Rice’s warning to Key revealed in leaked cables

John Key and Murray McCully received a stern warning from former US secretary of State Condoleezza Rice at a July 2008 meeting in Auckland. Photo / Dean Purcell

Leaked secret cables show that just months before he became Prime Minister, John Key had no knowledge of a major international nuclear agreement and predicted China would use its growing wealth to buy chunks of global mining companies.

Key and current Foreign Minister Murray McCully also received a stern warning from former US secretary of State Condoleezza Rice at the July 2008 meeting in Auckland, the WikiLeaks cable reveals.

Rice had already been in talks with India about a major civilian nuclear power deal for almost three years when she raised the issue with Key. Political manouevering around the talks made global headlines before the Rice-Key meeting.

Yet just months before the last General Election, Key was "unaware" of the talks and "did not express a view on the agreement", the cable said.

Rice warned Key and National's Foreign Affairs spokesman McCully that any New Zealand opposition to the US-India nuclear agreement would be "serious". After further discussion, Key said it was "hypocritical" for wealthy nations to demand carbon emissions from poor countries while denying them the right to develop nuclear power.

After discussing the Indian nuclear power issue, Key told Rice he had doubts about the stability of China's banking sector. He also predicted China would use its huge foreign currency reserves to buy chunks of global mining companies like Rio Tinto and BHP.

The cable also shows Key felt New Zealanders had reacted unwisely to the New Zealand- China Free Trade Agreement (FTA) signed three months earlier. Key also spoke in favour of a US-New Zealand FTA and Rice responded by saying such an agreement was high on President Bush's trade agenda, even though he had barely five months left as President.

Key asked Rice if she was worried by growing Chinese power and its "checkbook diplomacy". Rice said she found China's entirely "mercantilist" approach to the Third World countries worrying. But she also said as long as the US maintained a capable military, it had no need to worry about a security threat from China.

Rice said she was concerned about China's penchant for bankrolling despotic regimes in rogue states like Sudan and Zimbabwe. Rice said China "could not care less" about how poor countries were governed. She also said China was at risk of internal division because of growing wealth gaps and disputes between rural and urban parts of the country.

Rice also talked about North Korea, saying she was glad that country was out of the plutonium production business because the hermit state would "sell anything to anyone".

Rice said Afghanistan's abject poverty meant the country's recovery would be a "long struggle". She pointed to ingrained corruption and a massive drug trade as major challenges for the anti-Taleban coalition. Rice also described New Zealand's Provincial Reconstruction Team in Bamiyan as a "model".

According to the cable, Rice and Key also discussed Iran, Iraq, energy issues, food prices and the Kyoto Protocol.

The meeting was held in Auckland on July 26,2008. It was classifed as “secret”. Apart from Rice, the US delegation included US Ambassador William McCormick and Consul General John Desrocher, who took notes. The New Zealanders present included Key, McCully, Key’s chief of staff Wayne Eagleson and Elizabeth Halliday from MFAT. The meeting was supposed to remain secret until 2028.