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2005-03-24 10:14:00
Embassy Athens
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						S E C R E T SECTION 01 OF 04 ATHENS 000830 



E.O. 12958: DECL: 03/21/2014

Classified By: Ambassador Charles P. Ries. Reasons 1.4(b/d).

S E C R E T SECTION 01 OF 04 ATHENS 000830



E.O. 12958: DECL: 03/21/2014

Classified By: Ambassador Charles P. Ries. Reasons 1.4(b/d).

1. (C) SUMMARY: I am delighted to welcome you to Greece
March 30-31. The Greeks see your trip to Athens, following
on the heels of Foreign Minister Molyviatis' March 24 visit
to Washington, as more proof of America's reengagement with
Europe. Greece will want to characterize your visit -- the
first by a senior State Department official since President
Bush took office -- as the start of a strategic dialogue with
the U.S., and it is in our interest to have them think this
way. Greece may be one of the smaller and cash-strapped
countries in the EU, but it can be a good partner for the
U.S. in the Balkans, in resolving the Cyprus-Turkey-Aegean
issues, and in outreach to the Middle East. END SUMMARY.


2. (U) The last three years have been momentous for Greece.
In 2002, Greece arrested the ringleaders of the domestic
terrorist group "17 November". In 2003, Greece held the EU
Presidency, 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 and Turkey's EU
membership aspirations were advanced. In 2005, Greece joined
the UNSC as a non-permanent member for the first time since


3. (C) Such successes boosted Greece's self-confidence that
it can function effectively as a modern nation in Europe.
But its future as an outward-looking, non-idiosyncratic
nation is not yet cast in stone. Whenever it can, Greece
avoids staking out national positions on major issues by
deferring to EU conventional wisdom. And when it has to
choose, Greece has tended to stick close to France and
Germany. This plays well at home, where Greece's
inflammatory media is quick to hurl accusations of weakness
whenever it considers the government has given in to
"asphyxiating pressure" from the USG. But old habits are
beginning to change. Across most of the political spectrum,

Greeks now want their government to be seen as an important
and valued partner of the United States.

4. (C) Part of your message should be that we value Greece's
views and need Greece's help on important issues, especially
in Greece,s backyard. This is particularly true in the
Security Council where Greece,s value-added is its own
perspective on regional interests such as the Balkans and
Cyprus. In return for this validation, we can ask them to do
more for us.


5. (C) The 76-year old Petros Molyviatis was a career
diplomat from 1956-1974, and has a close relationship with
the Karamanlis family, serving Constantinos Karamanlis (the
current PM's uncle) while he was PM and President.
Molyviatis has coached the inexperienced Karamanlis on
foreign policy. He is a serious person, and while he is
politically cautious, he is also pragmatic, particularly on
Turkey. On the other hand, Molyviatis has shown little
creativity on Cyprus, and is inclined to pay more attention
to the EU than to NATO.

6. (U) Karamanlis was educated in the U.S. and has a low-key
and personable style. When elected in March 2004, the Summer
Olympics were only five months away and were necessarily his
overwhelming priority. As a result, however, his
Administration did not really get going until October 2004.
Karamanlis has not set out a bold foreign policy course,
preferring to grapple with Greece's poor economy. That said,
Karamanlis stood firm at the December European Council to
support Turkey's EU path. In May, Karamanlis will travel to
the U.S. to give the commencement address at the Fletcher
School, and has asked for a meeting with the President in
Washington. The White House is considering the request.

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7. (C) Your meeting with Foreign Minister Molyviatis will
occur first, and he will want to treat it as preparation for
your follow-on meeting with the Prime Minister by briefly
reviewing regional items and the transatlantic agenda. He is
certain to seek your views on the Balkans and Cyprus.
Karamanlis needs to hear an unambiguous message from you
about USG concerns over successor domestic terrorist groups.


8. (C) Greece supports the Standards for Kosovo review this
summer, but does not want to prejudge the outcome. While
Greece does not rule out independence for Kosovo, the Foreign
Minister is on record seeking "something less than
independence" and the MFA has made a big push to increase the
EU,s role in post-review Kosovo (despite some pushback from
Brussels). Molyviatis has already raised with me the
prospects for Greece's inclusion in the Contact Group. I
have noted the problems with expansion of the Contact Group,
while emphasizing our willingness to keep Greece in the loop.
I have urged the Greeks to continue to be more statesmanlike
(rather than pro-Serb) on policy and to focus on concrete
measures, such as their Balkans Reconstruction Program.

9. (C) Molyviatis will certainly raise the Macedonia name
issue and is expected to reiterate that Greece could not
accept a two-name solution. He will want your support and
advice. We have emphasized to the Greeks that this issue
does not preoccupy Washington, and have urged Molyviatis to
move Greece beyond semantics to more urgent, shared
priorities. His response is that the name issue is important
because it risks Macedonia's EU and NATO prospects since
Greece's parliament must ratify accession. Further,
Molyviatis worries a contentious Macedonia EU accession
process might lead to a referendum in Greece, which would be
a bad precedent for even more unpopular Turkey later.
Molyviatis believes that Macedonia does not understand these
very real dangers, and may ask you to help transmit this
message to Skopje. In turn, you might suggest the Greeks try
to engage their EU partners, who have as much -- or more --
stake in a negotiated outcome as we do.

WATCH OUT FOR: On the Macedonia name issue, both Karamanlis
and Molyviatis will want you to support Greece's position in
the UN talks. Our standard line is to support the talks, not
a particular outcome. The Greeks will also be looking for
your affirmation that the U.S. will implement a
mutually-agreed solution, something we have said before.


10. (C) Molyviatis has an ambitious schedule of high-level
meetings with Turkey this spring aimed at putting in place a
new package of CBMs, hopefully including the de-arming of
Greek and Turkish fighters overflying the Aegean. Both
Molyviatis and Karamanlis will complain that although they
are committed to rapprochement, they are hampered by
frequent Turkish sorties into disputed Aegean airspace and
waters. Molyviatis understands Turkey's need to demonstrate
that it challenges some of the Greek claims (which we
generally don't accept either) but says the scale of
show-the-flag exercises is excessive. Exploratory talks
between Athens and Ankara have established a good channel of
communication, but no convergence of views. Recently,
Molyviatis has begun to warn us that the "provocations" by
Turkey in the Aegean are undermining Greek support for
Turkey's EU path.

11. (C) Meanwhile, Cyprus is at a standstill. Greece gave
only tepid support to the Annan Plan in April 2004. It is up
to the Parties to resume negotiations, and convince the UN it
has a leading role to play. The first stumbling block has
been Cypriot President Papadopoulos, unwillingness to answer
the SYG,s request that he elaborate, in writing, his central
objections to the Annan Plan. While Karamanlis has told me
he has "zero influence" over Papadopoulos, Molyviatis told me
on March 16 that he expected Papadopoulos to send a letter to
the UNSYG. In any case, Cyprus is not a serious priority for
the GoG. I would recommend you ask Molyviatis to consider
ways Greece could show more support for efforts in the EU to
ease the economic isolation of the Turkish-Cypriots.
Molyviatis will probably ask you if Washington is prepared to
put forward new ideas for Cyprus (I have told him that this
is mainly the responsibility of the parties).

12. (S) WATCH OUT FOR: Last September the Department
notified Congress that Greece was in violation of the Arms
Export Control Act for the unauthorized retransfer of
U.S.-origin equipment (howitzers, helos) by Greece to Cyprus.
The Greeks and Greek-Cypriots insist the arms are crucial to
the island,s security. The Department is reviewing
applications for third-party transfers of equipment from
Germany to Greece, some of which would backfill the
unauthorized U.S. equipment now on Cyprus.

(If raised) The retransfer of U.S. arms to Cyprus is a
violation of U.S. law. The arms should be removed. We are
reviewing re-transfer requests, but won,t backfill what has
been illegally retransferred to Cyprus.


13. (C) PM Karamanlis made a campaign promise not to send
Greek forces to Iraq. Thus, Greece remains unwilling to lift
its NATO caveat on participation of Greek officers in NATO
billets in the NATO Training Mission-Iraq. Greece has
offered to train Iraqis in third countries, but has done
nothing specific aside from a pledge of 300,000 euro for the
NATO Training Mission-Iraq trust fund. Molyviatis is willing
to consider "filling in the holes" where U.S. and/or
coalition forces/trainers need to be backfilled.

14. (U) In Afghanistan, Greece contributes about 170 troops
to ISAF and offered in February to deploy a Role 2 Med Unit
to Kabul this summer (fulfilling a NATO requirement). We
understand, however, that the Greek med unit, originally
offered in response to a requirement to replace a Spanish
unit in May, will not be ready to deploy until the fall and
is understrength. This is almost certainly too late to be of


15. (C) Greece,s proximity to the Middle East and its
self-proclaimed good relations with the Arab world make it a
good venue to bring Middle East partners together. I have
discussed options with Molyviatis, and he agreed it made
sense for Athens to offer to host a BMENA/Forum for the
Future ministerial in Athens.


16. (C) I urge you to raise with Karamanlis our concerns
about the possibility of domestic terrorist successor groups
in Greece. In the last year, there have been five serious
incidents directed against the Greek police, including the
murder of a Greek guard outside the residence of the UK
Defense Attache (a previous UK DATT was murdered by "17
November" in 2000, the last victim of 17N.) No group has
claimed responsibility; no one has been arrested. Greece has
also released two convicted domestic terrorists on "medical
grounds." The message to deliver to Karamanlis is that
Greece did an excellent job hosting the Olympics, but there
can be no "Closing Ceremony" for the fight against terrorism.
The release of two convicted terrorists sends the wrong
signal and we are concerned a new chapter in domestic
terrorism may be opening in Greece.

WATCH OUT FOR: The Attorney General approved Greece for
inclusion in the Visa Waiver Program in May 1999, subject to
criteria that Greece did not then, and does not now, meet.
Among other requirements, Greece needs to institute a central
authority to issue and track biometric passports (it has
adopted the requisite legislation and is now in the process
of doing so). The Greeks have noticed that the U.S. has
given Poland a "road map" for qualification for the VWP, and
CA has agreed to work with Washington agencies to develop a
similar "road map" for Greece.


18. (U) Karamanlis will tell likely you that the economy is
his highest priority, and there are good reasons for it.
Greece continues to battle chronic deficits, declining
competitiveness, and poor public sector performance.
Structural change is urgent. The government has been
attempting to control expenditures through privatizations,
but with unemployment nearing 11 percent, these moves provoke
public outcry in a country accustomed to lifetime employment
and generous pensions. Greece caused an EU sensation when
last fall it announced that the previous government had
mis-reported expenditures and "discovered" that Greece had
exceeded the three percent deficit threshhold for eurozone
membership. Just last week, Greece closed the books on 2004,
with a fiscal deficit of 6.1 percent.

19. (U) Foreign investment in Greece has been largely static
for the last decade. Notoriously complex regulations hamper
business formation and the tax code is opaque. The GoG is
moving legislation to increase tax code transparency, cut
corporate taxes from 35 percent to 25 percent, and to offer
special incentives for investment in high tech and selected
industries (e.g. food processing and tourism).

20. (U) Although Greece has EU-standard IPR legislation on
the books, we are pushing for increased enforcement to help
promote investment. Greece does not see itself as a major
player in international trade affairs, and rarely takes a
position ahead of the EU consensus. This stance can lead it
to fail to grasp the potential domestic impact of
transatlantic trade disputes. This occurred most recently
with the rice dispute, in which Greece initially declined to
take a role. Only after the retaliation list was published,
which included several key Greek exports (olives and
peaches), did the government instruct its delegation in
Brussels to help find a solution. Greece continues to be a
vocal opponent of agricultural biotechnology products, and
has considered imposing excessive testing regulations that
would threaten our exports of corn seeds. Additionally, in
1997, Greece imposed severe SPS restrictions on U.S. wheat
exports, citing Karnal bunt (Kb) concerns. Although these
restrictions were moderated in 2000, U.S. wheat exports to
Greece remain negligible.


21. (U) Burdened by a selective reading of postwar history
which holds the U.S. responsible for the Greek junta and the
Turkish invasion of Cyprus, Greek public opinion toward U.S.
policies is generally the most negative in Europe. A
December 2004 poll, taken after the successful cooperation on
the Olympics, showed 80 percent of Greeks nevertheless
believing the U.S. plays a negative role in the fight against
terrorism. Many Greeks who are insecure about their
country's place see the bumps and swerves of the relationship
as part of an American master plan. At the same time, Greeks
make up the largest percentage of foreign students in the
U.S., related to population, of any country in the EU. Many
Greek elites have a nuanced and balanced view gained from
study in the U.S. or from working closely with Americans.
The Karamanlis government has been reluctant to publicly
criticize the U.S., which has in turn tempered the Greek
media's editorial line toward our policies. Your visit will
be viewed here with mixed emotions. Some will see your visit
as an opportunity for Greece; others will carp that the
Secretary hasn't come; and the elites will be relieved that

she hasn't come, since her visit would launch local protests.