Identifier
Created
Classification
Origin
05ATHENS2161
2005-08-18 10:34:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Athens
Cable title:  

SCENESETTER FOR CODEL HYDE (ATHENS, AUGUST 25-28)

Tags:  PGOV GR OREP PREL VISIT 
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UNCLAS SECTION 01 OF 04 ATHENS 002161 

SIPDIS

SENSITIVE

H FOR CODEL HYDE FROM AMBASSADOR CHARLIE RIES

E.O. 12958: N/A
TAGS: PGOV GR OREP PREL VISIT
SUBJECT: SCENESETTER FOR CODEL HYDE (ATHENS, AUGUST 25-28)

REF: STATE 145349

ENTIRE TEXT IS SENSITIVE BUT UNCLASSIFIED -- PLEASE TREAT
ACCORDINGLY.

UNCLAS SECTION 01 OF 04 ATHENS 002161

SIPDIS

SENSITIVE

H FOR CODEL HYDE FROM AMBASSADOR CHARLIE RIES

E.O. 12958: N/A
TAGS: PGOV GR OREP PREL VISIT
SUBJECT: SCENESETTER FOR CODEL HYDE (ATHENS, AUGUST 25-28)

REF: STATE 145349

ENTIRE TEXT IS SENSITIVE BUT UNCLASSIFIED -- PLEASE TREAT
ACCORDINGLY.


1. (SBU) Embassy Athens warmly welcomes the August 25-28
vist by CODEL Hyde to Greece. You will arrive just as the
summer holidays are winding down, and your visit will provide
an excellent opportunity, not only to showcase U.S.-Greece
relations, but to kick off the fall quarter with high-level
discussions of our top foreign policy priorities. We have
arranged a meeting with Foreign Minister Molyviatis, and I
will host the delegation at lunch with senior Greek
decisionmakers.


2. (U) Looking back, the last three years have been
momentous for Greece. In 2002, Greece arrested the key
leaders of the domestic terrorist group "17 November" which
had terrorized Greece for 25 years, and had made Athens a
"critical threat" post for the USG. In 2003, Greece held the
EU Presidency at the onset of Operation Iraqi Freedom, and
kept the U.S.-EU relationship intact despite deep splits
within Europe on relations with the U.S. In 2004, Greece
hosted the Summer Olympics, a major terrorist target, without
incident. Also in 2004, Turkey's EU membership aspirations
were advanced, a Greek strategic objective. In 2005, Greece
joined the UNSC as a non-permanent member for the first time
since 1952.


3. (SBU) Your visit comes almost a year to the day after the
Closing Ceremonies of the Athens 2004 Olympics. Today,
however, Greece is facing a burgeoning budget deficit in the
aftermath of those highly successful, but very expensive
Olympic Games, and Prime Minister Costas Karamanlis has had
little time to bask in the afterglow.

GREECE AND THE GLOBAL WAR ON TERRORISM


4. (SBU) In Prime Minister Karamanlis's May 20 meeting with
the President in Washington, the two leaders affirmed their
strategic partnership, and discussed a variety of issues,
including democratization in the broader Middle East region,
Iraq and Afghanistan.

-- On Iraq, the PM pledged during his campaign not to send
troops, however Greece is providing funding for the NATO
training mission in Iraq and providing equipment transport.

-- On August 15, a Greek-led multinational medical unit began
operations in Kabul, augmenting a Greek contingent of

soldiers serving in the International Security Assistance
Force in Afghanistan.

-- Greece has offered to host a ministerial meeting on
democratization in the Middle East under the auspices of the
G-8s Broader Middle East and North Africa initiative.

-- Greece has been helpful on the issue of terrorism
financing, but its ability to detect terrorist money, or
money laundering in general, is limited. In particular, some
smaller banks outside of Athens are still not computerized,
making the tracking of money flows difficult.

GREECE-TURKEY-CYPRUS


5. (SBU) Although there are unresolved issues between Greece
and Turkey -- both still differ on Aegean air/seaspace
demarcation and Greece often complains of alleged Turkish air
incursions in the Aegean -- Greek-Turkish rapprochement
remains the bedrock in their relations. As a result, Greece
has been one of Turkey's strongest supporters in the EU
because it relates Turkey's EU accession to its own strategic
interests. The August 2 statement by French PM de Villepin
that Turkey must recognize the Republic of Cyprus before
beginning accession negotiations with the EU has put Greece
in a difficult position.


6. (SBU) As is the case in many EU member states, public
opinion in Greece has not yet embraced Turkey in the EU. The
government expects that a Turkish-EU dialogue on accession
will contribute positively to stability in the region, while
Greek public opinion shows that many Greeks, like their EU
counterparts, have concerns about adding a large Muslim
country to the EU family.


7. (SBU) The Cyprus issue has been stymied since the Greek
Cypriots rejected UNSYG Annan's plan to reunify the island in
the April 2004 referendum (Turkish-Cypriots accepted the Plan
in the same referendum). While Athens quietly backed the
Annan Plan, the Greek Government also felt it should stand by
the Government of Cyprus and the vote of the Greek Cypriots.
At present, UNSYG Annan does not feel there is sufficient
grounds for restarting the negotiating process. On the
island, the Turkish Cypriot community has been concerned to
break out of its isolation, while the Greek Cypriot
government has been quick to oppose direct trade or
transportation links which could imply recognition.

BALKANS


8. (SBU) Southeast Europe is a tough neighborhood, with the
countries of the ex-Yugoslavia struggling to move beyond the
wars that wracked the Balkans in the 90s. As the only
country in the region that is a member of both NATO and the
EU, Greece sees itself as a natural leader to assist the
region's Euro-Atlantic integration. We strongly support this
endeavor and would like to see Greece play an even more
active role, including re-energizing its 550 million-euro
Balkan assistance program.


9. (SBU) One issue that Foreign Minister Molyviatis will be
sure to raise is the Macedonia name issue. Following the
breakup of Yugoslavia, Greece and Macedonia in 1995 agreed on
"Former Yugoslav Republic of Macedonia" as an interim name
until the two countries could decide on a mutually acceptable
solution. Last year's USG decision to recognize the Republic
of Macedonia by its constitutional name touched off a storm
of controversy in Greece. Many Greeks saw our decision as a
deliberate snub and the explanation that we took this action
to help defeat a referendum in Macedonia that could have
split the country and de-stabilized the Balkans did not
convince many here. In the aftermath, FM Molyviatis has
asked the USG to publicly support the UN negotiations and
accept whatever solution Athens and Skopje agree upon. We
have done so and continue to strongly support the UN-led
negotiations. On the surface, the issue seems to be wholly
semantical, but to both sides it strikes deep chords of
nationalism and historical destiny. Macedonia strives to
join NATO and the EU, and to do so, must come to terms on the
name of the country that will enter. Greece needs an
acceptable compromise from the Macedonians; otherwise, the
decision on Macedonia's NATO/EU entry would be unlikely to
clear Parliament and may end up in a referendum.

DOMESTIC TERRORISM


10. (SBU) The USG assisted in all aspects of Olympics
security, and this close cooperation with the Greek
Government has paid dividends in other security fields, such
as the Container Security Initiative (CSI). Along with our
allies and friends, we heartily congratulated Greece for
presiding over a safe and secure Games and funding the
necessary security commitments.


11. (SBU) We continue to be concerned about domestic
terrorism in Greece. Greece made big strides by convicting
key members of the infamous 17 November terrorist group,
responsible for killing many Greeks and six Embassy employees
(5 Americans and 1 Greek) over the course of its bloody,
25-year history. The same is true regarding prosecution of
members of another domestic terrorist group, Peoples'
Revolutionary Struggle (ELA),which, in past years, had
bombed nightclubs frequented by U.S. servicemen.


12. (SBU) We are concerned that the December 2004 brutal
assassination of a Greek police officer guarding the
residence of the British army attache may represent the
emergence of a follow-on terrorist group. We have also been
concerned by the release of two convicted members of 17N and
ELA (on medical grounds),believing this sends the wrong
signal about Greece's commitment to the war on terrorism.
Finally, more needs to be done to crack down on anarchists
who use homemade bombs to attack targets like Citibank ATMs
and political party offices. We have an excellent dialogue
with the GoG on these matters.

BILATERAL ISSUES: TIP, FMS, VWP


13. (SBU) Our bilateral relationship runs the gamut from
commercial to military matters, and is enriched by the large
Greek-American community in the U.S. and the estimated
100,000 Americans, many of them dual citizens, living in
Greece.

-- TRAFFICKING IN PERSONS: The congressionally-mandated TIP
report, with its different tiers of countries (Greece is
currently on the Tier 2 Watchlist, a designation for problem
countries),has been the key tool in getting Greek government
attention. Greece had made some progress in recent years,
but can do more in some major areas, including treating
trafficked women as victims (not criminals),more vigorously
prosecuting traffickers and keeping statistics on TIP-related
convictions.

-- FOREIGN MILITARY SALES: On July 20 Greece announced it
would purchase thirty F-16s via the Foreign Military Sales
program, with an option to purchase 10 more. This purchase
has raised a loud, continuing debate in Greece about the
merits of the F-16 vs. the Eurofighter. The Greek decision
was the Air Force's choice, mainly because F-16s are less
expensive and easier to integrate with existing planes. We
also welcome the vote of confidence in the defense
relationship with the U.S..

-- VISA WAIVER PROGRAM: In June 1998 the Department of State
notified the Department of Justice of its intention to
nominate Greece for membership in the Visa Waiver Program
(VWP). The Attorney General approved Greece for inclusion in
the VWP in May 1999 subject to three criteria: (1) full
membership in the Schengen border security regime; (2)
resolution of reciprocal 90-day duration of stay in Greece
for U.S. citizens; and (3) improvements in passport issuance
procedures and control of blank passports. Greece has met
the first two and is working on the third requirement.
Greece has announced it will begin issuance of its new
biometric passport in March/April 2006.

ECONOMICS


14. (U) Greece leads the EU in excessive debt (116% of GDP)
and deficit(6.7% of GDP),and Karamanlis faces tough choices
in order to bring them under control. GDP growth will be
less this year, due in part to the end of construction
projects related to last year's Olympic Games, which means
the GoG must increase revenues or cut expenditures to meet
EC-imposed deficit targets. For years, Greece has had trade
and current account deficits, compounded by declining
competitiveness. At mid-year, tax increases have not met
revenue goals, raising the specter of cutting social
expenditures; a task sure to prove unpopular. The government
must also confront the task of making Greece's economy more
competitive by privatizing inefficient state industries and
attracting foreign investment, while minimizing structural
dislocation.


15. (SBU) None of these reforms will be easy, given that
inflationary pressure from rising health care and pension
costs are expected to exceed those of any other EU member and
a strong euro continues to weaken already lackluster Greek
exports. GDP growth in 2004 was 4.2 percent, buoyed by both
construction and consumption during the Olympic period, but
is forecast from 2.7 to 3.4 percent in 2005-06. Unemployment
averaged 10.5 percent in 2004, although it hit a first
quarter peak of 11.3 percent. Consumer price inflation rose
by 3 percent in 2004, well above the 2.1 percent European
average. 2005 forecasts set inflation at 3.6 percent.

PUBLIC OPINION


16. (SBU) A word on Greek public opinion and the media. You
may have heard about strong anti-American feeling in Greece.
It does exist in a general sense, directed at official
American policies, but almost never translates into harsh
treatment of Americans on a personal level. It reflects
grievances over our perceived historical favoritism toward
Turkey, American support for the former Greek military junta,
the situation in Cyprus, our actions in Iraq, and, most
recently, our policy to recognize Macedonia by its
constitutional name, which, as noted earlier, many Greeks saw
as a challenge to their national identity. Polls bear this
out: some 93 percent of Greeks opposed the war in Iraq and a
large majority (80 percent) believe the U.S. plays a negative
role in the global war on terrorism. Some media outlets hype
this sort of feeling, broadcasting violent images from Iraq
and playing up any perceived slight against Greek interests
by the United States.


17. (SBU) At the same time, there are signs of change. Per
capita, Greeks make up the largest percentage of foreign
students in the U.S. of any EU country. Many Greek elites
have a nuanced and balanced view gained from years in the
U.S. or from working closely with Americans in business or
multilateral institutions. Your visit is part of the normal
high-level exchange between our two countries.


18. (U) Again, I look forward to your visit and a productive
and pleasant stay in Athens.
RIES