SCENESETTER FOR HHS SECRETARY LEAVITT'S VISIT TO

UNCLAS VIENNA 001121

SIPDIS

SENSITIVE
SIPDIS

HHS FOR T. GAY

E.O. 12958: N/A
TAGS: TBIO OTRA OVIP KSCA KFLU AU
SUBJECT: SCENESETTER FOR HHS SECRETARY LEAVITT'S VISIT TO
AUSTRIA

REF: STATE 59683


1. (SBU) Austrian-U.S. relations have a solid basis in the
common values of democracy and civil rights, and Austria's
international activities contribute to our shared vision of a
world of peace, freedom, democracy and prosperity. Austria
holds the rotating Presidency of the EU Council for the first
half of 2006, giving the U.S. the opportunity to work with
the government at an unusually high level of intensity.


2. (SBU) In its capacity as President, Austria is hosting a
series of Informal Ministerials, including the Informal
Health Ministerial on April 25-26 that Secretary Leavitt will
attend. These Ministerials allow the EU ministers to discuss
topical issues in an informal, consultative forum while
allowing the host country to highlight its culture, cuisine,
and cities. This meeting also serves as preparation for the
Employment, Social Policy, Health, and Consumer Affairs
(EPSCO) Council meeting in early June.

WOMEN'S HEALTH - EU PRESIDENCY FOCUS
--------------


3. (U) Two of Austria's Ministry of Health and Women's
Affairs (MOH) EU Presidency priorities--women's health and
diabetes--are topics at the Informal Ministerial. Secretary
Leavitt will speak during the second of two sessions focused
on women's health. Since two of the four Ministerial
sesssions will be dedicated to this topic, it is the key
theme of the Ministerial. As noted in the background material
communicated to HHS via e-mail, the Austrian Presidency
believes that gender is a key determinant of health. While
acknowledging that recognition of this has grown, the
Austria Presidency believes that there are still shortcomings
in early detection, research, treatment and care relating to
certain major diseases in women, in particular cardiovascular
diseases, lung cancer, endometriosis, and osteoporosis.


HEALTH CARE ISSUES
--------------

Austrian Health Care System


4. (U) Since the end of World War II, the Austrian health
care system has evolved into a complex entity with a
multitude of stakeholders, including all nine state
governments and various governmental social security
companies based on professional affiliations (e.g., farmers,
civil servants, private sector employees, and self-employed).
Health care expenditures greatly exceed revenues. Experts
maintain that the government must reduce spending by at least
Euro 300 million per year to guarantee the system will not
collapse in the near future. Virtually all occupational
associations have to pay a percentage of their income into
the mandatory social insurance system for health care funds.
These funds cover ambulatory care and drugs. State
governments are responsible for financing patient care. The
current system does not contain enough incentives for cost
containment and costs are therefore exploding. Health care
costs have risen from 7.5 percent of GDP in 2000 to 9.5
percent (Euro 23 billion) of GDP in 2004. However, this
figure is still only slightly above the EU average. Social
insurance payments from the various occupational associations
provide for 70 percent of the system, state budgets for 20
percent, and individual contributions account for the
remaining 10 percent. Private contributions are increasing
since doctors tend to opt out of the social insurance system,
leading patients to insure themselves privately.

Pharmaceutical Industry


5. (SBU) U.S. pharmaceutical companies based in Austria have
kept the Embassy aware of continued concerns regarding
restricted access to the Austrian market, below-EU-average
prices, and weak patent protection in Austria. The Embassy
has facilitated discussions between GoA health care
stakeholders and the pharmaceutical firms by holding yearly
Informal Commercial Exchange (ICE) talks and follow-up
meetings. The latest meeting took place in March 2006.
Despite some improvements such as the installation of an
"Independent Drug Commission" and a better structured pricing
system, the pharmaceutical companies are requesting permanent
access to innovative medicines for Austrian patients, less
volume control, and more effective legal remedies.

Avian Influenza


6. (U) In February, the H5N1 strain of avian influenza
surfaced in Austria. To date, 92 birds (mainly wild swans
and ducks) have tested positive. In response, farmers must
keep poultry in coops until April 30. Three cats that lived
in an animal shelter in Graz, together with an H5N1-infected
swan, also tested positive for the virus. However, the cats
apparently fought off the virus. The GoA has official plans
to address both an animal epidemic and an influenza pandemic.
There has been no outbreak of avian flu in Austria since

1946. The GoA is still in negotiations with Roche on
creating stockpiles of Tamiflu. The Austrian subsidiary of
Baxter is developing vaccines against a possible flu
pandemic. During a February 24 Informal Health Ministerial
on the "Impact of Avian Influenza on Public Health in
Europe," EU health ministers stressed the importance of
public awareness. Austria pledged $1 million at the January
Avian Flu Conference in Beijing. Austria is hosting an
International Partnership on Avian and Pandemic Influenza
(IPAPI) Senior Officials' Meeting on June 6-7.


POLITICAL SITUATION
--------------


7. (SBU) Chancellor Wolfgang Schuessel's Austrian People's
Party (OVP) governs Austria in coalition with the Alliance
Future Austria (BZO). Schuessel faces parliamentary
elections in fall 2006. He remains more popular than his
party, which has lost a series of state elections since
taking office in 2000. However, the opposition Social
Democrats, who had led in polls for more than a year, have
suffered fallout from the revelation that a trade union-owned
bank lost Euro 1 billion in currency speculations. The
election, once an uphill battle for Schuessel, now appears to
be a tossup. Still, Schuessel cannot hope to form a new
government with his current coalition partner, which is in
the process of disintegration. Many observers expect the
elections to result in a grand coalition of the People's
Party and the Social Democrats. A coalition of either of the
major parties with the Greens is also a possibility.


PROMOTING DEMOCRACY AND FREEDOM
--------------


8. (SBU) Under Schuessel, Austria has played an active role
in advancing freedom and stability in Southeastern Europe.
Austria's foreign policy agenda for the presidency starts in
the Balkans, where Schuessel has been a solid partner for the
U.S. Austria assumed a EUFOR command in Bosnia on November
30, 2005. The government has placed no caveats on the use
of its 600 troops in Kosovo and over 300 in Bosnia. As EU
Council President, Schuessel has
facilitated progress on status questions in Kosovo and
elsewhere. Austrian diplomats are playing key roles, working
closely with the U.S. and with UN Special Envoy Martti
Ahtisaari. A broader area of emphasis for the Austrian
Presidency is the EU's "New Neighborhood" policy. The
Austrians have sought to promote democracy and reform in
Belarus, supporting the U.S. strategy to isolate Belarussian
President Lukashenko.


9. (SBU) Austria has made modest but important contributions
to stability in Iraq: police trainers at the Iraqi Police
Academy in Jordan, humanitarian aid, substantial debt relief,
and offers of export credit guarantees. The Foreign
Ministry has sent a Special Envoy to Baghdad for the duration
of Austria's EU Presidency. Austria has twice sent troops to
Afghanistan, most recently in fall 2005 to assist the German
Provincial Reconstruction Team in Konduz with election
security.


10. (SBU) In the Broader Middle East, Austria has encouraged
the identification of common values as a response to
extremism. In November, Austria hosted a conference on
"Islam in a Pluralistic World," which Iraqi and Afghan
Presidents Talabani and Karzai attended. This event
reinforced the message of the Bahrain Forum for the Future
conference and supported our broad goals. The Austrian
Presidency has also led the EU effort to encourage dialogue
with the Muslim world in the wake of the Danish cartoon
controversy. In this connection, it hosted an April 7-9
Conference of European Imams. EU policy on Hamas, under
Austrian leadership, is identical to USG policy, i.e., Hamas

needs to renounce violence, recognize Israel, and accept
existing agreements. The EU has also cut off assistance to
the Hamas government.


11. (SBU) The Austrians are skeptical on Turkish EU
membership, but have allowed accession talks to proceed.
However, Schuessel has repeatedly emphasized that Turkey must
meet all criteria for membership. Further, in his view, the
EU also has a lot of "homework" still to do before it will be
ready to absorb Turkey as a member state.

ECONOMIC PROSPERTIY AND DEVELOPMENT
--------------


12. (SBU) Austrian business, especially in the financial
sector, has delivered real benefits to the area between
Austria and the Russian border. Austrian banks are important
in the region, holding almost a quarter share of the region's
banking sector. The stability they bring has been a basis
for commercial investment and development. USG officials
have been actively working with Austrian government and
financial interlocutors on issues of concern relating to
illicit finance, anti-money laundering/counter-terrorist
financing and WMD proliferation in the region.


13. (SBU) The Austrian bank Raiffeisen has found itself in
the spotlight because its subsidiary, Raiffeisen
International AG (RIAG),was instrumental in the January
natural gas deal between Russia and Ukraine. RIAG serves as
a trustee for an unnamed partner in the RUE joint venture
with Gazprom. RUE was key in "unblocking" the dispute.
According to press reports, RUE is mixing more expensive gas
from Russia with cheaper supplies from Turkmenistan and
reselling it to Western Europe at market prices and Ukraine
at a lower price. The press has speculated over the identity
of the unnamed partner that RIAG represents, with conjectures
ranging from Russian and Ukrainian politicians to organized
crime figures.


14. (SBU) Austrian firms have a strong presence in the
Middle East. Austrian business has made strides in
reestablishing itself in Iraq, and the Austrian government
opened a small Trade Office in Erbil in December. Austrian
Airlines hopes to become the first western airline to
institute regular flights to Iraq, pending an improvement in
the security situation.


15. (SBU) Austria has traditionally had close commercial
relations with Iran. An Austrian arms manufacturer sold
high-power sniper rifles to Iran in 2005 before the Austrian
government halted further deliveries. Iran recently shelved
plans to open a large trade center in the Austrian state of
Burgenland because of start-up difficulties.


16. (SBU) Austrian development policy focuses on Official
Development Assistance, committing resources to a few
"priority countries" in order to maximize impact. Austria
prefers to channel emergency response through the EU,
although they made generous bilateral offers of assistance
after Hurricane
Katrina.

SECURITY AGENDA
--------------


17. (SBU) Austria is a strong partner in stemming financial
flows to terrorists. Our law enforcement cooperation with
Austria has generally been flexible and effective. The
Austrian government has made anti-corruption and law
enforcement cooperation a cornerstone of the presidency.
Austria had previously taken the lead for the EU in
coordinating law enforcement activities in Central and
Eastern Europe and Central Asia. Working with EU External
Relations Commissioner Benita Ferrero-Waldner, a former
Austrian Foreign Minister (and Schuessel protege),the
Austrian EU Presidency is encouraging stability and
development in the region.


18. (SBU) The Interior Ministry will host a major
ministerial conference in Vienna on May 4-5 to coordinate EU
law enforcement activities in the area along the EU's eastern
border and to discuss the establishment of security
partnerships consistent with its European Neighborhood
Policy. Attorney General Gonzales will participate, along
with Justice and Interior Ministers from more than 35
countries.

Kilner