Cablegate: Scenesetter for U/S Dobriansky Visit to Madrid

DE RUEHMD #1002/01 2631458
R 191458Z SEP 08




E.O. 12958: N/A
SEPT.26-OCT. 1

1. (SBU) Summary: Embassy Madrid warmly welcomes your
visit. Your speech at the American Chamber of Commerce
energy conference, your meetings with GOS officials and
climate change experts, and a press event will provide
opportunities to explain USG leadership on climate change and
address concerns on trafficking in persons and religious
freedom. After 15 years of rapid economic growth, Spain is
feeling the pain of an economic slowdown that has hurt the
Zapatero government's public standing. Our bilateral
relations have recovered from a low point after Spain pulled
out of Iraq in 2004 and are based on strong cooperation in
areas such as the military, law enforcement,
counterterrorism, and renewable energy. End Summary.

Tough Times for Economy, Zapatero

2. (SBU) President Zapatero's Socialist party (PSOE) narrowly
defeated Mariano Rajoy's Popular Party (PP) in general
elections last March. The PSOE gained seats in Congress but
fell just short of an absolute majority, forcing it to barter
with small regional parties and the leftist IU to gain
support. Foreign affairs did not play a major role in the
campaign, but the PSOE reminded voters that it removed
Spain's troops from an unpopular war in Iraq. Zapatero's new
cabinet has more female ministers (9) than male (8),
including Spain's first female Defense Minister, Carme

3. (SBU) Since Zapatero was re-elected, a deepening economic
slump that the GOS has been unable to stop has increased
public frustration. After 15 years of rapid economic growth,
the end last year of a long construction boom has led to
surging unemployment, now likely over 11 percent. Inflation
is above 4 percent, the economy may already be contracting,
and 2009 is expected to be an even more difficult year.
Although Spaniards were briefly cheered by a summer of
unprecedented sports success, the public mood was further
dampened by an August 20 Madrid airplane crash that killed

4. (SBU) After months of worse-than-predicted economic news,
Zapatero and his economic policymakers are widely criticized
for their predictions during the campaign and for having
denied the economic difficulties long after many others were
calling them a crisis. Public skepticism has been aggravated
by a series of initiatives that have not noticeably halted
the slowdown and by Zapatero's efforts to blame U.S.
financial woes (the international credit crunch aggravated
Spain's troubles but came after the housing slump began).
Now that the budget surplus of the last four years has become
a rapidly growing deficit, tensions have heightened over
regional government financing issues and the 2009 budget.

5. (U) The medium-term economic picture remains reasonably
favorable. Spain has the world's eighth largest economy and
is the second largest international tourism destination and
eighth largest auto manufacturer. Its per capita GDP
is expected to pass Italy's in 2010. U.S. investment has
long been important to the Spanish economy (more so than
bilateral trade), and U.S. firms employ over 220,000
Spaniards. Spanish investment in the U.S. has surged in the
last few years, particularly in banking, toll road
construction, and renewable energy. In 2007, Spain was the
fourth largest foreign investor in the U.S.

Renewable Energy Increasingly Important

6. (U) Renewable energy is an increasingly important part of
the Spanish economy and of our bilateral relationship.
Abundant wind and sun and generous feed-in tariffs have
helped make Spain a world leader in wind and solar power.
More than 10 percent of the country's electricity is
generated by wind, and an additional 10 percent comes from
hydro, solar, and other renewable sources. Spanish
companies, including the world's largest (Iberdrola) and
third largest (Acciona) producers of wind power, own wind
farms in at least 14 U.S. states and continue to expand.
They also own four wind turbine manufacturing plants in Iowa
and Pennsylvania. Spanish companies have significant solar
and biofuels investments in the U.S. as well, and U.S.
companies such as AES are investing in Spain's solar market.

7. (U) This past February, you met with a delegation of
Spanish government and business leaders on renewable energy.
Among them were several people you will see on this trip,

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including Ambassador Aguirre, American Chamber of Commerce
Chairman Jaime Malet, GOS Secretary of State for Climate
Change Teresa Ribera, and Acciona official Carmen Becerril.
The group visited Washington and Denver for meetings with
federal, Senate, and state officials, business
representatives, and the National Renewable Energy
Laboratory. One of our aims in organizing the mission was to
emphasize the links between climate change policy and the
renewable energy industry, and we recommend that you
highlight these links at the American Chamber conference and
your press event. Spain also sent a delegation to WIREC,
although the event's timing a few days before national
elections prevented higher-level GOS representation.

8. (SBU) An issue that you should be prepared to address is
GOS and corporate concern over the uncertainty of U.S.
federal investment and production tax credits for renewable
energy set to expire December 31. The GOS and energy
companies have raised this with Senate and House members and
USG officials, saying it is the most important issue
affecting Spanish companies' investment plans. Your
interlocutors would appreciate any information you can
provide about the prospects for renewal of these credits.

Climate Change

9. (SBU) Climate change is one of the signature issues of the
Zapatero Administration. The socialist government has firmly
embraced the Kyoto Protocol, under which Spain committed to
reduce greenhouse gas (GHG) emissions to 15 percent above
1990 levels by 2012. Despite generally popular initiatives
to promote renewables and energy efficiency and to implement
EU commitments, emissions are currently 50 percent above 1990
levels, in part because of years of rapid economic growth.
Spain is the EU country most out of compliance with Kyoto,
and will not meet its 2012 commitment. That said, Zapatero
remains committed to fighting climate change and, despite the
economic slowdown, may be willing to commit to costly actions
if necessary.

10. (U) After Zapatero,s March re-election, the former
Ministry of Environment was merged into the former Ministry
of Agriculture, creating a super ministry responsible for
environment and climate change, agriculture, rural
development and marine affairs. Previous Agriculture
Minister Elena Espinosa was given charge of the new ministry,
but the profile of climate change issues was increased. Lead
international climate negotiator Teresa Ribera, with whom you
will meet, is now a Secretary of State, equivalent to an
Under Secretary. Spanish officials were pleased that Dr.
Jose Manuel Moreno was elected in Geneva earlier this month
to the IPCC,s Working Group II, the group being co-chaired
by U.S. candidate Chris Field. You will see Dr. Moreno at
the Ambassador,s climate change breakfast September 30.

11. (SBU) Ribera has said informally that she favors
establishing aggressive emissions reductions goals to ensure
progress even if they are not fully attained. The GOS wants
to be taken seriously on climate change and demonstrate its
leadership on the issue, and GOS officials have expressed
repeatedly their frustration over not being included in the
USG-initiated Major Economies Meeting process. The USG and
GOS obviously differ on climate change policy and approach,
but we have made gains in developing positive relationships,
communicating the USG position and providing perspective.
After the December 2007 Bali conference, Ribera praised the
USG for its leadership. We recommend you emphasize the USG's
commitment to combating climate change without jeopardizing
economic growth, the need to include commitments by
developing countries, and our support for technological

Trafficking in Persons

12. (SBU) We hope you will raise trafficking issues when you
see Deputy Foreign Minister Angel Sanchez de Lossada. Spain
continues to merit a Tier 1 country ranking in the annual TIP
report and fully complies with the minimum standards for the
elimination of trafficking. Spain is both a destination and
transit country for people trafficked for the purpose of
sexual exploitation and, to a lesser degree, forced labor.
Trafficking victims arrive in Spain from three major regions:
Eastern Europe and the former Soviet Union, Latin America and
sub-Saharan Africa. More than three-quarters of all
trafficked women come from five countries: Romania, Russia,

MADRID 00001002 003 OF 004

Brazil, Colombia and Nigeria. Victims trafficked for forced
labor purposes are primarily found in the agricultural,
construction, and domestic sectors.

13. (SBU) To further expand its anti-trafficking efforts,
and under the aegis of the powerful Vice President Teresa
Fernandez de la Vega, Spain has developed a national integral
plan against trafficking in persons. The plan, which includes
a government pledge of almost $45 million per year and over
200 police to aid in enforcement of anti-trafficking efforts,
is reportedly ready for adoption by the Council of Ministers
but is being held pending
announcement of a larger human rights initiative by the
Spanish Government, of which anti-trafficking is a part.
We understand from our Spanish interlocutors that the human
rights plan, along with the anti-trafficking plan, will be
announced later this year. We recommend you raise the issue
with Sanchez de Lossada, commending GOS efforts and urging
adoption of the plan at the earliest possible date.

Religious Freedom and Equality

14. (SBU) Spain's record on religious freedom and equality
is a good one, but there is one issue (which has captured
some U.S. Congressional attention) which we recommend you
raise in your meeting with Sanchez de Lossada. We have
been encouraging Spain to grant tax treatment to Mormons,
Jehovah's Witnesses, and Buddhists equivalent to those
enjoyed by other religions. The regulatory process is
complicated, with the first step being a religion's
recognition as 'well-known and deeply rooted.' This status
is known in Spanish as 'notorio arraigo.' Mormons,
Jehovah's Witnesses, and Buddhists now have this status, but
concession of tax benefits and other privileges has
been delayed because the Spanish Government is preparing a
legal change that will automatically give all notorio
arraigo religions the same tax and benefit status rather than
requiring each to petition for the benefits individually.
This would be a step forward, but unfortunately the previous
Congress adjourned without acting. We are now encouraging
the GOS to get the measure back on the congressional
calendar. The issue involves both the Ministry of Justice
and (because of the revenue implications) the Ministry of

Diplomatic Cooperation and Security

15. (SBU) U.S-Spain relations were seriously damaged by
President Zapatero's decision soon after his election in
2004 to abruptly withdraw Spanish forces from Iraq. However,
over the last several years, both countries have
made a concerted and successful effort to rebuild the
relationship based on strong mutual interests in
counter-terrorism, fighting narcotics trafficking and
organized crime, and rapidly expanding economic ties. The
real bilateral story is found in novel initiatives such as
the HSPD-6 agreement we signed last September to facilitate
the sharing of information between our national
counter-terrorism authorities. Following the March 11, 2004
train bombings, Spain remains a target of Islamic extremists.
Al-Qaeda leaders often call for the recapture of the medieval
"Al Andalus," and the uncovering in January of a cell
allegedly sympathetic to Al-Qaeda and operating out of
Barcelona has shown the public that this threat is not an
idle one.

16. (SBU) Spain is no stranger to terrorism, having fought
the domestic Basque terrorist group ETA for almost 40 years.
ETA has been weakened by a series of arrests stemming in part
from improved cooperation from France. However, it retains
the capacity for violence. It has carried out several
small-scale bombings and killed two people this year.

17. (SBU) Narcotics trafficking is another area of common
concern and excellent cooperation. Spanish authorities
acknowledge that Andean cocaine is a serious problem here,
and Colombian trafficking organizations are active in
Spain. Money laundering is another serious issue. We are
increasing bilateral cooperation and encouraging Spain to
continue engaging more aggressively with law enforcement
authorities in key Latin American countries.

18. (SBU) Spain, second only to the U.S. in terms of
Investment in Latin America, is actively engaged in the
region. In addition to cultural and historical ties, Spain

MADRID 00001002 004 OF 004

shares our interest in a strong democratic and free market
institutions in the region. Regarding Cuba, we share with
Spain the objective of a peaceful transition to democracy but
differ markedly on how to achieve this end. Spain's
socialist government has opted for engagement, claiming it
can encourage regime elements who want change. It has
claimed that Cuba's willingness to hold dialogue with the EU
is a result of successful GOS efforts to improve EU-Cuban
relations. We take every opportunity to remind the Spanish
that the Cuban regime is only interested in survival and that
the Cuban dissidents need and deserve the active and visible
support of democracies everywhere.

19. (SBU) Spanish military cooperation matters. The bases of
Rota and Moron are strategic hubs, midway between the
U.S. and Afghanistan and Iraq. U.S. planes and ships account
for around 5,000 flights and 250 port calls a year
in Spain. Spain has nearly 800 personnel in Afghanistan and
runs a provincial reconstruction team in Badghis province.
Spain has contributed some 150 million Euros in Afghan
reconstruction funds. Planning is underway to allow the
Spanish to train and equip an Afghan Army company, which we
hope will be a prelude to the training and equipment of a
full battalion. Spain has nearly 1,100 troops with UNIFIL in
Lebanon and about 700 in Kosovo. On Iraq, Spain has
contributed $22 million to the Basrah Children's Hospital and
a further $28 million in development funding for Iraq.
Spain's total commitment to the Iraq Compact was USD 225
million. It also has provided through UNHCR over 800,000
euros for refugee and displaced persons relief in Jordan and

Personal Security

20. (U) In general, Spain is safe. However, Madrid,
Barcelona and other large cities in Spain attract a large
number of criminals and pickpockets and frequent incidents of
crime of opportunity against the unwary do occur. It is best
to carry only essential items including a photocopy of your
passport's photo page. Visitors can protect
themselves against crime by being street-smart, alert and
aware of their surroundings. Travelers are encouraged to
review the most recent Worldwide Caution issued by the
Department of State. As the Department of State continues
to develop information on any potential security threats to
Americans overseas, it shares credible threat information
through its Consular Information Program documents, available
on the Internet at http://travel/ Additional
information regarding safety and security in Spain is
available on the U.S. Department of State's website

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