Cablegate: Finding a Role for the Oecd -- Secretary-General

DE RUEHLO #1821 1911318
P 091318Z JUL 08

C O N F I D E N T I A L LONDON 001821


E.O. 12958: DECL: 07/09/2018

Classified By: Economic Counselor John McNamara, reasons 1.4 (b) and (d ).

1. (C) Summary: Organization for Economic Co-Operation and Development (OECD) Secretary-General Gurria,s recent visit was designed to strengthen the relationship between the OECD and the UK. A broad swathe of UK government ministers met Gurria to express the UK,s commitment to the organization. Gurria told his UK interlocutors that the OECD has much to offer the UK in a globalized world. The UK has concerns about the accession of Russia to the OECD, but is otherwise pleased with the enlargement and enhanced engagement process. Gurria did not discuss this in great detail in his meetings. The UK believes that the OECD must promote the benefits of membership and enhanced engagement to country candidates in order for them to buy in to the organization. HMG would like the OECD to focus on structural and microeconomic issues for developed countries. The IMF could then focus on macroeconomic issues and the World Bank on microeconomic issues in developing countries. The UK has not yet fleshed out the details of this division of labor sufficiently to propose it internationally. End summary.

2. (SBU) OECD Secretary-General Gurria visited the UK June 30 to July 1, 2008 where he met with eight senior UK ministers, including Chancellor of the Exchequer Darling and Foreign Secretary Miliband. He also met with the President of the Confederation of British Industries, Martin Broughton. The Head of the Foreign and Commonwealth Office (FCO),s Globalization and International Architecture Team, Guy Harrison, gave us a read out July 8.

3. (SBU) The UK used the Secretary-General,s visit to reaffirm its commitment to the OECD. In recent years, UK ministers have been unavailable to attend many the OECD ministerial meetings and so the UK wanted to avoid the appearance of disengagement. Gurria,s message was that the OECD has much to offer the UK in a globalizing economy. For example, the OECD has done much work on investment issues including a study of best practices for sovereign wealth funds. The Secretary-General also explained how the OECD,s peer reviews and research allow member countries to improve their global competitiveness.

4. (C) The UK has concerns about Russian accession to the OECD, because political "like-mindedness" is an important aspect of membership. In addition, membership in the OECD should entail a commitment to an open economy and the rule of law. However, enlargement and enhanced engagement were not discussed in detail at the Secretary-General,s meetings, because the UK is broadly satisfied with the road maps developed last year. The Secretary-General was optimistic that the other four enlargement countries would be members by the end of 2009. Gurria also argued that enhanced engagement may be the first step on the way to accession. Harrison said these comments may be premature; it is a large "psychological leap" between enhanced engagement and accession.

5. (C) Harrison said the OECD must tailor its products for the enhanced enlargement countries or else they will fail to buy in to the benefits of the OECD. The FCO says the best medium-term strategy is to look for non-controversial issues that can be resolved quickly. For example, the UK Embassy in Beijing suggests that although the PRC may not yet be willing to agree to more difficult parts of the OECD, it would be interested in help with technical issues like an export credits list.

6. (C) PM Brown has made the reform of international institutions a priority and the FCO has a rough sketch of a vision for the OECD and its place in the pantheon of international organizations. According to this vision, the OECD should concentrate on structural and microeconomic issues for developed countries. The IMF could then focus on macroeconomic issues and the World Bank could concentrate on microeconomic issues in developing countries. HMG has not yet described this publicly, because many details of the plan are yet to be sorted out. Although he did not raise it during this trip, Secretary-General Gurria has been keen to stake the OECD,s place in international fora, Harrison noted. The FCO expected Gurria to raise the prospect of an OECD place at the table at both the G8 and the Heilingdamm Process, but he did not. Visit London's Classified Website: XXXXXXXXXXXX

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