himself and his place in the limelight. The ensuing, widespread sense among the public that Sarkozy didn’t really care about the problems of ordinary people sent the president’s popularity plummeting. (His cause was not helped either by the embarrassing week-long visit to Paris last fall by Libyan leader Qadhafi, whose pronouncements and antics chipped away the notion that Sarkozy’s approach to such leaders and to human rights issues would be markedly different from his predecessor’s -- and contrasted sharply with Sarkozy’s earlier public pronouncements.) ¶5. (C) Since March Sarkozy has sought to reassure his partisans and the country that he remains committed to reform, despite setbacks, and that he has drawn appropriate conclusions concerning the visibility of his private life. Sarkozy re-fashioned his image, hewing somewhat more closely to public expectations for French presidents as soberly distant, near-regal figures who officiate at civic rituals. This return of a more traditional presidency has coincided with Prime Minister Fillon’s emergence from under the shadow of Sarkozy as a national leader in his own right and of the Fillon government’s ministers finding firmer footing as policymakers and implementers of reform. In a prime-time television appearance in April, Sarkozy re-launched reform, promising his continued, personal engagement. However, any return to the political dominance Sarkozy once enjoyed will be very difficult, will take time, and will depend largely on showing results -- reforms that enhance the prosperity and opportunities of ordinary citizens. In sum, his first year in office has highlighted three Sarkozys who will likely continue to co-exist through the end of his term: the hyper-activist reformer and commanding political figure, the self-absorbed and frenetic individual, and the statesman, matured by the exigencies and burdens of office, who perseveres to achieve his leadership vision. SARKOZY’S LEADERSHIP: U.S.-FRANCE ----------------------------- ¶6. (C) France remains a world power and a leader of Europe. With global military and diplomatic reach, it generates significant economic wealth and still enjoys envied cultural prestige. Even though he was not elected on a foreign policy platform, Sarkozy’s most significant achievement thus far is his re-positioning of France to work alongside the U.S. to solve problems, removing the Gaullist imperative of keeping a critical distance from Washington. From the outset of his presidency, Sarkozy was intent on improving relations with the U.S. and, more broadly, bringing France back -- as he put it in a key foreign policy address -- to full membership in the “the West’s family” of democratic nations. Sarkozy considers the re-positioning of France alongside the U.S. -- no longer advocating alternative poles to American leadership -- will increase France’s influence as we together address the grave challenges facing the international order. Sarkozy identifies those challenges as religion-based political extremism, nuclear proliferation, non-inclusion of the world’s poor in economic integration, and environmental catastrophe. In addition, he sees bringing France and the U.S. together as historically fitting and proper. This stems PARIS 00000957 003.2 OF 008 both from Sarkozy’s full appreciation of the significance for France of liberation from Nazi occupation in World War II and from his personal identification with American social values, in particular, individual opportunity and achievement. ¶7. (C) Sarkozy’s leadership in reinvigorating the bilateral relationship was marked both by powerfully symbolic gestures and concrete actions. Sarkozy’s trips to the U.S., including a vacation in New Hampshire last August and an official visit in November, clearly signaled the renewal of trust and friendship between the U.S. and France. Sarkozy said, in the opening of his November 7 speech before a joint session of Congress, “Friendship, first and foremost means being true to one’s friends” and France and the U.S. are friends that “have always stood side by side, supported one another, helped one another, fought for one another’s freedom.” Figuring prominently among Sarkozy’s gestures that signaled a new French understanding of key U.S. policies were the dispatch, after your meeting with him in Kennebunkport, of his foreign minister to Iraq and his own Christmas Eve visit to Afghanistan. ¶8. (C) At the Bucharest Summit, when you last met with him, Sarkozy repeated his intention to “renovate” France’s relationship with NATO and to increase its commitment of troops under NATO command in Afghanistan. He was vague, however, as to the exact timing of NATO re-integration, and he understated the size of the French reinforcement for Afghanistan, announcing only the 700-person battalion that will be sent to RC-East. He did not publicly mention the additional 300-350 troops France will send to Kabul in July when it assumes RC-Capital command there (or the possibility of dispatching special operations forces sometime later). Sarkozy’s public caution on NATO and Afghanistan reflects his sensitivity to recent criticism that he is aligning France across the board with the U.S. It also demonstrates how his current unpopularity has weakened his ability to brave the opprobrium of the Gaullist conservatives, including many in his own administration. Sarkozy’s commitment to a more Altanticist France is not in question. But he does have to factor in the political caution of many around him (including Prime Minister Fillon) and the continuing strength of the Gaullist consensus among the public at large. Finally, a largely powerless Socialist Party-led opposition has found a voice criticizing Sarkozy over Afghanistan and NATO, even if it does not have the political muscle to throw him off course. WHAT WE CAN DO FOR HIM ------------------------- ¶9. (C) You and Sarkozy have brought about an important shift on the world scene: France and the U.S. are acting together in a way they were not before his election on May 6, 2007. Giving Sarkozy full credit for his leadership and bolstering his stature as a world leader of vision and consequence, would be the best way to solidify France’s new orientation. We have sought French Government support on a range of issues over the year since Sarkozy became President. The French have responded more positively than in the past, consistent with the Sarkozy-directed shift to a closer and more harmonious working relationship. Your visit would be the best opportunity to show the French we value that relationship and wish to build on it in such a way that it serves our collective and individual interests. Your praise of France’s efforts to improve the relationship will have greatest impact if it is coupled with an acknowledgment of its legitimate role in the resolution of the issues that matter most to the French -- beginning with Lebanon, Palestinian-Israeli peace, Iran and Kosovo. The greater the specificity in describing a French role, the greater the impact. This would also be an opportunity to express your support for Sarkozy’s vision of an effective Europe, as you did in Bucharest, by endorsing the further development of the EU’s defense capabilities alongside NATO -- demonstrating that closeness to the U.S. and sensitivity to U.S. priorities pay off and result in more, not less, influence for France. FOREIGN POLICY ISSUES PARIS 00000957 004.2 OF 008 ------------------------ ¶10. (U) Discussion follows of France’s approach to key international issues and how the visit might be used to advance our bilateral cooperation toward the achievement of our policy objectives. ¶11. (S/NF) IRAN: The French are the most tough-minded of our allies, and Sarkozy has more than erased the doubt in France’s position stemming from Chirac’s ill-advised public equanimity about a likely Iranian nuclear capability. Sarkozy’s hard line has negatively impacted on France’s bilateral relationship with Tehran, and France has paid a commercial price, although the Iranians, more than the French, are the ones seeking to preserve some sort of discreet channel between Paris and Tehran. France has hammered away at other EU countries concerned about protecting their economic interests to implement measures to enforce UN sanctions and complementary EU sanctions. Despite the overall positive French position on Iran, they were very upset over what they considered our maladroit handling of the release of the NIE last fall on Iran’s nuclear program. This, in their view, greatly complicated the P-5 plus 1’s efforts to pass UNSCR 1803 and maintain a solid front in the face of Iranian intransigence. The French share our skepticism about ElBaradei and the IAEA. Given an unchanged French estimate of Iran’s nuclear capabilities (perhaps more influenced by Israel’s), Sarkozy will listen carefully to your views on the way forward with Iran. He and many other French policymakers share our concerns about the regional threat Iran poses in the Gulf, Iraq, and Lebanon. ¶12. (C/NF) NATO: President Sarkozy,s closest advisors have made clear that he has already made the decision for France to rejoin NATO,s integrated military command. However, he faces opposition and reluctance, including from within his own party, as many prominent French policy makers cling to the self-image of an independent France as symbolized by its singular position in NATO. The grand bargain -- a full return to NATO in return for a U.S. embrace of an enhanced EU role in European defense ) is viewed as essential to make the move politically palatable to the broader French public. For this reason, President Sarkozy was deeply grateful for your support at Bucharest. French officials are preparing to make European defense a priority of the EU presidency in the second half of this year, and are tentatively citing the 60th anniversary NATO summit as the target date for a French announcement on reintegration. As noted above, a further statement during the visit of U.S. support for a strengthened European defense would be welcome as Sarkozy seeks to move forward on NATO. The French continue to doubt Georgia’s and Ukraine’s readiness for MAP, but have not completely closed the door to a NATO Ministerial decision granting MAP to one or both of them in December. ¶13. (C) AFGHANISTAN: At the Bucharest NATO summit, Sarkozy publicly announced 700 new troops for Afghanistan, a supplemental battalion for RC-East. As noted, in July France will also be adding some 300-350 troops to bolster the French presence in Kabul, as France assumes command of RC-Central beginning this summer. Finally, a deployment of Special Forces may also still be on the table, although not before the July reinforcement of France’s command presence in Kabul. Although still the largest increase announced at Bucharest, Sarkozy understated France’s additional contribution in the face of rising public and political opposition. (Most polling shows only a minority of the French public supports increased deployments to Afghanistan, and there is little public appreciation of the stakes involved.) To increase support for Afghanistan, the French government is co-hosting the Afghanistan support conference, to take place on the eve of your visit. The conference will follow up on the 2006 London donor,s conference and address broader questions of counter-narcotics, effective distribution of aid, good governance and anti-corruption efforts. Your public statements need to address the widespread perception that the international effort in Afghanistan is failing and explain why success there must be a European imperative. PARIS 00000957 005.2 OF 008 ¶14. (C) IRAQ: French reluctance to commit military troops to Iraq remains a constant, as does France’s hesitation to increase bilateral assistance or engagement as long as the security situation and prospects for national reconciliation are seen as fragile. The French have, however, begun to re-engage, opening an embassy office in the Kurdish city of Irbil (which they have suggested would be used as a national center for training and assistance). FM Kouchner participated in the last two “neighbors” meetings as a means of encouraging Arab states to shore up diplomatic and other relations with Baghdad. France staunchly backs UNAMI and the idea of the UN leading international reconstruction in Iraq. The French have not, however, had much success achieving a significant change of view within the EU and may use their upcoming presidency to push harder. Commercial ties are growing, but only slowly. The French are eager to talk about Iraq, but we need to do more by way of a sustained and realistic dialogue. Iraq Coordinator David Satterfield started such a dialogue last December, but we should consider intensifying it and making it more of an interagency undertaking, with State and DoD in the lead. French concerns about Iran’s role in radicalizing Shi’a elements in Iraq and elsewhere is something we should factor into these discussions. ¶15. (C) LEBANON/SYRIA: They French Presidency learned its lesson from its failed attempt to work with Syria late last year to secure election of a new president in Lebanon. France has resisted repeated Syrian appeals to resume that effort or start a new one and the French have publicly blamed Syria for the continued impasse. However, they are out of ideas as far as how best to move things forward and have adopted the public line that the only diplomatic initiative in play is the one the Arab League (with Syria’s assent) adopted. The recent fighting in Lebanon saw the French at once eager to work with us but determined to seek as a priority the minimum necessary to calm the situation and resume dialogue among the parties; the safety of their UNIFIL contingent weighed heavily in their policy deliberations. The current crisis has underscored a key divergence in the French approach from ours, i.e., the degree to which it supports the majority March 14 movement as well as the Lebanese government. Repeatedly, the French have asserted that they support the government led by PM Siniora but do not accept that the movement behind him, which they see as one unstable faction among many, deserves the same full support. Maintaining a channel to Hizballah, which Sarkozy and Kouchner have called a terrorist organization despite French reluctance to designate it as such, is another reason the French refuse to “take sides” in a way that would put pressure on Hizballah despite their firm view that March 8 and the Syrians are responsible for Lebanon’s political stalemate. Despite frequent tactical disagreements at the UN, we and the French largely share the same view that it is vital that the UN investigation into the many political assassinations in Lebanon lead as rapidly as possible to indictments and prosecution. Your visit offers an important opportunity for policy coordination. ¶16. (C) ISRAELI-PALESTINIAN PEACE: As always, France remains eager to play an important role in bringing peace between Israel and the Palestinians. Under Sarkozy, the French needling of the U.S. and Israel has largely disappeared from the government’s daily script. The French hope that Sarkozy’s warm embrace of Israel (unprecedented over the past fifty years), and his strategic rapprochement with the U.S., have increased its credibility as a partner in peace-making. It was in this context that the French offered to follow up the Annapolis conference with a donors conference in Paris. Sarkozy, who is an unabashed admirer of Israel but keen that Palestinians are treated justly, will listen carefully to what you have to tell him about your recent visit to the region and how his own Middle East trip at the end of June can reinforce your message to the parties. ¶17. (C) KOSOVO: France recognized Kosovo,s independence immediately, but is hesitant about full implementation due to the potentially destabilizing role of Serbia (and Russia) in PARIS 00000957 006.2 OF 008 the region. It is important to reassure Sarkozy that, while we must proceed with full implementation of the Ahtisaari plan, we agree with France on the importance of Serbia in maintaining regional stability, and that U.S. policies will remain consistent with our vision for Euro-Atlantic integration of the entire Western Balkans, including both Serbia and Kosovo. ¶18. (C) EU PRESIDENCY: France will chair the European Union from July to December 2008. As President of the European Council, Sarkozy will be the most visible face of the EU and will have a major opportunity to advance French policy priorities. Sarkozy’s goals for France’s presidency include strengthening European Security and Defense Policy (ESDP), in which he will seek to increase European defense capabilities in parallel with normalizing France’s role in NATO. Sarkozy’s other priorities include building a European consensus on energy and environment, immigration, and agricultural policy, as well as developing the Union for the Mediterranean. France seeks to create a comprehensive, cohesive European energy policy, promoting energy security along with environmental aims such as reduction of greenhouse gases and promotion of renewable energies. Similarly, a common European pact on immigration would help EU member-states present a consistent front to those seeking asylum or immigrant visas. Sarkozy also wants to set the stage for a revision of the EU Common Agricultural Policy, which provides French farmers with important subsidies. The French EU presidency will also inherit ongoing initiatives, such as the internal process of ratification of the Treaty of Lisbon, or simplified EU treaty, for which Sarkozy takes credit. France will also during its presidency help shape EU responses to crises or other foreign policy issues that may emerge. The presidency will thus raise Sarkozy’s global visibility, increase his influence, and give him an opportunity to improve his image as a statesman both overseas and domestically. We enjoy good communication with the French on their EU presidency preparations, and such openness will remain key during their presidency. Transparency regarding defense capabilities is particularly important as we seek, with other NATO allies, to ensure that ESDP development is carried out in harmony with NATO. Sarkozy continues to oppose Turkey’s entry into the EU, in line with French public opinion, but he has not sought to bring the issue to a head. France will seek to use its influence as EU President to break through the Turkey-Cyprus impasse on NATO/EU cooperation. ¶19. (C) UNION FOR THE MEDITERRANEAN: This new organization, Sarkozy’s brainchild, will be established at a Paris summit meeting on July 13. Built on existing cooperative structures, it is intended to bring the EU member-states together with countries from around the Mediterranean basin to work on concrete economic, environmental and infrastructure projects. The focus on specific projects is likely to be a productive approach, for which we can signal our interest and support. Though the U.S. would not be eligible, nor seek to join the Union for the Mediterranean, we could eventually participate in specific projects or work in tandem with them. Sarkozy significantly revised his initial vision for the Union to allay the concerns of Germany and other European partners that a new cooperative body could split or otherwise weaken the EU. The linkage of the Union for the Mediterranean to pre-existing structures that have by most accounts proven ineffective, coupled with a lack of public-sector funds for the new initiative, may mean the new organization’s impact will be less than intended. ¶20. (C) TERRORISM: Fighting terrorism remains among the GOF,s top priorities. France is one of the few countries in Europe that &gets it,8 and remains dedicated to increasing its capabilities ) in both defense and intelligence. France has been a target of terrorism for decades and is Al-Qaida in the Islamic Maghreb’s (AQIM) number one foreign target. The improvement of our bilateral relationship over the past year has meant more substantive discussions on many of our common threats. The visit is an opportunity to signal to Sarkozy that the U.S. appreciates our increased C/T cooperation and PARIS 00000957 007.2 OF 008 would like to see that collaboration expand further. ¶21. (C) FARC HOSTAGES/BETANCOURT: Sarkozy raised the profile of the Betancourt issue during the election campaign and over the first year of his Presidency, hoping to accrue political credit for succeeding where his predecessors had failed. Instead he has only raised the Betancourt’s value to the FARC as a prisoner. The French continue to search for possible options to negotiate a release of Franco-Colombian hostage Ingrid Betancourt (and other hostages). In an attempt to increase international concern over Betancourt,s health and possibly secure a hostage release, the French Government sent a medical mission to Colombia in early April. The FARC rejected this effort, saying that any release would have to be coordinated in advance with them. Foreign Minister Kouchner visited Colombia, Ecuador, and Venezuela at the beginning of May in an effort to find new solutions to the hostage issues; however, Kouchner told journalists after his return that he is not optimistic that Betancourt will be released. The French believe the Colombian airstrike on March 1 which killed senior FARC member Paul Reyes may have derailed ongoing efforts to free Betancourt. Sarkozy may raise his concern that the Colombian military might undertake additional operations -- that could threaten the safety of Betancourt -- and he may well seek your assistance in securing Betancourt’s release given perceived U.S. influence with President Uribe. ¶22. (U) CLIMATE CHANGE: Ninety percent of the French public considers climate change as one of the gravest issues facing mankind and many still cannot understand why the U.S. failed to accept the Kyoto Protocol. When Sarkozy was elected President, he challenged the U.S. to assume a leadership role. Over the past year, the French have begun to appreciate our active engagement on this issue. Following the U.S. proposal for a Major Economies Meeting process to further the UN climate process, the French at first expressed a mixture of skepticism and interest. They are now fully on board, with France hosting the third Major Economies Meeting (and the first to be held overseas) in mid-April, where Sarkozy made a major address. France anticipates additional productive MEM sessions leading up to the summer’s Leaders Meeting. This does not mean that the French share all U.S. positions in the MEM. For example, they thought our medium-term greenhouse gas emissions reduction target (capping emissions at 2025 levels) much too modest. France will seek strong language on climate change in the upcoming G-8 statement, in addition to the language on climate change in the Leaders Statement under the MEM process. This would be an opportunity to sensitize Sarkozy and the GOF further to the seriousness and breadth of U.S. efforts. ¶23. (C) DARFUR/AFRICA: Sarkozy came to office in 2007 with an ambitious agenda for Africa, including an international conference on Darfur that the French hosted shortly after he became president. The French have focused on stabilizing Chad and the Central African Republic as their response to the broader Darfur problem. They were responsible for obtaining European approval of the French-proposed EU peacekeeping mission in those countries, intended to complement UN peacekeeping in Darfur. The French provided essential support to our Embassy in Chad and to Americans in-country during the rebel attacks in February 2008. Concurrently, the French have been working to modernize relations with Africa, seeking to develop a more business-like model free of the trappings of the colonial and immediate post-colonial eras. Their reflexive suspicion of U.S. competition in Africa has diminished, especially as China’s presence and influence has increased. ¶24. (C) CHINA: Sarkozy has tried to balance domestic political pressure to take a tough stand on Chinese human rights violations with competing economic interests and a strategic approach to China that favors engagement, over isolation or alienation. He has yet to rule out boycotting the opening ceremonies of the Olympics and has said that as France will hold the EU Presidency during the Olympics he will consult with EU partners on the decision. While France PARIS 00000957 008.2 OF 008 continues to support lifting the EU arms embargo against China, it is unlikely that it will press this issue as there is little EU support, which the Tibet/Olympics controversy has only further dampened. ¶25. (C) RUSSIA: Sarkozy has been decidedly pragmatic in his relations with Russia, though his advisors say he enjoys a good personal rapport with Prime Minister Putin. The Sarkozy government has consistently been firmer than its immediate predecessor in criticizing Russian international provocations (CFE, Georgia) as well as domestic human rights abuses. That said, Sarkozy continues to see his relationship with Moscow through the prism of needed cooperation with Russia on Iran and other major international issues, and the French are sensitive to the energy security concerns of Germany and other European partners. We should assure Sarkozy that we are equally conscious of Russia,s critical role in certain areas, but stress that it is not in our collective interest to submit to deal-making with an increasingly authoritarian and unpredictable regime in Moscow. ¶26. (C) International Economy: Elected on a platform of economic reform, President Sarkozy has taken steps to make France,s labor market function more efficiently and to create a more auspicious policy environment for business. But Sarkozy,s economic instincts are Gaullist and populist, rather than free-market. While the French government has generally been a helpful interlocutor during recent global financial turmoil, Sarkozy has blasted &financial capitalism8 and speculators, insisting on a need for the &moralization8 of capitalism. He has shown a willingness to defend French national corporate champions, most recently letting it be known that French bank Societe Generale would not be for sale to foreigners in the wake of a large-scale trading scandal. His minister of agriculture has used the recent spike in global food prices to call for the strengthening -- not liberalization -- of administrative oversight of food markets through the EU,s Common Agricultural Policy. He speaks enthusiastically about defending EU &community preferences8 and mentions the Doha round only in terms of defending agricultural interests (despite the considerable potential gains for the service-oriented French economy). And he allows populist views to prevail on agricultural biotechnology by maintaining a WTO-inconsistent ban on MON810 corn. The French are extremely concerned about exchange rates and their competitiveness with a weak dollar. When Prime Minister Fillon visited Washington in May he was fishing with FRB Chairman Bernanke and Secretary Paulson for any hints that the USG might agree to some sort of exchange rate management or intervention. Our message to President Sarkozy should underscore that reducing market distortions and maintaining open economies will be essential to meeting common economic challenges and fostering long-term growth. Please visit Paris’ Classified Website at: http://www.state.sgov.gov/p/eur/paris/index.c fm STAPLETON