OFM AND EMBASSY MADRID DISCUSS

UNCLAS SECTION 01 OF 02 MADRID 000826

SIPDIS

DEPARTMENT FOR M, DS, DS/OFM, EUR/EX, EUR/WE

E.O. 12958:DECL: N/A
TAGS: AMGT KREC SP
SUBJECT: OFM AND EMBASSY MADRID DISCUSS
TAX AND VEHICLE ISSUES WITH SPANISH MFA


1. Summary: DS/OFM DAS lead a negotiating team
consisting of Embassy Management Counselor, HRO Senior
FSN, and an OFM Program Officer in discussions with
Spanish representatives of the Ministries of Foreign Affairs
and Finance. This meeting focused on two issues: (1) the
continued practice of the GoS to not grant the A&T staff the
same tax relief benefits extended to diplomats and consular
personnel and (2) the lengthy period it takes for official and
personal vehicles to be properly registered and plated in
Spain, including the issuance of cover plates. End Summary.


2. DAS began the meeting by explaining the role of OFM
and its interest in the tax and vehicle privileges extended to
US Mission personnel worldwide. OFM's authority to
employ reciprocity without further approval from Congress
was also detailed. With this point as background, it was
stressed to the Spanish side that improvements in their
treatment of Post and its personnel, especially in the area of
tax relief, could allow for an immediate and positive
response from OFM.


3. Given that during past negotiations the Spanish
Government has made clear that their interpretations of the
tax relief obligations detailed in the VCDR and VCCR are
inconsistent with those of the USG, a decision was made not
to readdress this line of argument, but rather to seek a
practical solution to this real problem for A&T staff. DAS
expressed the personal interest of Secretary Powell in
securing the equitable treatment for all accredited members
of US Missions abroad. The Spanish were further informed
that their policy of disallowing tax privileges for members of
the A&T staff is practiced by only three other nations: the
Bahamas, Barbados, and Morocco. The US side advised
that, according to OFM records, Spanish A&T personnel
make up 53% of the nation's Mission to the US. To provide
a possible roadmap for achieving a mutually beneficial
solution to this issue, information on recent agreements that
resulted in the reciprocal extension of tax benefits to A&T
personnel at the US Mission in Austria and Slovenia were
discussed.


4. The Spanish delegation, led by the MFA's Director
General of Protocol, began by expressing envy for the
unique authority granted to OFM for dealing with matters of
this nature. He advised that under current regulations, the
GoS had little leeway to quickly address or remedy the A&T
tax situation. Currently, such an action would require a
change of law, which can be a lengthy and uncertain process.
Diplomatic privileges in Spain are not extended by virtue of
reciprocity and are uniform by decree. Therefore, bilateral
agreements on such issues do not appear viable. However,
the Spanish side agreed to study this issue and explore
possible solutions with the best of intentions.


5. Secondly, DAS discussed Post's concerns with the current
lengthy period (as long as two months) required for the GoS
to properly register and plate Post's official and personal
vehicles. The OFM practice of registering vehicles within
one day was described. The Spanish seemed genuinely
surprised by the news that there has been such a long delay
in the processing of vehicle registrations. They quickly
agreed that even a one month delay is unacceptable, and they
assured the US side that this issue would be promptly
addressed. Post will provide a list of the outstanding
registrations so that action can be taken immediately. The
Spanish side expressed regret that, given the bureaucratic
limitation of the Spanish system, the efficiency of OFM
could not be matched, but agreed that improvements can be
achieved. The Spanish explained a new initiative underway
to make the registration process web-based. In theory, this
will allow for a more efficient and smoother process.


6. In addition to the registration issue, the issuance of cover
license plates for security purposes was addressed.
Currently, the GoS will provide only one cover plate for each
US Mission family. This action forces family members to
decide which vehicle and passengers remain a soft-target for
terrorist actions. DAS made a strong appeal for the issuance
of cover plates to all members of Post without limitation.
The Director General of Protocol agreed that providing only
one cover plate per family provided little benefit of security
for a diplomatic family. He recounted his personal
experience as a terrorist target while he was serving outside
Spain and how the lack of cover plates negatively affected
him and his family. He promised that action would be taken
to address both the registration and licensing of vehicles.


7. As a final note, DAS requested an update on the situation
concerning the seizure of Post's official VAT
reimbursements due to judicial action. The Spanish
expressed their concern over several court decisions to seize
USG's VAT refunds. They noted that in some cases the
Spanish State Attorneys had been denied participation to
appeal and defend the non-attachability of the USG's VAT
refunds. They also pointed out that there is no law in Spain
that addresses the immunity of a Foreign Sovereigns assets
and that some Spanish judges tend to uphold the basic
fundamental rights of citizens when these conflict with
diplomatic immunity. They reiterated that the MFA shared
the USG's position and arguments on this issue and, as
explained above, Spanish law does not clearly define the
extent of diplomatic immunity, which leaves such matters
open to judicial interpretation. The MFA representative
from its Legal Department expressed some optimism that a
possible pending U.N. resolution may provide assistance in
this matter, however others on the panel expressed privately
that this position may be overly optimistic.

ARGYROS