SCENESETTER FOR SECRETARY RICE'S JUNE 21 VISIT TO

UNCLAS VIENNA 001735 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PREL PGOV AU SUBJECT: SCENESETTER FOR SECRETARY RICE'S JUNE 21 VISIT TO VIENNA ¶1. (SBU) Austrian-U.S. relations have a solid base in the common values of democracy and civil rights. Austria's international activities contribute to our shared vision of a world of peace, freedom, democracy, and prosperity. Pursuant to a 1955 constitutional law, Austria is neutral. Austria holds the rotating Presidency of the EU Council for the first half of 2006, giving us the opportunity to work with the government at an unusually high level of intensity. ¶2. (SBU) Within the traditional "honest broker" role of the EU Presidency country, Austria has used its chairmanship of EU organs to focus attention on the economic and social development of the western Balkans. It is vocally in favor of Croatia's EU candidacy. Vienna stresses its energetic engagement with the new member states to the east. Austria has benefited from enlargement, improving both competitiveness and productivity. The Government of Austria does not, however, support EU expansion uncritically. Looking further down the road, the Austrians can be expected to share German and French concerns with regard to enlargement beyond the current candidates to Ukraine. In addition, Austria is promoting the U.S.-EU Transatlantic Partnership -- particularly the economic aspects -- during its presidency. Austria looks forward to hosting the upcoming U.S.-EU Summit. -------------- Promoting Democracy and Freedom -------------- ¶3. (SBU) Austria is a steady partner in promoting democracy in its own backyard and beyond. Under Chancellor Schuessel, Austria has played an active role in advancing freedom and stability in Southeastern Europe and favors the region's integration with Euro-Atlantic institutions, including NATO and the EU. Austria assumed a EUFOR command in Bosnia in November 2005, and the government has placed no caveats on the use of its 600 troops in Kosovo and over 300 troops in Bosnia. As EU Council President, Schuessel has facilitated progress on status questions in Kosovo and elsewhere, and Austrian diplomats are working closely with UN Special Envoy Martti Ahtisaari. Austria has been an outspoken critic of the regime in Belarus and was instrumental in ensuring the EU adoption of travel bans and asset freezes against Belarusian leadership. ¶4. (SBU) Austria has made modest but noteworthy contributions to stability in Iraq. The Austrian government agreed to cancel 80% of Iraqi bilateral debt, an amount about roughly equal to 1% of Austria's GNP. Austrian experts are contributing to the development of law enforcement in Iraq by training justices and police recruits. Austria has deployed police trainers to the Iraqi Police Academy in Jordan. In Afghanistan, Austrian soldiers have been deployed to ISAF and to Konduz, while a contingent of Austrian staff officers have worked in Kabul since February 2002. In concert with the U.S. embassy, the Vienna diplomatic academy sponsored a training program on good governance for local administrators and NGO representatives from Central Asia. Austria also heads a multi-year, multi-million Euro EU program to build up democratically-controlled police and border forces in Central Asia. -------------- Political Situation -------------- ¶5. (SBU) Chancellor Wolfgang Schuessel's conservative Austrian People's Party (OVP) governs Austria in coalition with the Alliance for Austria's Future (BZO). Schuessel, in office since 2000, faces parliamentary elections in fall ¶2006. He remains personally popular, but his party has lost a series of state elections. However, the opposition Social Democrats (SPO),who had led in polls for more than a year, have recently fallen behind the OVP because of the fallout from a banking scandal involving a bank owned by a labor union. Many observers expect the elections to result in a grand coalition of the People's Party and the Social Democrats, but a coalition of either of the major parties with the Greens is also a possibility. -------------- Economic Prosperity and Development -------------- ¶6. (SBU) Austrian business, especially in the financial sector, has delivered real benefits to the area between Austria and the Russian border. Austrian banks, holders of nearly a quarter share of the region's banking sector, have served as a stabilizing force in part by providing a basis for commercial investment and development. Austrian firms seek to 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. 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. -------------- Security Agenda -------------- ¶7. (SBU) Austria is a strong partner in stemming financial flows to terrorists. 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. McCaw