GREEKS FLEXIBLE ON WTO MARKET ACCESS, BUT

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 002992

SIPDIS

STATE PASS TO USTR

E.O. 12958: DECL: 10/26/2015
TAGS: ECON ETRD GR
SUBJECT: GREEKS FLEXIBLE ON WTO MARKET ACCESS, BUT
UNWILLING TO RISK FRENCH WRATH DURING EU BUDGET SEASON

\\FOLLOWING MESSAGE BEING RESENT UNDER NEW MRN AND MCNS.
MESSAGE WAS SENT AS DUPE ATHENS 02791 ON 31 OCTOBER 2005.\\

REF: A. ALLGEIER - EU AMBASSADORS TELCON 10/21

B. STATE 190730

Classified By: AMB Charles P. Ries, E.O. 12958 reasons 1.4 (b) and (d)


1. (SBU) Summary: At the end of a week of pressing at all
levels, Ambassador met with Greek Minister of Finance
Alogoskoufis for second time, who admitted that while Greece
is willing to be flexible regarding market access for the
Doha Development Agenda (DDA),their national interest does
not allow them be seen as willing to compromise lest the
French abandon them on domestic support, or retaliate against
them in the EU budget process. End Summary.


2. (SBU) In response to requests to energize EU member
states to produce a more meaningful EU offer on agriculture
for the upcoming Hong Kong WTO ministerial, Ambassador raised
the issue with Minister of Economy and Finance Alogoskoufis,
Minister of Foreign Affairs Molyviatis, and the Chairman of
the Federation of Greek Industries. Econcouns also met with
the Secretary General of Finance and Trade Policy Director.
Ambassador and econcouns met together with Alogoskoufis
October 26 to get a definitive view of the Greek position.
Alogoskoufis told Ambassador that Greece could be more
flexible on agricultural market access, but dares not be seen
as among those willing to compromise, for fear that France
would abandon Greece on the issue of domestic support, or
even retaliate against Greece in the EU budget process.


3. (SBU) Alogoskoufis noted that Greece has agricultural
concerns: it has the largest percentage of its population
still working in agriculture and derives a larger percentage
of its GDP from agriculture than most EU nations.
Furthermore, many regions of Greece, particularly in the
poorer north, depend almost entirely on agriculture for their
livelihood. That said, Alogoskoufis was clear that Greece
was not irretrievably opposed to a better EU agricultural
market access offer. Greece is mainly interested, he said,
in protecting the ability to receive substantial domestic
support in the green and blue boxes, and only secondarily in
ensuring a few products (peaches, olive oil, cotton and
sugar) are considered sensitive.


4. (C) Regarding the current EU offer and Commissioner
Mandelson's position, Alogoskoufis felt the French were
ensnared in a box of domestic politics, with no flexibility,
and that the Commissioner had gone too far in trying to
ensure a successful outcome. While Alogoskoufis acknowledged
a good outcome for Hong Kong was a laudable goal, he felt
that countries with threatened interests were now reining in
Mandelson. Alogoskoufis also observed that Hong Kong did not
equal Doha, and that agriculture was not the only issue in
the DDA. Ambassador noted there was a severe risk to Hong
Kong and the DDA in the event that the EU failed to produce
an offer somewhere in the negotiable range, but Alogoskoufis
demurred. In his assessment the EC could make its offer to do
more on agricultural market access in Hong Kong, when it has
had a chance to evaluate offers in other areas. Ambassador
noted that the U.S. supported Mandelson on the issue of
working on NAMA and services as well as agriculture, but
stressed that in our assessment Lamy was correct: the gap on
agricultural offers was outside the negotiable range, and had
to be narrowed in order to have any hope for success.


5. (C) Ambassador asked whether the GoG would support a
proposal for the EU to promise to improve its agricultural
market access offer at Hong Kong. Alogoskoufis said this
could be possible on the condition that there was sufficient
quid pro quo on NAMA and services. He observed that an
improved EU offer was going to take longer than a couple of
days to put together, especially as the Germans were
currently without strong leadership and the French were
backed into a corner. He observed that those two countries do
not agree about everything, but were pretty close on this
issue, and Greece simply could not be seen as being bold in
the face of that opposition.


6. (C) Comment: Alogoskoufis returned time and again to the
idea of French retaliation against Greece, either on domestic
support issues in the DDA or in the EU budget process,
emphasizing that this was the crux of the Greek position. He
acknowledged that Mandelson was pursuing a sound economic
strategy in pushing for liberalization, and that many EU
countries were in fact, working against their own interests
by being intransigent on agriculture. Nonetheless,
Alogoskoufis made it clear that there was a lot of concern,
which the GoG shares, that after the CAP reform of 2003, it
was politically impossible to take on domestic agricultural
concerns again this soon. In Greece's case, he noted that
the issue was currently passing without much press attention,
but could ignite in the event that farmers smelled a
possibility of being sold out.


7. (C) Alogoskoufis also candidly acknowledged that Greece
was exposed because of its excessive deficit procedure as
well as its failure to implement ECJ decisions (directing
repayment of subsidies to Olympic Airlines),and EU
directives (deregulating the energy sector, environmental
failures, and others). This "vulnerability," caused by Greek
failures to be good Europeans, will continue to keep Greece
from taking strong stands in the EU. Last summer, at the
prodding of the EC, Greece nearly became the first EU nation
to unilaterally abrogate its bilateral air transport
agreement with the U.S., citing exactly the same concerns; it
was weak vis-a-vis the EU and larger members because of the
excessive number of cases and judgments pending against it.
Also, the Greek economy is quite reliant on EU transfers, and
while they understand at some level that they are going to
lose much of that money to the ten new entrants, it is clear
they are anxious to hang on to whatever they can get.
Alogoskoufis summed it up best when he noted that the
discussion was not just about the DDA or Hong Kong, but had
greater implications for Greece in general; "In the EU," he
said, "everything is related." End comment.
RIES