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Cablegate: New Government's Eventful First Weeks

VZCZCXRO1271
RR RUEHDT RUEHPB
DE RUEHWL #0408/01 3432054
ZNR UUUUU ZZH
R 082054Z DEC 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5568
INFO RUEHNZ/AMCONSUL AUCKLAND 1807
RUEHBY/AMEMBASSY CANBERRA 5343
RUEHDN/AMCONSUL SYDNEY 0773
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 03 WELLINGTON 000408

SIPDIS
SENSITIVE

STATE FOR STATE FOR EAP/ANP
PACOM FOR J01E/J2/J233/J5/SJFHQ

E.O. 12958: N/A
TAGS: PGOV PHUM KDEM NZ
SUBJECT: NEW GOVERNMENT'S EVENTFUL FIRST WEEKS

WELLINGTON 00000408 001.2 OF 003


1. (SBU) Summary. In his first weeks as Prime Minister John Key has
addressed, in quick succession, many challenges: the APEC Leaders'
Meeting in Peru; a national aviation tragedy; and having hundreds of
New Zealand travelers stranded in Bangkok. On the whole, observers
judge that Key has performed reasonably well. Although he attracted
some criticism for his handling of the Bangkok episode, Key still
appears to be enjoying a honeymoon period with the media and the
public. With the new Parliament due to open for business December
9, Key will now return to his legislative priorities, many of which
already well-known from the campaign. The new Government's specific
long-term priorities, however, are not so well known and it will
take a while for the public to fully indentify them. End Summary.

New PM's APEC Visit Viewed Positively
-------------------------------------
2. (SBU) Just over 24 hours after being sworn in as Prime Minister,
John Key arrived in Peru for the APEC Leaders' Summit. Before
arriving in Lima, Key accepted former Prime Minister Helen Clark's
offer to provide any help he wanted in foreign affairs. In a 45
minute phone conversation just prior to his departure from New
Zealand, Key heard Clark's personal observations on participating
leaders and on how to best handle the two leaders' meetings.
3. (SBU) Key made it clear he saw the APEC Leaders Meeting as an
opportunity to establish himself as New Zealand's new leader on the
international stage. Key also wanted to specifically address the
international financial crisis and the impact a global recession
will have on New Zealand's economy. As such, his first
international mission after becoming Prime Minister was generally
treated positively by New Zealand observers who considered that Key
effectively advanced New Zealand positions and his own message.
They concluded that Key delivered his formal remarks with authority
and expertise, as was expected given his background in international
finance and high level of comfort talking about it.
4. (SBU) Key delivered his first formal address as Prime Minister
to APEC's Business Advisory Council. The core message was bold and
decisive for a newcomer to the world stage: that the Leaders Meeting
was not acting as strongly as it should in promoting trade
liberalization as a means to counter the effects of economic
problems countries are facing. He bluntly blamed banks and other
financial institutions for plunging the world into crisis. Key said
in many cases there had been a "recklessly complacent attitude to
risk" and credit had become out of proportion to real economies.
But his main point was that APEC's founding principle of free trade
was the most important way to get out of the crisis." [Note. Key
dismissed the original text of the speech written by his Ministry of
Foreign Affairs and Trade (MFAT) officials as not bold enough, only
to write his own. End Note].
5. (SBU) Key's arrival in Peru was buoyed by a decision by the US,
Australia and Peru to look at forming a free trade agreement with
New Zealand, Singapore, Brunei and Chile. Said Key, "Now that
Australia has joined in - obviously our closest friend, ally and
trading partner - we are creating momentum across the Pacific." New
Trade Minister Tim Groser, in Peru with Key, stated that the
emerging trading bloc would be part of the answer to working through
the current economic turmoil.
6. (SBU) In Lima, Key bolstered his leadership credentials when he
Key met President Bush and China's President Hu Jintao. Key also
held formal bilateral meetings with Australian Prime Minister Kevin
Rudd, Chilean President Michelle Bachelet, OECD Secretary-General
Angel Gurria and Singapore's Prime Minister Lee Hsien Loong.
Immediately after the meeting, Key flew to London to meet the Queen
and Prime Minister Gordon Brown.
Condemns Mumbai Attacks
-----------------------

7. (SBU) The Government acted immediately to condemn the November
26 terrorist attacks in Mumbai, India. New Foreign Minister Murray
McCully, without delay, instructed the New Zealand High Commission
in New Delhi to urgently seek information on any New Zealanders that
may have been caught up in the attacks. At this point, there have
been no reports of any New Zealand casualties.

Plane Crash Shocks Nation
-------------------------

8. (SBU) On November 28 Key had to soothe the frayed nerves of the
nation after a leased Air New Zealand Airbus A320 aircraft crashed
in the Mediterranean seas off the coast of France killing five New
Zealanders aboard. Key immediately offered any and all assistance
required in the immediate aftermath of the tragedy. The crash
occurred on the 29th anniversary of New Zealand's biggest single
tragedy, when an Air New Zealand DC-10 crashed into Antarctica's
Mount Erebus on a sight-seeing flight on November 28, 1979, killing
all 257 people aboard.

Reaction to Thai Crisis Criticized

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----------------------------------
9. (SBU) The Government's response to the crisis in Thailand, where
approximately 250 New Zealanders were stranded, attracted criticism
from Labour, the media and sections of public alike. Although
tensions in Thailand have since eased and Suvarnabhumi international
airport is now reopened for business, questions were asked whether
the new Government acted soon enough when New Zealand lives could
have been at risk.
10. (SBU) In response to the crisis, PM Key initially wanted to
dispatch to Thailand one of the two New Zealand Defence Force (NZDF)
Boeing 757s to evacuate stranded NZ travelers. However, much to his
chagrin, Key discovered that both planes, purchased by the previous
Labour-led government for exactly these sorts of evacuation
scenarios, are currently under maintenance in the US. McCully said
questions would be asked about NZDF's decision to allow both its 757
aircraft out of the country at the same time and asserted that
efforts would be made to ensure a better response capability in
future. Key was forced to turn to the considerably slower option of
sending a NZDF C-130h Hercules to Malaysia where it remains on
stand-by in case it is needed.
12. (SBU) Labour leader Phil Goff chided the government for its
handling of the crisis. Goff said the government knew well in
advance that both 757s were out of commission. Further, he
questioned why faster action wasn't taken, why Key did not appear to
have a contingency plan and a why planeloads of Australians were
quickly evacuated yet New Zealanders remained seemingly abandoned.
Goff also questioned why a joint effort by Australia and New Zealand
was not sought by the New Zealand government. Goff noted that while
the Australian government talked to the Australian national carrier
Qantas, which agreed to put on more flights, the New Zealand
government had not sought to charter a plane from the its national
carrier Air New Zealand, of which the Government has a majority
holding, with rights to fly in Thailand. McCully responded by
reminding Goff that it was he, as Defense Minister in the previous
government, who presided over the equipment program in the NZDF over
the last eight years. Said McCully, "any responsibility for the
inability of the two 757s to fly, to be in service at the same time
comes to rest on [Goff's] door step."
MFAT Performance in Thai Crisis Scrutinized
-------------------------------------------
13. (SBU) Despite public assertions from Key, McCully and Goff that
the New Zealand Embassy in Bangkok have worked extremely hard to
handle the situation, some stranded New Zealand travelers have been
critical. There have been some reports by marooned New Zealanders
in Bangkok that they had only minimal contact with Embassy officials
there and any information distributed by the officials were
frequently outdated and unreliable.
14. (SBU) The Wellington-based political publication, TransTasman,
reported on December 4 that political leaders have expressed
"considerable disappointment with the flow of information from
[MFAT], the lack of its ability to report consistently, and the
tardiness in offering workable solutions. Foreign Minister Murray
McCully is insisting on a review of MFAT's operational capability."
TransTasman suggested that under the previous government,
Wellington's bureaucracy lacked the capacity to act creatively. It
further implied that dissatisfaction with MFAT's muddled response to
the Thai crisis showed that the bureaucracy has yet to adapt to the
new government's desire to have an innovative and high-performing
public sector. Fran O'Sullivan of the New Zealand Herald newspaper
wrote on December 6 that, although Key was the subject of criticism
over the sluggish response to Bangkok crisis, the "real question
surely should have been what has gone so wrong at the Ministry of
Foreign Affairs that [New Zealand's] Thai embassy didn't have
contingency plans in place to cover any evacuation need?" She
asserted that the inaction was essentially "the product of an
environment where officials have got so used to second-guessing
Cabinet ministers that their capacity for independent action has
been stymied."
Voters More Confident under New Government
------------------------------------------
15. (SBU) The first poll since the November 8 election hinted that
Key is still experiencing a honeymoon period with voters. The
December 4 Roy Morgan Poll found that Key's National Party (44
percent) maintains a large lead over Labour (32.5 percent). More
significantly, confidence is beginning to return: after the election
a record 66 percent of New Zealanders (up 12 percent) now say New
Zealand is "heading in the right direction" compared to a record low
19 percent (down 12 percent) that say New Zealand is "heading in the
wrong direction."
Media Coverage Mostly Positive
------------------------------
16. (SBU) Media reporting and analysis on how Key is handling his
new job as prime minister has largely been positive. On most fronts
- his APEC appearance, the speed and efficiency by which he formed
his government and his transition into government - the media have
generally held an affirmative position on Key. The Dec 4

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TransTasman reported that the Parliamentary Press Gallery gave Key a
"thumbs up" after his first post-Cabinet press conference for being
knowledgeable about the main issues and willing to accept that he
did not know all the details at this early stage.
17. (SBU) Key has also attracted some media criticism since
becoming PM, though as the New Zealand Herald's O'Sullivan observed
"much of it directed at stylistic matter" (i.e., the manner in which
Key has presented himself in his new role, in contrast to his
polished and experienced predecessor, Helen Clark). However, the
media have mostly allowed for a period of grace as Key establishes
himself in his new role. Indeed O'Sullivan noted that "Clark's own
authority and gravitas developed over her period as Deputy Prime
Minister in the late 1980s and her latter nine years in the top job.
And that she too displayed an almost frisky delight in her initial
weeks as PM."
Immediate Legislative Priorities Well Signaled
--------------------------------------------- -

18. (SBU) On December 9, in a speech to the new Parliament on
behalf of the government, the Governor-General will spell out the
legislative program for next three years. Details surrounding the
likely near-term legislative objectives have been signaled well in
advance by National during its election campaign. The first act
will be to address the deteriorating economic position of many New
Zealanders and stimulate the faltering economy. To this end, Key
will announce a tax cut package to take effect on April 1, 2009 and
a provision of financial relief for the jobless.

Longer-Term Plans More Vague
----------------------------
19. (SBU) Although Key's near-term plans for the country are
well-known, it is not clear what his government plans to do in the
longer-term or even if any determination has be made around policy
beyond the immediate legislative priorities. Public sector reform,
particularly public spending, could feature prominently in early
2009. In opposition, Key was highly critical of the explosion of
bureaucratic staffing levels under the Labour government and
evidence of wasteful public spending. In government, he is expected
to curb the expansion of the public sector and instruct public
sector chiefs to conduct line-by-line review of their spending.
Also in the wings is the possible establishment of a Cabinet
expenditure control committee to oversee the spending review and
create task forces headed by private sector representatives to focus
on public spending in a particular area.
Comment: Key Survives Rough Weather
-----------------------------------
20. Unexpected crises and the continuing economic downturn have
confronted the new Prime Minister with far more severe initial
challenges than he could have anticipated. His tenure was supposed
to begin with the opening of Parliament tomorrow. Instead, he may
find it a welcome respite from the rough weather he has already
survived. End Comment.
McCormick

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