Cablegate: Lukoil-Repsol Role Highlights Importance Of

R 241220Z DEC 08
FM AMEMBASSY MADRID
TO SECSTATE WASHDC 5823
INFO EU MEMBER STATES COLLECTIVE
AMEMBASSY MOSCOW
AMCONSUL BARCELONA
NSC WASHDC
CIA WASHDC
DEPT OF COMMERCE WASHDC
DEPT OF ENERGY WASHINGTON DC

C O N F I D E N T I A L MADRID 001359

STATE FOR EUR/WE

E.O. 12958: DECL: 12/23/2018
TAGS: EINV EPET KBIO RU SP
SUBJECT: LUKOIL-REPSOL ROLE HIGHLIGHTS IMPORTANCE OF
PRESIDENCY SYG BERNARDINO LEON

REF: A. MADRID 1257
B. MADRID 1226

Classified By: DCM Arnold A. Chacon, for Reasons 1.4 (b) and (d)

1. (C) Presidency Secretary-General Bernardino Leon
confirmed in a December 22 dinner with the Ambassador
that President Zapatero has tasked him with ensuring
that Russian (and partly U.S.-owned) oil company
Lukoil's pending purchase of a sizable stake in Spain's
Repsol takes place on politically acceptable terms. Leon
is seeking to limit Lukoil to purchasing the 20 percent
stake of Repsol owned by troubled construction company Sacyr
Vallehermoso, rather than the almost 30 percent it had
originally sought (reftels), so that Lukoil will not become
Repsol's most influential shareholder. Zapatero wants to see
the sale of Sacyr's stake go through in order to help Sacyr,
which has more than 20,000 employees, overcome its current
difficulties. King Juan Carlos also has been a proponent
of the deal, which is seen as a way of strengthening Spain'
s relations with Russia. Leon is seeking either to
persuade Repsol's other Spanish shareholders to hold their
shares or to find Spanish buyers for them. At present, the
main hurdle to the Sacyr-Lukoil deal appears to be price,
especially with the continuing fall in the price of oil.
The Spanish banks who are Sacyr's creditors would finance
Lukoil's purchase, as they are reported to prefer to be
creditors of Lukoil than of Sacyr if acceptable collateral
arrangements can be reached.

2. (C) Comment: His involvement in the sensitive Lukoil
deal plays up Leon's increasing importance as one of
Zapatero's closest advisers, especially on international
issues (along with Defense Minister Chacon). The
forty-four year-old former deputy foreign minister plays a
more policy-oriented role than the coordinating function
that usually falls to the presidency secretary-general. He
also accompanies Zapatero on all his foreign travel. Leon
was supposed to accompany Zapatero to Afghanistan December
23, but the trip was cancelled because of regional
government financing discussions, in which he is the
government's point man. Leon told the Ambassador he expects
to join Zapatero on a trip to Lebanon early in the New Year.

3. (C) Comment Continued: Leon does not seek a prominent
public role, and he told the Ambassador that a December 22
article in the El Mundo newspaper playing up his super-charged
National Security Advisor role did not go over well with
with Foreign Minister Moratinos and Second Vice
President and Finance/Treasury Minister Solbes. The article
described Leon as the brain behind the effort to increase
Spain's international influence, particularly with the U.S.,
and it included several statements that could be read as
slights to Moratinos, such as "some say he (Leon) is the real
foreign minister and has more influence than the Vice President."

4. (C) Comment Continued: Leon clearly will be one of the
key voices shaping Zapatero's views on the next U.S.
administration, and he appears to have a better
understanding of the U.S. than either Zapatero or other
advisers. Leon visited the U.S. in April to meet with
advisers to then-candidates Obama, Clinton, and McCain. He is
reported to have organized Zapatero's September New York meeting
with U.S. business leaders (working through the AmCham), and he
directed the ultimately successful campaign to get Spain
invited to the November G-20 financial crisis summit. He
said he looked forward to meeting with WHA A/S Shannon during
the latter's visit in early January. We will seek to
maintain our strong relationship with him over the coming months.
End Comment.

AGUIRRE

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