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Cablegate: Das Bryza's April 10-12 Visit to Greece

VZCZCBSO965
PP RUEHBS
DE RUEHTH #0576/01 1141619
ZNY CCCCC ZZH
P 231619Z APR 08
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC PRIORITY 1687
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 5133
RUEHKB/AMEMBASSY BAKU 0202
RUEHTI/AMEMBASSY TIRANA 1323
RUEHSQ/AMEMBASSY SKOPJE 1172
RUEHAH/AMEMBASSY ASHGABAT 0134
RUEHMO/AMEMBASSY MOSCOW 1000
RUEHDM/AMEMBASSY DAMASCUS 0288
RUEHTH/AMCONSUL THESSALONIKI 1860
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 06 ATHENS 000576

SIPDIS

E.O. 12958: DECL: 04/12/2018
TAGS: PREL ENRG EPET GR
SUBJECT: DAS BRYZA'S APRIL 10-12 VISIT TO GREECE

Classified By: Ambassador Daniel Speckhard for Reasons 1.4 (b,d)

1. (C) Summary. Arriving in the wake of the Bucharest
Summit, EUR DAS Bryza found his Greek counterparts expressing
a strong commitment to work with the United States on a range
of issues including, but not limited to, the Macedonia name
issue. On Macedonia, his counterparts promised that Greece
would work towards a solution, but as one interlocutor told
him, "in your dealings with us, please do not treat your old
ally Greece and FYROM as equals." GoG officials spoke
uniformly of Greece's effort to seek diversification of
natural gas supplies, promising full commitment to the TGI
pipeline. While Bryza did not try to convince them to drop
support for Gazprom's South Stream proposal, he urged them to
make TGI their state's top energy priority, and to do so
publicly. Greek officials expressed no clarity on whether
and how Greece would recognize Kosovo, particularly in view
of uncertain Serbian elections. Discussions of Cyprus
ge`h one
minister calle
President Sioufas, Foreign Affairs Minister Bakoyannis,
Deputy Ministers of Foreign Affairs Valynakis and Doucas,
Foreign Affairs Secretary General for International Economic
Affairs Skylakakis, Minister of Development Folias, Deputy
Diplomatic Advisor to the P.M. Bitsios, PASOK Foreign Affairs
Advisor Dolis and National Gas Company of Greece (DEPA)
President Papageorgiou. End Summary.

- - - - - - - - - - - - - - - - - - - -
The Name Issue: Alliance
Solidarity Key; Ready to Move Forward
- - - - - - - - - - - - - - - - - - - -

2. (C) On Macedonia, FonMin Bakoyannis said that it is key
for Greece that Bucharest had ended with a display of
Alliance solidarity, and she emphasized that Greece remains
committed to continuing negotiations aimed at a final
resolution. She lamented, however, that "Skopje has a long
way to go." With an eye towards the political stand-off in
Skopje over elections, Bakoyannis noted that Greece would
reject at this point any name offer by Gruevski that was
predicated on the results of upcoming elections. Moreover,
she noted the paramount importance to Greece that any
solution be truly final, and invoked the resultant need for a
Security Council resolution to seal the deal. "Anything else
will not solve the irredentist logic, which we want to bury
once and for all." Bakoyannis claimed that she was in a
delicate position: while she wanted to address the issue in a
forward-leaning, logical way, she was hearing "incredible
things" in Parliament that highlighted the popular passions
associated with the issue. Nonetheless, she stated outright
that she was ready to go wherever asked to continue talks:
"I'll go to Geneva, New York, Skopje, or stay here. All are
ok."

3. (C) For his part, Deputy FonMin Valynakis demonstrated a
certain amount of showmanship, handing Bryza a picture of the
Macedonian PM laying a wreath on a map of an enlarged
"united" Macedonia. He also read a quote from a 1944
Circular Airgram from then-Secretary of State Stettinius that
characterized any talk of a "Macedonian nation or Fatherland"
as "unjustified demagoguery" and a "possible cloak for
aggressive intentions against Greece." Valynakis could not
concede that Skopje had demonstrated flexibility in accepting
Nimetz,s "Republic of Macedonia (Skopje)" proposal,
discounting "parenthesis and dashes" as unacceptable. He
urged the U.S. and others to send positive messages to Skopje
for genuine compromise through UN auspices. He furthermore
reiterated that Greece's strategic goal was to see Skopje
integrated into the EU and NATO, but that Greece took the
good neighborly relations criteria very seriously.

4. (C) Lastly, Deputy PM Diplomatic Advisor Bitsios
emphasized that, for him, the basic issue with the name was
that one part of historical Macedonia could not be allowed to
"claim the whole." He said any solution must take account of
Greece's key three principles: the final solution must lead
to "a name that makes a difference," one that will be used
"for all international relations", and one that must be
enshrined in the ROM's constitution. "This is the best way
to enforce any final solution." Bitsios discounted the
chance that political instability in the Republic of
Macedonia could lead to that country's break up. Lastly, he
urged the U.S. not to treat "Skopjeans" and Greeks as equals
in view of the tremendous shared history of the American and
Greek people.


5. (C) DAS Bryza underlined that the UN was and remained in
the lead on the name issue: the USG would, however, help
whenever and wherever possible. "We were invited by you, the
Macedonians, and Matt Nimetz to assist, and we will." He
conveyed the impressions of US NATO Ambassador Nuland from
her April 9 visit to Skopje that, after Bucharest, the
Macedonian officials were ready to find an acceptable
compromise. "They realize they have to move, and in fact,
have moved by apparently accepting Nimetz' last proposal."
Bryza urged Greece to take advantage of this opening.

- - - - - - - - - - - - - - - - - - - -
Kosovo: No Clear Way Forward for Greece
- - - - - - - - - - - - - - - - - - - -

6. (C) Greek officials did not outline a clear path towards
Greek recognition of Kosovo. Bakoyannis noted that the GoG
had had a "very hard time in Parliament -- the political
parties want Greece out of Kosovo and Afghanistan."
Personally, she felt that "UNMIK is hugely important, as is
the Greek role within it. Nonetheless I see a raft of
problems, such as the legal basis for UNMIK moving into
Northern Kosovo." She linked the parlous political situation
in Serbia with the GoG's wait-and-see attitude vis-a-vis
Kosovo. "If Tadic wins the elections, ok, we can make
positive moves -- we would consider recognition by UNGA. If
someone else wins, that's a problem." She was in close
contact with 5-6 like-minded European allies (Spain, etc),
and they were all looking for a "good way forward" that would
"keep Serbia calm." She highlighted a problem with the Dutch
Parliament, which wanted to predicate an EU SAA on
extradition of Mladic, a position she found unworkable.

7. (C) Bryza reminded Bakoyannis of the continuing U.S.
commitment to Kosovo. He was concerned by EU Foreign Affairs
Commissioner Solana's recent statements and attitude, which
we thought made the EU look a bit desperate on the issue. It
is important that we not allow ourselves to seem too eager to
base our actions on hoped-for Serbian good will as we believe
this could end up being counterproductive. Nonetheless,
Serbian integration into Euroatlantic institutions remains a
cornerstone of our policy for Europe.

- - - - - - - - -
Cyprus and Turkey
- - - - - - - - -

8. (C) Bryza's discussions about Cyprus quickly evolved into
a broader discussion of the recent AKP court case and the
evolution of Turkish democracy. All of Bryza's interlocutors
showed themselves to be strongly supportive of Turkey's
European aspirations and equally worried that the AKP court
case could have a fundamental and damaging impact on this.
Bakoyannis noted her renewed hopefulness on Cyprus in the
wake of the Ledra Street opening and the restarting of the
July 8 framework process, but said "we simply do not know
what Turkey aims for in Cyprus." In perhaps the most
intQmments, and ones that rrealities and not grounded in the
past. He explained that, now that a confident Cyprus had
successfully integrated into the EU, security issues facing
the island had changed and it was time to start viewing
security and Turkey from a different, updated angle. In
short, Valynakis did not see how the concept of Turkey as a
Guarantor Power made any sense in the new, post-EU accession
world. Bryza cautioned Valynakis against deploying
opposition to the 1960 Treaty of Guarantee at this point,
just as settlement talks are about to recommence; such a move
at this point would poison the atmosphere and risk a new
breakdown in a process that is just gathering steam.

- - - - - - - - - - - - - - - - - - -
Energy: We're Committed to Diversity
through TGI (and South Stream)
- - - - - - - - - - - - - - - - - - -

9. (C) Minister of Development Folias, FonMin Bakoyannis and
other Greek officials repeatedly and emphatically stressed
their government's firm commitment to assuring energy
security through multiple routes and sources of energy.
Bakoyannis said "diversification is our policy," and Folias
emphasized that it was his "deep-rooted principle to have
diversity of energy supplies." Folias told Bryza he was
dedicated to achieving TGI through action and not just words.
"If I have to travel to Baku every six months to make TGI
happen, I will do so." Folias had conducted a very positive
visit to Baku in March, where he found the Azerbaijanis
clearly committed to making TGI work. He saiQhe wanted to
purchase an additional 1 bcm from Baku asap; this, combined
with Greek Algerian purchases, would bring the Russian share
of Greek gas imports from 80% to below 60%. Bakoyannis noted
that she had told Russian Deputy Foreign Minister Titov
earlier in the day that Greece was dedicated to completing
TGI. (Note: As well as participating in South Stream. End
note). She informed DAS Bryza that, while Folias has the
lead on energy issues, she would be as supportive as
possible.

10. (C) All interlocutors expressed concern over Turkey's
commitment to TGI. Folias said it was essential that Turkey
serve "as a transit country and not a reseller." Both he and
Bakoyannis expressed concern over the ramifications of
Turkey's gas cutoff to Greece in the winter, although Folias
noted that the situation had improved tremendously: "The flow
from Turkey is up to the level it should be, and the quality
of the gas we are receiving has improved." He moreover
admitted that Turkey had had the contractual right to reduce
flows of gas to Greece as a result of its own gas shortfall.
Folias said he was about to invite his counterparts from
Italy, Turkey and Azerbaijan to meet in Athens in order to
help resolve outstanding TGI issues, including the Turkish
transit dispute. Parliament President Sioufas also noted the
importance of resolving the Turkey transit issue, but was
emphatic in his appreciation for the support shown by Turkish
Energy Minister Guler for TGI. "In order to sign the
Turkey-Greece-Italy gas inter-governmental agreement, he
traveled five hours from his electoral district to meet with
me, which he did for six hours. Then he drove back to his
district the same day. And he did all this four days before
the national elections."

11. (C) DAS Bryza's GoG interlocutors told him that Greece
wanted to participate in South Stream, but put this into the
context of Greece's search for more gas from whatever source.
"We need more gas, and it is essential that supply meet
demand," Folias emphasized. He noted that a Greek technical
group had recently returned from discussions in Moscow over
the modalities of South Stream, and said that another Russian
technical group "might come to Athens soon." FonMin
Bakoyannis said that "On South Stream, Greece wants
diversification -- I have been to Algeria, my Deputy Minister
has been to Egypt. Our Government has told our shippers to
build LNG tankers..."

12. (C) DEPA President Papageorgiou told Bryza that Gazprom
was playing hardball in its negotiations with the GOG. He
urged Bryza to use his meeting with Folias to stiffen Folias'
backbone. He noted that Gazprm was predicating extension of
the 2016 gas areement on reduced DEPA offtake of Gazprom gas
in order to allow Gazprom to begin marketing its gas in
Greece directly. Gazprom was also working through its
Italian partner ENI to enter the Greek market through
purchasing one of the new regional gas companies (EPAs) that
DEPA was in the process of establishing. Gazprom was also
likely to try to bid for a controlling share of DEPA, once
the GoG privatized the firm. Papageorgiou stressed that,
from his optic, Gazprom wanted to take over all aspects of
Europe's gas system -- from upstream production, through
transit pipelines, to downstream sales. It was an
avaricious, monopolistic, all-controlling monster that needed
to be countered.

13. (C) DAS Bryza welcomed the Greek commitment to diversity
and to TGI in particular. He noted that the USG was "quite
confident" that Azerbaijan had enough gas in the ground for
TGI, the first phase of Nabucco, and perhaps for all of
Nabucco. The challenge was to secure sufficient volumes of
Azeri gas when needed by TGI's and Nabucco's investors. He
admitted that dealing with Azerbaijan could be complex: "The
Azeris would like to welcome you into their bazaar, but they
want you to beg them to buy their carpet." This led the GOAJ
to send unclear signals that Bryza urged the Greeks not to
misconstrue as a lack of commitment to the Southern Corridor.

14. (C) On Turkey's role in the Southern Corridor, Bryza
noted that a corner had been turned. Once Azerbaijan's
supply agreements expired April 1, the GOAJ had felt in a
position to begin negotiations over both the cost of future
gas sales to Turkey and transit arrangements in earnest.
Most importantly, both national leaders were now personally
involved in the negotiations. He noted that the best way for
Greece to assure the flow of gas through Turkey was to make
certain it negotiated smart contracts with Turkey. "Turkey
will uphold whatever you negotiate."

15. (C) Bryza made it clear that the USG did not seek a new
Cold War with Russia, and recognized absolutely that Russian
gas would remain the largest source of Europe's future gas
needs. This, however, did not undercut the need for
diversity, but rather strengthened it. While he recognized
the GOG's commitment to TGI, he repeatedly stressed that
South Stream was aimed at undermining it, and Greece needed
to be careful in sequencing the two pipelines. Making
certain that TGI was completed first would put Greece in a
far superior negotiating position with Russia over South
Stream, while doing the opposite -- giving South Stream
priority -- could well scare off both the Azerbaijani
Government as well as potential investors from TGI. In
response to a question from Bitsios as to the cost to Greece
of signing agreements now without content on South Stream,
Bryza admitted there did not seem to be a cost. The problem
was that, if TGI was thrown off track by South Stream, Greece
and its consumers would end up paying a higher cost for gas
supplies in the future. Bryza told Folias that the Bulgarian
Government had kept a small number of basic principles in
mind when negotiating over South Stream: 1. All South Stream
contracts must contain ship-or-pay clauses; 2. Contracts
should include an explanation of the source of South Stream's
gas; 3. Contracts should show that a reasonable amount of
rate-of-return would be realized on any investment in a
reasonable time frame; 4. Host countries should own a
majority of South Stream pipelines transiting their
territory; and 5. third-party access provisions must be
protected.

- - - - - - -
ECCC Issues
- - - - - - -

16. (C) MFA Secretary General Skylakakis expressed his strong
commitment to the Economic and Commercial Cooperation
Commission (ECCC) process in his meeting with DAS Bryza. He
called the Commission a "useful tool" that allowed the two
sides to discuss the economic side of the relationship on a
regular basis. He said he was looking forward to holding the
next ECCC on June 19 in Washington, and promised to do
whatever he could "to have as good a meeting as possible."
Skylakakis and Bryza went through the entire ECCC agenda:

a. IPR. Skylakakis said that Foreign Minister Bakoyannis
had finalized creation of the IPR Interministerial Committee
under Skylakakis' leadership and that its creation had been
officially published in the Government's Gazette. He noted
that the Ministry of Culture's Copyright Office (OPI) had
spent $1 million in the creation of an information portal on
good IPR practices. The Special Tax Police (YPEE) had now
completed the process of sending a fourth tranche of letters
to 5000 companies with 20-39 employees, asking the firms to
supply software licenses or risk a detailed tax audit. The
last letter had been sent at the end of January, and firms
had until the end of February to respond. YPEE was now
collating the responses and would decide which firms to
audit. Skylakakis noted that 92% of large companies (i.e.
those firms who received YPEE's first tranche of letters in
2006) had responded in a satisfactory way. "I promise that
the Business Software Alliance (BSA) will see increased
software sales as a result of our efforts. This is the first
time that the Greek state has done this."

Skylakakis said that new Greek laws finally allowed
municipalities immediately to destroy seized
counterfeit/pirated goods estimated to posses any value. In
the past, he admitted, the municipalities did not have the
authority to do this and were instead forced to auction off
such goods. Skylakakis raised the new, interagency
confiscation teams, which had started work in January. "This
is moving too slowly; I admit that even I am not satisfied,
and promise new energy will be given to this task this
month." He noted that, as a former head of the Athens
municipal police, he recognized that this task was a
particularly challenging one for municipal authorities, but
promised to seek results. "I will also use the new committee
to get results." Skylakakis highlighted the fact that, in
Greece, the police are viewed as the "evildoers", not those
who break the law.

Skylakakis ended his presentation by urging Bryza not to
support a Special 301 listing this year, as that would just
feed into a sense that, after the Bucharest Summit, the USG
would try to find whatever means it could to punish Greece.
He understood the two issues had no relation to each other,
but the Greek public would not understand.

Bryza noted that this was an impressive list of achievements.
He explained that the 301 process involved many agencies,
who were hearing a tremendous amount of information from U.S.
industry, most of which was negative. He said the June 19
ECCC meeting represented a unique opportunity for the GOG to
present its views directly to the USG's interagency community.

b. Commercial Issues. i. Procurement: Skylakakis noted
that Greek implementation of European procurement law had
already had a very positive effect on the bidding process.
Now only victorious companies had to supply the large amount
of qualification documents. He admitted that, as ministries
learned how the new law worked, procurement was lagging, but
this was a universal problem not limited to U.S. bidders.
Skylakakis also promised to urge the Ministry of Development
to fulfill its commitment to the Embassy to publish by May a
list of alternative documents that can be presented by U.S.
bidders, which the GoG will accept as fulfilling Greek
tendering procedures.

ii. Hospital Debt. Skylakakis said he had received some
promises from the Ministries of Health and of Finance
relating to the resolution of the hospital debt issue. "I am
not going to present these to you because they are too vague,
and I want to receive them from a high level. I will have
more news for you in June."

iii. Trade and Investment. Skylakakis said the key issue
from the Greek point of view was the lack of U.S. trade and
investment in Greece. "You are losing a tremendous
opportunity -- access to a market of more than 200 million
Euro/year at a time when your currency is particularly
competitive." He hoped to be able to discuss this issue on
June 19, as well as during the private sector event
associated with the ECCC on June 20.

iv. Money Laundering/Terror Finance. Skylakakis said the
GoG would ratify the Third European Community Directive on
Money Laundering/Terror Finance in May.

- - - - - - - - - -
Visa Waiver Program
- - - - - - - - - -

17. (C) Deputy Foreign Minister Valynakis pressed Bryza on
the Visa Waiver Program, noting that upon completion of their
meeting he was to testify before Parliament on the issue.
Valynakis stressed that the GoG was committed to solving
outstanding MOU technical issues in order to secure Visa
Waiver status. He noted that while Foreign Minister
Bakoyannis was determined to see the MOU to completion, Greek
public opinion complicated matters, and Bakoyannis needed our
assistance. Valynakis continued to press Bryza and the
Ambassador to show the "political will to help us," noting
that success would represent a victory for the U.S. image in
Greece. Parliament President Sioufas echoed Valynakis'
argumentation, and told Bryza passionately that Greece, a
NATO ally for 55 years, whose citizens had repeatedly shed
blood with Americans in twentieth century conflicts, should
be a member of the VWP. "All we want is proper -- not
preferential -- treatment." He offered whatever help he
could provide for Greece to enter the program.

18. (C) The Ambassador explained that he expected to receive
a revised MOU from the GoG shortly, and next steps would
largely depend upon suggested MOU modifications -- minor
edits could be addressed expeditiously but more significant
modifications could result in Greece's delayed entry through
an EU-wide exercise.

- - - - - - - - - -
Business with Syria
- - - - - - - - - -

19. (C) DAS Bryza expressed surprise to Deputy Foreign
Minister Doucas over his recent visit to that country.
Doucas indicated that he believes it is important to engage
Syrians so they don't move more towards Iran.
Bryza said that was interesting, but one of the key issues
for the USG was the issue of foreign fighters
moving through Syria to Iraq adding to Iraq's instability.
Doukas agreed this was a problem, but said that
the Syrian ministers with whom he met are interested in
engaging with the West. Doukas and Bryza agreed that
one area of possible opportunity for Greece is to work with
the Government of Iraq in order to urge moving
more quickly in developing the Akkas gas field. Bryza said
he needed to focus on Akkas once back in
Washington, but said he saw potential to Greece's support
here.

SPECKHARD

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