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Cablegate: Scenesetter for Your Meetings with Eu Political

VZCZCXRO4996
RR RUEHIK
DE RUEHMD #0021/01 0111754
ZNR UUUUU ZZH
R 111754Z JAN 10
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1657
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4296

UNCLAS SECTION 01 OF 02 MADRID 000021

SENSITIVE
SIPDIS

FOR UNDER SECRETARY BURNS AND ASSISTANT SECRETARY GORDON
FOR P STAFF AND EUR FRONT OFFICE

E.O. 12958: N/A
TAGS: PREL EU IR SP
SUBJECT: SCENESETTER FOR YOUR MEETINGS WITH EU POLITICAL
DIRECTORS JAN. 15

MADRID 00000021 001.3 OF 002


Summary
-------
1. (SBU) Embassy Madrid welcomes your visit for the EU
Political Directors meeting hosted by Spain. The GOS seeks
to strengthen EU (and GOS) ties with the USG during its
presidency, and your interlocutors will be eager to meet with
you. U.S.-Spain relations are strong and based on shared
global interests, including our association in NATO, the
fight against terrorism, and growing economic ties.
Spaniards are enthusiastic about President Obama, and
President Zapatero's desire for closer bilateral relations
and enhanced engagement is reflected in GOS stances on
Afghanistan and Guantanamo. On Iran, although Spain prefers
dialogue to sanctions in almost any situation, it recognizes
that action may be necessary if Iran continues its present
course.

Bilateral Relations
-------------------
2. (U) We value Spanish cooperation on security issues and in
the fights against terrorism and narcotics. Spain is a
strong bilateral defense partner, despite differences in the
past over its sudden pullout from Iraq in 2004 and its poorly
coordinated 2009 withdrawal from KFOR. Spain operates a
Provincial Reconstruction Team in Afghanistan with about
1,000 troops participating in ISAF. Zapatero was criticized
for his poor relations with the USG during the Bush
Administration (a result of his Iraq pullout). His
enthusiasm for President Obama and his desire for closer
bilateral relations have resulted in GOS willingness to send
511 more troops to Afghanistan, pending legislative approval,
and to take 5 Guantanamo detainees. In both cases, he has
faced public criticism that he has subordinated Spain's
interest to President Obama's. Spain also allows us the use
of two military bases, Rota and Moron, that are crucial
transit points between the U.S. and Afghanistan and Iraq.
Counter-terrorism and law enforcement cooperation is strong,
and business ties are increasing.

Political Context
-----------------
3. (U) President Zapatero won re-election to a second term in
2008. His center-left Spanish Socialist Workers Party (PSOE)
is seven seats shy of a Congressional majority and fared
poorly in regional and European Parliament elections in 2009.
Zapatero's popularity and credibility have suffered because
of the long recession and high unemployment, his initial
unwillingness to acknowledge the seriousness of the economic
situation, and his continued claims that things will get
better soon. The conservative opposition Popular Party (PP)
has not capitalized on Zapatero's unpopularity, as it has
suffered internal divisions and has been dogged by corruption
accusations. That said, recent polls suggest that the PP
could win an election over the Socialists if the vote were
held today.


Economic Context
----------------
4. (U) Spain grew much faster than the EU average over the 15
years through 2007 and now has the world's 9th largest
economy. The rapid growth was driven by a housing boom that
ended in 2007, after which the world economic crisis
aggravated the economy's woes. Spain has been in recession
for almost two years. The economy is expected to continue
contracting until later in 2010, which would make it the last
large economy to begin to recover, and the eventual recovery
is expected to be sluggish. Unemployment, now over 19%, is
expected to pass 20% this year. The GOS has responded with a
major fiscal stimulus. This has boosted the budget deficit
to around 10% of GDP, and the GOS will have to limit spending
significantly between now and 2013 to meet EU deficit
requirements. Zapatero's government is working to reorient
Spain's economy towards more sustainable sectors, with
renewable energy a key priority. Spain, the 10th largest
foreign investor in the U.S., is especially active in wind
and solar power, banking, and road construction. The U.S. is
also a major investor in Spain.

EU Presidency
-------------
5. (SBU) Spain,s presidency of the Council of the EU gives
Zapatero an opportunity to emphasize an international role to
counter the negative domestic economic situation. He seeks
to use the presidency to show that he is taking a leading
international role in responding to the economic crisis; this
ties in with his argument that the crisis is an international

MADRID 00000021 002.3 OF 002


problem for which his government should not be held
responsible. The GOS has been stung by foreign press
criticism (in the Economist, Financial Times, and New York
Times) of Spain's intentions for its presidency. At his
January 8 press conference with Van Rompuy and Barroso to
mark the start of Spain's presidency, Zapatero had to argue
that Spain's economic difficulties did not disqualify it from
helping lead EU economic recovery efforts.

6. (SBU) The need to adjust to the new roles of President Van
Rompuy and High Representative Ashton will be both a major
focus of the Spanish presidency and a factor that will reduce
the prominence of Spain's role from what it might have been.
Initial GOS aspirations to use the presidency to address a
wide range of issues seem to be giving way to a greater focus
on key issues. For example, Zapatero now acknowledges that
strengthening EU ties with Cuba will not be a major focus of
Spain,s presidency, contradicting earlier GOS statements.
However, the less-than-ideal coordination between the
Presidency and the Foreign Ministry, and within the Ministry,
may muddle the government,s message at times.

7. (SBU) Zapatero and his officials have repeatedly cited
strengthening transatlantic relations as a key aim of Spain's
presidency. For domestic political reasons, they intensely
want a US-EU summit, and the lack of a Presidential visit
would be seen as a major failure of Zapatero and a sign of
USG disinterest. This desire will give you an opportunity to
press your interlocutors for specific Summit deliverables
before we can commit, as well as for Spanish leadership
during the presidency on issues such as Afghanistan, Iran,
and Guantanamo.

Iran
----
8. (SBU) The GOS traditionally prefers dialogue and
engagement to sanctions and criticism in almost any case,
including Iran, Cuba, and Venezuela. Many also are skeptical
that additional sanctions will influence Iranian actions.
However, Zapatero and senior officials increasingly
acknowledge that international action will be necessary if
Iran does not change course. At times in the past, other EU
countries' officials have identified Spain as one of the
member states resisting increasing sanctions, but this
position may be evolving. Spain implements UNSC resolutions
and EU sanctions conscientiously.

9. (SBU) Even if it accepts the need for additional
sanctions, it would be difficult for the GOS to support
sanctions on investment in Iran,s oil and gas sector,
because of the interests of the formerly state-owned firm
Repsol. In 2008, USG pressure led Repsol and the Dutch firm
Shell to decide against moving forward for the time being
with a joint venture to develop an Iranian gas field. That
project remains on hold, though the company maintains
frequent contact with the GOI and remains interested in
developing the country's resources when possible. Repsol and
Shell are currently negotiating to sell some of their stake
in the project to a Chinese and/or an Indian company.

Personal Security
-----------------
10. (U) In general, Spain is safe. However, Madrid and other
large cities attract a large number of criminals and
pickpockets, and frequent crimes 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 issues 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,
available on the Internet at http://travel/state.gov.
Additional information regarding safety and security in Spain
is available on the U.S. Department of State's website
(www.embusa.es).
SOLOMONT

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