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Cablegate: Spanish Secretary of State for Economy: Terrorism

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 MADRID 002248

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON EFIN EAID ETTC PTER PINR SP
SUBJECT: SPANISH SECRETARY OF STATE FOR ECONOMY: TERRORISM
FINANCE, IRAQ, ECONOMIC REFORM

REF: A) MADRID 2230 B) MADRID 2204 C) MADRID 2012

1. (SBU) Summary. In a June 14 meeting with Charge, Spanish
Secretary of State for Economy David Vegara said the fight

SIPDIS
against terrorism finance, including close cooperation with
the United States, would continue to be a priority for the
Ministry of Economy and Finance. On Iraq reconstruction, the
senior Spanish Economy Ministry official reiterated that
Spain will honor the commitments made at the October 2003
Madrid Donors' Conference, forecasting the $5 million
contribution to the International Finance Corporation Small
Business Facility and $20 million to the IRFFI would be
deposited this week or next. Vegara described stimulating
productivity, respect for market mechanisms and fiscal
stability as the pillars of the Spanish Socialist Party
(PSOE) economic program. He downplayed media speculation on
the seriousness of the PSOE's commitment to economic reforms,
recognizing the government needed to earn the trust of
Spain's major economic players. Vegara said he hoped to meet
with Treasury officials when next in Washington, at a minimum
on the margins of the annual IMF/WB meetings. End Summary.

Terrorism Finance: Toward the Top of the Agenda
--------------------------------------------- ---

2. (SBU) In a June 14 courtesy call with Charge, Vegara
emphatically underscored the importance of the fight against
terrorism finance to the Ministry of Economy's agenda.
Vegara demurred that he was still reading in on the subject,
but appreciated the GOS' work in FATF and that Spain would
continue to play an active role on these issues, including
close cooperation with the U.S. Vegara took note of the
Charge's urging that the Ministry of Economy press for rapid
approval of implementing regulations for last year's
terrorism finance law. He noted he would be attending his
first meeting of the newly created Terrorism Finance
Oversight Committee next week and would raise the regulations
if not already on the agenda. Vegara said he would welcome
U.S. views on any other terrorism finance-related issues
where we felt additional action was needed.

Iraq: Honor Our Commitments
----------------------------

3. (U) Charge recounted to Vegara Vice President Solbes'
commitment to Ambassador that Spain would honor the
assistance pledges made at the October 2003 Madrid Donors'
Conference. He noted our initial concern regarding recent
remarks by FM Moratinos as reported in El Pais (ref B), which
Secretary of State for Foreign Affairs Bernadino Leon later

SIPDIS
clarified that Mortinos intended to review how money was
being spent not whether it would be contributed (ref A).
Vegara reitered that Spain would honor its commitments. He
noted his intention to complete the processing for the
deposit of $5 million for the IFC Small Business Facility and
$20 million to the IRFFI this week or next. He needed to
consult with the MFA before final approval but anticipated he
would not encounter any problems.

Improving Productivity and Keeping the Budget Balanced
--------------------------------------------- ---------

4. (U) Vegara provided a brief overview of the Zapatero
government's economic vision, stating that the GOS was
commited to change the growth model to a greater focus on
improving productivity. For instance, labor reform needed to
ensure wage increases reflected increases in productivity.
Fiscal disipline also formed a critical pillar of the PSOE's
economic policy. Vegara credited the Aznar government with
creating a wide base of public support for sound fiscal
policies. PSOE intended to maintain that support, as shown
by VP Solbes' presentation of next year's broad budget
framework establishing expediture limits in line with fiscal
balance. Vegara also underscored the Zapatero's government's
respect for markets, promising the Socialist government had
no intention of interfering in private sector business
decisions. Vegara said he understood the Zapatero
government would need to earn the private sector -- and
American investors' -- trust, but also noted the government
should be allowed time to establish its reputation. He
offered his doors were open if the Embassy needed
clarification or coordination on specific issues raised by
U.S.investors or other policy concerns.

Comment
-------

5. (SBU) Clearly still getting a handle on his job, Vegara
came across as committed to sound economic policies and
willing to work with us on terrorism finance as well as other
issues. In our conversation, Vegara mentioned his interest
in meeting with his counterparts when next in DC. We
anticipate Vegara will attend the IMF/WB meetings this fall
and recommend Washington agree to appropriate bilaterals if
schedules permit.

Bio Note
--------

6. (U) A 40-year old economist from Catalunya, Vegara spent
junior high school in Palo Alto and studied at the London
School of Economics. He worked at the Sabadell Bank after
getting his degree, joining Prime Minister Gonzalez' economic
staff at Moncloa (the Spanish White House) in the latter
years of the Gonzalez government. After PP gained power in
1996, Vegara worked with Miguel Sebastian (now PM Zapatero's
economic advisor) at Intermoney, a Spanish economic
consultancy. Following the Catalan Socialist Party victory
earlier this year, he briefly joined the Catalan government,
before being asked by PM Zapatero to serve as Secretary of
State for Economic Affiars. Vegara speaks fluent English.
MANZANARES

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