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Cablegate: Czech Republic: No Haste Action Expected On the Bit

VZCZCXYZ0000
RR RUEHWEB

DE RUEHPG #0166 0521159
ZNR UUUUU ZZH
R 211159Z FEB 07
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC 8616
INFO RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS PRAGUE 000166

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/NCE, EB/IFD/OIA, L/EB
STATE PLEASE PASS USTR LISA ERRION
COMMERCE FOR 4224/ITA/MAC/EUR MROGERS

E.O. 12958: N/A
TAGS: EINV ETRD ECON EZ
SUBJECT: CZECH REPUBLIC: NO HASTE ACTION EXPECTED ON THE BIT

REF: STATE 15774

1. (SBU) SUMMARY AND COMMENT: Czechs remain troubled by the
U.S.-Czech BIT and the potential liability the GOCR
attributes to it. However, post does not/not believe this
Czech government would be willing to expend enough political
attention on the issue to terminate the BIT. While the
fragility of the current government and its lack of majority
in Parliament makes it is difficult to guess how long that
will last, post believes Czechs have bigger fish (or radars)
to fry at the moment, which will prevent them from paying
sufficient attention to terminate the BIT. Nevertheless,
post agrees the USG needs to remain attentive and engaged to
Czech concerns. END SUMMARY AND COMMENT.

2. (SBU) Econoff met February 21 with the Ministry of Finance
Director of the Legal Section Vaclav Rombald to hear his
reactions to the reftel USG response to the February 2006

Czech diplomatic note requesting amendments to the existing
U.S.-Czech Bilateral Investment Treaty (BIT). Rombald said
the USG response was "sufficiently clear," even if the answer
is not as the GOCR had hoped. While he readily conceded that
the USG position was theoretically correct, he said the GOCR
was focused on its practical experience (i.e. the CME case).
He concluded that the USG has no intentions of amending the
BIT due to the negative precedent it would create for other
BITs. In response to the USG offer to provide further
clarifications to address Czech concerns, Rombald replied
that would not likely be necessary given such clarifications
are not legally binding.

3. (SBU) Rombald said that new Minister of Finance Kalousek
had not yet been briefed on this issue, although he may be
aware of it in general terms given his previous position as
chairman of the budgetary committee in Parliament. Rombald
reminded that a government resolution gave a fall 2007
deadline for an interagency proposal on resolution of the
issue to Parliament or a request additional bilateral
consultations. In response to Econoff's question about which
was more likely -- some sort of a resolution or further
consultations -- Rombald said he could not answer because he
was not sure what the Czech interagency group would
ultimately propose. Personally speaking, Rombald said he was
not sure how any progress would be possible given the clear
and strong position of the USG. He insisted that the BIT is
not that important to American investors in the practical
sense, given that all the provisions covered by the BIT are
provided in other EU and Czech laws. Therefore, he argued,
the USG should not regard the proposed amendments to the BIT
in such an monumental significance and implications.

4. (U) Regarding the GOCR invitation for a USG delegation to
visit Prague after March 19, 2007 for further discussions on
the BIT, Rombald believes further consideration on the
invitation should be made after the USG receives the official
Czech response to reftel, which he estimated would take about
one month.
MUNTER

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