July 22, 2005
The sleaze hits the fan: An increasingly worried Labour claims National is US pawn

SUBJECT: THE SLEAZE HITS THE FAN: AN INCREASINGLY WORRIED

LABOUR CLAIMS NATIONAL IS U.S. PAWN

Classified By: Charge D'Affaires David R. Burnett,

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for reasons 1.4 (b) and (d).

1. (C) Summary: Facing rapid losses in the polls, the ruling

Labour Party has apparently decided to play the anti-American

card, telling New Zealanders that a vote for the National

Party means a vote against New Zealand's independent foreign

policy. Embassy Wellington is in general keeping a low

profile on this and other election-related issues. However,

we released a press statement in response to veiled Labour

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allegations that U.S. interests are funding and controlling

the National Party's campaign. We have also quietly warned

the Government that we will similarly respond to any further

baseless allegations. Labour's actions are not without risk

to its own interests: more than one media report has

expressed suspicions that the Government is trying to divert

attention from its problem-plagued domestic policies. In

light of Labour's actions, Ambassador Swindells strongly

recommends that Washington reconsider whether Agriculture

Secretary Johanns should visit New Zealand just weeks before

the general elections (see para 13). End Summary.

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THE MITTS COME OFF

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2. (SBU) After months of appearing invulnerable to a series

of scandals and controversies, the Labour Government's armor

is apparently beginning to crack. A series of polls

conducted in recent weeks has shown support for the

opposition National Party is increasing at the same time as

Labour's is falling. The most recent polls, conducted over

the weekend, have shown National now leads Labor by between

three and five percentage points, although neither party has

majority support. (A One News/Colmar Brunton poll issued

July 18 showed National's support at 42 percent vs. Labour at

39 percent; a July 16 Fairfax New Zealand/AC Nielson poll

showed 42 vs. 37 percent, respectively.)

3. (C) It is now almost certain that elections will not be

held until mid-September rather than late August, and

Labour's worry over its recent slide is at least partly

responsible for the later date. But although the Prime

Minister is not likely to announce the election date formally

before August 20, campaigning is already well underway and is

becoming more personal and vicious. In a recent speech, Dr.

Brash called PM Clark "a petty, spiteful, deceitful leader

whose government was 'rotten to the core.'" Meanwhile, an

apparently worried Labour has made the decision to play the

anti-American card: senior Labour officials have begun to

imply that a vote for National would mean a vote against an

independent NZ foreign policy, and a vote for a U.S.-run NZ

government.

4. (SBU) On Tuesday, PM Clark and Michael Cullen each

claimed in separate speeches that the question of National

leader Don Brash's credibility would be a cornerstone of

Labour's campaign. At the same time, Labour began to run

advertisements in local newspapers and on buses that include

a statement Brash made about the Iraq War some time ago --

that given the evidence surrounding Saddam and weapons of

mass destruction, he too would have "done the same thing as

President Bush" i.e., sent New Zealand troops to participate

in Operation Iraqi Freedom. Young Labour also put up posters

showing side-by-side photos of Brash and the President,

together with the accompanying slogan "Can you spot the

difference?" Cullen also questioned in his speech where

National was getting it's money, claimed that the party had

much more money than Labour, and implied that some funds were

coming from overseas.

5. (SBU) In response, Brash told the media that Labour was

just trying to divert attention from the Government's

domestic policies. Obviously wishing to avoid the question

of the Iraq war, which remains deeply unpopular here, Brash

also stressed that the past was the past and it makes no

sense to talk about what he would have done two years ago.

Undaunted, Foreign Minister Goff issued an official statement

claiming that Brash's Iraq policies were a legitimate

question: Australia has recently decided to send more troops

to Iraq; would Brash as PM make a similar decision? After

repeated questions by the media, Brash later fleshed out his

stance, "In some circumstances we (i.e., a National-led

Government) might certainly go with the United States but we

make that judgment in the light of what's in New Zealand's

best interests."

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CROSSING THE LINE

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6. (SBU) On July 23, Education Minister Mallard upped the

ante. During a press conference that was ostensibly on the

Government's education policies, he alleged that "the lead

bag man" for Brash "is an American..." and that "we will name

him at the appropriate time." Mallard then went on to say

that "..if you say nukes gone by lunchtime and you have very

close relations on Iraq and may or may not have made promises

to send troops to Iraq the fact that an American is

collecting cash for you is I think pretty interesting." He

also said that "...Brash has indicated that he will act on

American lines more than any government in New Zealand ever

has in the past," and added that National's campaign is being

written by Americans. While claiming that his remarks were

not directed at Americans or the Bush Administration, Mallard

clearly meant to hint at U.S. Government connection to

National's financers, remarking, "...I think New Zealanders

expect our policies...to be written in Wellington not

Washington."

7. (SBU) Despite the fact that the Charge had hosted Mallard

to dinner the night before, the Embassy first learned about

the Minister's claims from a journalist who was reporting on

the story and wished to know the Embassy's response. (The

Charge had actually raised concerns about Young Labour's

poster campaign over dinner; the Minister did not respond but

looked very uncomfortable.)

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THE EMBASSY (VERY QUIETLY) WEIGHS IN

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8. (SBU) After learning of the press inquiries concerning

Mallard's innuendoes, the Charge called Ministry of Foreign

Affairs (MFAT) and Trade CEO Simon Murdoch, who was unaware

of Mallard's comments. (We then faxed the transcript to

him.) Murdoch contacted Minister Goff, who was on travel

within New Zealand and about to board a flight. Goff agreed

that a line had been crossed, and said he would call the

Charge once he returned to Auckland.

9. (SBU) Brash, meanwhile, was telling the media that this

was a low blow. National's policies are not for sale, he

said, and are written by New Zealanders for New Zealanders.

Although the media has speculated the financial backer in

question is Julian Robertson, a wealthy US property developer

who has been a part-time resident here for years, Brash

denied that National has gotten truly significant funding

from any single donor. TVNZ, in reporting the flap, implied

that Mallard's comments were driven by National's

hard-hitting criticism of Labour's education policies. TVNZ

also ran old footage of an obviously pleased Prime Minister

Clark meeting with President Bush, commenting that Clark

clearly relished the attention of the U.S. President. Radio

NZ said that Mallard will have to soon prove his accusations

or he will completely lose credibility.

10. (C) When, as promised, Goff called in, the Charge told

him that we recognize that New Zealanders have the right to

debate issues of substance during their election campaign,

even when the issues involve the United States. The Embassy

had not, for example, commented on Minister Goff's remarks on

Labour's vs. National's Iraq policies. But by hinting that

Washington was interfering in the elections and cutting

secret deals with National, Mallard's statements had gone

SIPDIS

over the line. Goff agreed, noting that "Mallard's wording

was not as careful as it should have been." The Charge

countered that, on the contrary, Mallard's words seem to have

been very carefully chosen to imply that there was U.S.

Government involvement without actually saying so. Goff was

silent at this.

The Charge also reminded Goff that Ambassador Swindells had

spoken in his July 4 speech of the failure of both

governments to deal with the legacy of mistrust that exists

between us. He added that Labour's tactics seemed designed to

increase that mistrust rather than to reduce it.

11. (C) The Charge told Goff that the Embassy would have

appreciated a head's up that Mallard would be making these

remarks. Goff said that as was well known, he (Goff) has

very favorable feelings towards the United States and close

family connections there. (Goff's sister is an Amcit and has

two sons serving in the U.S. military (one of who is in Iraq)

with a third on his way to West Point.) But, he went on, the

Government believes that these issues do resonate with the

New Zealand public and it would therefore be foolish not to

pursue them. There will be more campaigning on issues

related to U.S. policy in the weeks ahead, he cautioned. The

Charge said that was Labour's call to make, but if further

false claims were made the Embassy would respond. Goff

agreed that it was in the Embassy's right to do so, and

endorsed the idea of our making a press statement refuting

Mallard's claims. The Charge then released to the media the

following statement, which has also been cleared by

Washington:

"Our position is that the outcome of the upcoming election is

entirely a matter for the people of New Zealand to decide.

The U.S. Government has neither asked for nor received

assurances of any kind from any political party in New

Zealand. As Ambassador Swindells mentioned in his farewell

speech, we stand ready to work with whomever New Zealanders

choose to represent them in order to make this important

relationship all that both countries want it to be."

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COMMENT

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12. (C) The tepid media reaction to Mallard's comments shows

Labour's strategy might be a risky one. Many journalists are

questioning the accuracy of the claims and have picked up

with some sympathy National's view that this is a

diversionary tactic. (Embassy has e-mailed a summary of media

reports to EAP/ANP and others in Washington.) In addition,

we understand that our MFAT contacts have been counseling the

Government that there will be long-term impact on our

bilateral relations if Labour continues its baseless

diatribes and hints that a close relationship with the United

States is in general not in New Zealand's interests.

Meanwhile, we continue with our behind the scenes talks with

MFAT and other key decision makers in government, the private

sector, and the media about ways we can improve the bilateral

relationship after the elections (septel).

13. (C) But if Labour wins, its campaign may impact our

ability or desire to build bridges. Ambassador Swindells,

who is on travel but has been kept abreast of the latest

flap, also strongly recommends that Washington reconsider

whether or not late August is a good time for Agriculture

Secretary Johanns to visit New Zealand. Ordinarily such a

SIPDIS

visit would be a positive message of support for bilateral

ties. However, we question whether a Cabinet-level visit

just weeks before the elections might not be seen as

interference in domestic politics or be used to undermine

broader U.S. interests.

Burnett