Cablegate: Is National's Latest Crisis Brash's Tipping Point?

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E.O. 12958: DECL: 11/22/2016
TAGS: PGOV PREL NZ
SUBJECT: IS NATIONAL'S LATEST CRISIS BRASH'S TIPPING POINT?

Classified By: Political-Economic Counselor Katherine Hadda,
for reasons 1.4 (b) and (d)

1. (C) Summary: The author of a soon to be published book
claims it will prove National Party leaders have mislead
their own caucus and the public about the party's fundraising
and other contacts with religious and corporate players
during the 2005 campaign. Nats leader Don Brash only days
ago got a temporary injunction from publication of his
personal e-mails which he claimed were hacked. Now that it
appears the book relies on e-mails provided by disgruntled
party insiders, Brash says it should be published. Party
officials and MPs are worried about the book but apparently
even more so by Brash's response. For the first time even
caucus loyalists are hinting they have had enough of him,
although they are not as keen to back National Finance
spokesman John Key as the media suggests. End Summary.

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New Book Claims National Lied About its Campaign
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2. (SBU) The author of a new book about to the hit the
shelves claims it will prove National Party leader Dr. Don
Brash and his closest advisers repeatedly misled the public
about their 2005 election campaign. Author Nicky Hager that
"The Hollow Men" will reveal that Brash worked more closely
than he has admitted with the Exclusive Brethren, the
secretive sect which ran an initially covert campaign against

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Labour at the last election. It will also show that despite
his denials leadership contender John Key knew about the
Brethren's campaign. Hager says the book also reveals
breaches of election financing laws that National allegedly
kept secret while accusing other parties of the same
misdeeds. Hagar says his research has uncovered National's
"hidden links" with influential industry lobby groups, and
says the party also had more contact with American backers
than it has admitted. Hagar is a known author who leans left
but has also written an expose of Labour's attempts to cover
up the accidental release of genetically-modified corn. New
Zealand readers consider him credible.

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Brash's Response May Damage His Caucus Standing
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3. (C) Brash's handling of the book has once called into
question his political judgment and his ability to handle a
political crisis. Following Foreign Minister Peters' earlier
release of Brash's personal e-mails Brash last week got an
interim injunction preventing the publication of e-mails he
said were stolen from his personal computer. Although Brash
claims the court order was not aimed at Hager, it did prevent
publication because the book is partially sourced from
e-mails Now that Hager has claimed the e-mails were provided
by disgruntled National Party insiders and not stolen, Brash
has reversed himself, saying he now wants the book published
so its can be "exposed to daylight" whilst protecting the
privacy of his contacts.

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Latest Brash Stumble Could Be His Last as Leader
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4. (C) Brash's reversal only drew more attention to a book
that could cause National considerable long-term pain and
internal disruption. A stoic Brash supporter within caucus
who only two days ago told us "it would not be a good look
for National to again change leaders" has now started to
change his tune, questioning Brash's political talent.
Another National MP tells us Brash appears increasing out of
touch with the average New Zealander and freshman members of
caucus will not automatically line up behind him, contrary to
what outside observers are led to believe. Although the MP
does not think that this particular setback will lead to
Brash's ouster, he expects a challenge will arise in early
2007.

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Leadership Contender Key's Star Rises, But Maybe Not Enough
--------------------------------------------- --------------

5. (U) As this controversy unfolds, a new Herald DigiPoll
survey shows that 17.3% of Aucklanders favor John Key as
Prime Minister, only 1.5% behind the 18.8% who favor Brash.
This is the first time Key has been within striking distance
of usurping Brash in Preferred Prime Minister polling.

6. (C) Yet although the drumbeat for Key to replace Brash is
growing louder by the day, especially among the country's
media, there is less evidence that the National Party caucus
backs him in sufficient numbers to mount a coup. One member
has explained to us that some in the caucus are wary of Key's
lack of political experience and uncertain over where he
stands on many issues. Needless to say, damaging information
in Hagar's book about Key could harm his standing with caucus
and public alike.

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America Is Not The Book's Focus
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7. (C) Murray McCully, National's Foreign and Defence
Spokesman and a member of Brash's inner circle, told us that
the party leadership is "working its way through things
quietly." He said he hopes they'll get past the matter within
a few days but his tone suggested he suspects this won't be
possible. McCully said that he has been told by people who
have read the book that it concentrates very little on
American involvement in the 2005 campaign, focusing instead
on the Exclusive Breathren and other campaign finance issues.
McCully speculates the book may mention e-mails between
Brash and a former Republican official who is a part time
resident of New Zealand. McCully promised to let us know if
he learns of any other American-related allegations in the
book.

8. (C) McCully admitted that National has seen "too much
untidiness" over the last months, and confided that some of
the blame rests with the party's leader. It was Brash alone
who had decided to seek a gag order on any release of his
e-mails, said McCully, despite McCully's advice against this.
When asked if the book and Brash's u-turn might be a step
too far for the National caucus, McCully first tried to laugh
off any problem, noting that the caucus "will find this
uneasy but this is nothing new." But he then asked
rhetorically, "Who knows how tolerant they will stay?"

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Comment
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9. (C) We have been struck by the near despair with which
our contacts are describing this latest snafu. McCully has
been implicated in past leadership coups, and his remarks
about not knowing the extent of caucus support, if true, are
striking indications that the inner circle may not be able to
continue to rally the troops as they have in the past.
National's freshmen MPs have been lauded for their talent,
but the downside of that for the party is that many have "day
jobs" to return to if the party fails to stage a victory next
election. This can only increase pressure on Brash and the
rest of the leadership, although the lack of a clearly-backed
successor may provide a respite.
McCormick

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