CONFIDENTIAL
003346
MDHIAN 0622
FOREIGN AND FAILED IN DOMESTIC POLICY. OVER YUGOSLAVIA, THEY WERE METICULOUS ABOUT CONSULTING US. BUT THEY CONTINUE TO REGARD SERBIAN AGGRESSION AS THE CORE OF THE PROBLEM. THEY SEE THEIR WILLINGNESS TO TAKE PART IN IMPLEMENTING ANY BOSNIAN AGREEMENT AS A REAL STEP FORWARD FROM THE PREVIOUS ADMINISTRATION'S POLICY. THEY WOULD LIKE TO ENFORCE THE NO FLY ZONE, BUT KNOW THERE IS NO CONSENSUS IN NEW YORK FOR THIS. THEY WILL WANT TO AIR-DROP RELIEF SUPPLIES IF THE SERBS CONTINUE BLOCKADING MOSLEM COMMUNITIES. THEY ARE DETERMINED TO MAINTAIN THE PRESSURE ON SADDAM HUSSEIN. THE PRESIDENT IS PRE-OCCUPIED WITH YELTSIN'S INCREASINGLY PRECARIOUS POSITION AND WANTS TO CONSULT THE PRIME MINISTER ABOUT HOW TO HELP HIM. HE IS LIKELY TO MEET YELTSIN AND OTHER EUROPEAN LEADERS IN MARCH. THE NEW ADMINISTRATION FEELS, EVEN MORE STRONGLY THAN BUSH, THAT TO REMAIN RELEVANT NATO MUST BE ABLE TO PLAY A ROLE IN PEACEKEEPING.
10.
THERE WILL BE AREAS OF DIFFICULTY HIGHLIGHTED IN MY EARLIER TELEGRAMS. OVER IRELAND, THE DEMOCRATIC ADMINISTRATION WILL BE LESS RELIABLE THAN ITS PREDECESSOR, E.G. OVER EXTRADITION CASES. THEY ALREADY ARE LEARNING, THE HARD WAY, ABOUT THE EXTREME POLITICAL SENSITIVITY OF ANYTHING TO DO WITH NORTHERN IRELAND BUT ARE MORE SUSCEPTIBLE TO PRESSURE FROM THE AMERICAN-IRISH GROUPS. OVER CHINA/MFN/HONG KONG THERE IS A CONJUNCTION BETWEEN THE DESIRE TO CUT BACK THE BURGEONING CHINESE TRADE SURPLUS - AT DOLLARS 18 BILLION IT IS NOW SECOND ONLY TO THAT OF JAPAN AND TO INCREASE THE PRESSURE ON CHINA OVER HUMAN RIGHTS. CLINTON HAS PLEDGED NOT TO RENEW MFN UNCONDITIONALLY BUT THE ADMINISTRATION CLAIM TO BE SENSITIVE TO OUR CONCERNS ABOUT HONG KONG.
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11. THE AREA WHERE WE ARE GOING TO HAVE TO WORK HARDEST IS TRADE POLICY. THE PRESIDENT PERSONALLY IS NOT A PROTECTIONIST. HE WOULD LIKE TO GET A GATT AGREEMENT AND IS DEFENDING NAFTA. BUT HIS ADMINISTRATION DOES NOT HAVE THE SAME IDEOLOGICAL COMMITMENT TO FREE TRADE AS THEIR PREDECESSORS AND ARE MORE SUBJECT TO THE INFLUENCE OF THE AFL/CIO AND DOMESTIC PRODUCERS. THE FAST TRACK NEGOTIATING AUTHORITY IS LIKELY TO BE RENEWED TO THE END OF THE YEAR. WE HAVE TOLD THE ADMINISTRATION THAT THERE CAN BE NO GOING BACK ON THE EC/U.S. AGREEMENTS ON AGRICULTURE OR AIRBUS. BUT THE OILSEEDS SETTLEMENT IS BEING THREATENED BY THE FRENCH. THERE WILL BE A VERY TOUGH STRUGGLE AHEAD TO BRING THE URUGUAY ROUND TO A SUCCESSFUL CONCLUSION AND TO CONTAIN TRADE FRICTION MEANWHILE. ARE HAVING TO FIGHT DETERMINED EFFORTS BY THE OTHER U.S. CARRIERS TO GET THE ADMINISTRATION TO INTERFERE WITH PHASE ONE OF THE BA/USAIR AGREEMENT.
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