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Reference ID Created Released Classification Origin
09LONDON2303 2009-10-06 16:04 2010-11-30 11:11 SECRET//NOFORN Embassy London

DE RUEHLO #2303/01 2791646
O 061646Z OCT 09
S E C R E T LONDON 002303 


EO 12958 DECL: 10/06/2019 

Classified By: Ambassador Louis B. Susman for reasons 1.4 (b/d).

1. (C//NF) Summary. The Secretary’s visit to London comes on the heels of the Labour, Conservative, and Liberal Democrat political party conferences -- their last before the UK elections which must be held by June 2010. The domestic political situation remains in flux, but with the Conservatives enjoying a consistent lead in the polls. A Conservative victory is not assured, however; the Conservatives have done a better job of criticizing Labour policies than of selling Conservative solutions. The cumulative contraction of the UK economy by 5.7 percent over the last five quarters has focused electoral discussions on economic issues. The major foreign policy issues for the election are the UK’s involvement in Afghanistan, which all parties continue to back for now in spite of eroding public support and a lively debate in the media, and the UK’s role in the EU, which Labour has been using as an example of the Conservatives’ “isolationist” tendencies on economic and foreign policy. Politically, PM Brown and Foreign Secretary David Miliband will want the Secretary’s visit to demonstrate the strength of their relationship with the U.S. administration in order to counter domestic press speculation about a perceived decline in the “special relationship” following Megrahi’s release and President Obama’s reported “snubbing” of PM Brown’s requests for one-on-one meetings at the G-20 and UNGA. Some of the key issues of import to the UK Government are Afghanistan, Iran, Pakistan, Northern Ireland, and non-proliferation. End summary.

The UK on Key Issues

2. (S//NF) The Secretary’s meetings with PM Gordon Brown and Foreign Secretary David Miliband likely will focus on the following key issues:

-- Afghanistan - As the second largest force contributor in Afghanistan, the UK has lost 219 soldiers since operations began in 2001. The up-tick in British casualties in July and August 2009 has contributed to renewed public debate on the UK’s engagement there. Public support for the war effort is tepid. Rather than questioning the reasons for the UK’s presence in Afghanistan, many critics instead have asserted that Brown has provided insufficient troops and equipment (including helicopters) to get the job done. In his September 25 discussion with the President, Brown said Afghan forces must shoulder a greater portion of the burden and take more responsibility for their own affairs and asserted the UK would not be “cutting out” of Afghanistan, though it lacks the capacity to commit additional troops. Brown and Miliband made similar statements to General McChrystal on October 1 and Admiral Mullen and Admiral Stavridis October 2, and the PM’s Foreign Policy Advisor Simon McDonald has asked the USG to show “understanding of the political pressures that the PM is under.” However, UK military officials claim that 1,000 - 2,000 additional troops are available for deployment. Brown, Miliband, and British military leaders would like other NATO allies to assume a greater share of combat operations, stressing that the U.S., UK and a few other allies have borne the brunt of the fighting. The PM very much wants to see strong U.S. leadership and is anxious to see the Administration’s policy review completed soon.

-- Iran - The UK has privately shared with us that it is ready to proceed with designations of the Islamic Republic of Iran Shipping Lines (IRISL) and Bank Mellat under their Counter Terrorism Act powers, an action that requires parliamentary approval. In the wake of the October 1 P5 1 meeting in Geneva, however, UK officials are likely to want to consult with the U.S. on the best timing for announcing the designation. UK officials may also raise the issue of Nosratollah Tajik, former Iranian ambassador to Jordan, currently under arrest in the UK and awaiting extradition to the U.S. on charges of procuring restricted military items (night-vision goggles) for the Iranian government. Tajik has exhausted all judicial appeals in the UK and all that stands in the way of the extradition is approval by the Home Secretary. Before approving the extradition, the UK wants to be sure the timing is right and will not interfere with our joint efforts through the P5 1 to engage with Iran.

-- Pakistan - Because of immigration and economic ties, Pakistan has an important domestic dimension for the UK and will feature in public debates in the run-up to the UK’s 2010 elections. Following the Friends of Pakistan meeting on September 25, the UK announced it will provide an extra GBP 50 million (USD 80 million) to improve infrastructure and security in Pakistan’s border areas. However, UK officials later confirmed that these are not new funds and will instead
come from the current GBP 655 million (USD 1 billion) already designated for Pakistan aid. British leaders view a secure Pakistan as key to regional stability. They recognize Pakistan’s now more effective response to the Taliban and other extremists, but say more is needed.

-- Northern Ireland - Prime Minister Brown and Northern Ireland Secretary Shaun Woodward will probably ask the Secretary to urge Northern Ireland First Minister Peter Robinson and Deputy First Minister Martin McGuinness to accept the “Westminster Package,” regarding the devolution of justice and policing powers, which was recently presented by Prime Minister Brown. HMG would like to reach an agreement with the parties this week, before the Secretary’s arrival. HMG argues that the proposal is a good deal for Northern Ireland. If the agreement is not completed by the weekend, there is potential that some of the parties could seek to draw in the Secretary. The best approach is to urge all parties to work together patiently to reach agreement. An agreement would be a strong, positive signal to potential investors.

-- Nuclear Non-proliferation - Both PM Brown and FS Miliband welcome U.S. leadership on the global nuclear non-proliferation agenda, including the April 2010 Nuclear Security Summit in Washington. The UK firmly agrees with us on the importance of close P5 and P3 cooperation in the lead up to next year’s Nuclear Nonproliferation Treaty (NPT) review conference. At UNGA, Brown emphasized that the onus is on non-nuclear states to prove they are not developing nuclear weapons. He also pledged the UK’s support for sponsoring a uranium bank and offering civil nuclear power to non-nuclear states that fulfill their responsibilities. He also announced that, subject to the sustained ability to maintain continuous deterrence, the UK will consider reducing its fleet of Trident nuclear-armed submarines from four to three. The move also is regarded as a cost-cutting measure for a government facing significant fiscal challenges in the coming years.

-- Defense Trade Treaty - The PM and FS Miliband may ask about the status of the Defense Trade Treaty and when the Senate will ratify it. U/S Tauscher told UK officials on September 30 that her goal is to have the Senate act on the treaty by year’s end. U/S Tauscher and A/S Shapiro are working to counter the SFRC staff’s belief that implementing legislation is necessary to enforce the treaty and to address their concerns about Congressional consultations and notifications.

-- Arms Trade Treaty - Miliband frequently raises with senior U.S. interlocutors the possibility of negotiating an ATT. We continue to have doubts about the possibility of negotiating an effective treaty, but are willing to move forward on the condition that it will proceed on the consensus basis traditional for multilateral arms control and nonproliferation negotiations.

-- Gary McKinnon Extradition Case - The PM will likely raise with the Secretary (as he has with the Ambassador) the extradition case of Gary McKinnon. McKinnon is a 43-year old computer hacker with Asperger’s Syndrome who is wanted for prosecution in the U.S.; he is accused of hacking into U.S. government systems in 2001 and 2002. McKinnon has gained enormous popular sympathy in his appeal against extradition; the UK’s final decision is pending. The case has also caused public criticism of the U.S.-UK extradition treaty. In August, PM Brown, in a one-on-one meeting with the Ambassador, proposed a deal: that McKinnon plead guilty, make a statement of contrition, but serve any sentence of incarceration in the UK. Brown cited deep public concern that McKinnon, with his medical condition, would commit suicide or suffer injury in imprisoned in a U.S. facility. The Ambassador has raised this proposal with AG Holder and would be happy to brief the Secretary in more detail.

Domestic Politics in Flux in Run-up to Elections
--------------------------------------------- --- 

3. (C//NF) The annual political party conferences currently underway have thrust the UK into electoral campaigning mode, with the Labour, Conservative, and Liberal Democrat parties all positioning themselves for the general elections, which must occur before June 2010. The recent conferences have given each party in turn an up-tick in the polls, though with the Tories consistently enjoying a significant overall lead. PM Brown is unchallenged as leader of the Labour Party, but remains embattled by the UK media. Many in his party question if Labour can win the next elections with him at the helm despite his strong showing at the Labour conference. Honing its campaign message, the Labour Party plans to make
the elections about class divisions, highlighting Labour’s strong public services record and its economic vision for Britain. At present, the major foreign policy issues shaping the electoral debate are the UK’s involvement in Afghanistan, which all parties continue to back for now in spite of eroding public support and a lively debate in the media, and the UK’s role in the European Union, which Labour has been using as an example of Conservative economic and foreign policy “isolationist” tendencies.

4. (C//NF) Conservative leader David Cameron’s headline message to the media as the Tory conference began October 5 was about the UK’s “twin crises” of debt and unemployment and the Tory’s to-be-unveiled “big, bold, and radical” scheme to “get Britain working.” The Tories’ platform during the June European and local elections was based on keeping in focus bedrock issues such as the economy, job creation, and health and education reform; casting Labour as profligate and irresponsible; and portraying the Conservatives as the party of thrift, responsible spending and transparency. Ireland’s “yes” vote on the Lisbon Treaty has highlighted internal Conservative party divisions on the EU as the conference gets underway. PM Brown and FS Miliband may ask the Secretary to emphasize U.S. support for a “strong Europe” as a way to highlight Conservative schisms.

5. (C//NF) In response to the summer 2009 parliamentary expenses scandal, which has alienated some voters from the political class and the mainstream parties, Cameron has been credited with reacting more decisively than Brown - a performance that some political commentators have said demonstrated impressive leadership, especially compared to Brown (who throughout his prime ministership has had to fight accusations of indecisiveness). Keeping the public focused on the economy, Cameron has said the Conservatives would be judged by their response to the UK’s debt crisis and has called for an “age of austerity.” While spending cuts are expected to be a large part of the future Conservative program, neither Cameron nor Shadow Chancellor of the Exchequer Osborne has offered details on where government spending should be cut, beyond just saying there will be a ten percent cross-the-board cut with only education and the National Health Services remaining untouched. Many in the UK public remain skeptical of the Tories’ unspecified plans for major cuts.

6. (C//NF) The UK’s relationship with the U.S. has also become a campaign issue. During the fever pitch of UK media reporting on the release of convicted Pan Am 103 bomber Abdel Basset al-Megrahi, the Conservatives blamed Labour for damaging the “special relationship.” The UK media has refused to let the issue die, continuing its mischievous reporting of recent alleged USG snubs of senior UK officials, particularly during UNGA.

Overview of UK Economy

7. (U) The UK officially entered recession in the third quarter of 2008 and has suffered a cumulative contraction of 5.7 percent over the last five quarters. In July, the IMF forecast a further contraction of 4.2 percent in 2009 and growth of 0.2 percent in 2010. HM Treasury expects a contraction of 3.5 percent in 2009 and growth of 1.25 percent in 2010. Unemployment stands at 7.8 percent, its highest since 1995, and is expected to climb to more than 10 percent in early 2010. Unemployment is particularly acute among 18-to-24 year olds at 17 percent. The economic downturn is taking a heavy toll on trade. According to U.S Commerce Department and U.S. International Trade Commission monthly trade statistics, U.S. goods exports to the UK declined by 21.7 percent from January to June 2009, compared to the same period in 2008, and UK exports to the U.S. declined by 25.6 percent. Concerns about employment figures remain high, with unemployment rates near eight percent and expected to peak just in advance of the parliamentary elections.

8. (U) Public debt stands at GBP 800 billion (56.8 percent of GDP), its highest level since records began in 1974, and up from 56.6 percent last month. However, UK debt as a percentage of GDP is still lower than in the other G7 countries. How to manage and finance the UK’s debt burden is a key issue dividing the two parties, and is expected to emerge as one of the top economic issues during the political campaign.
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