Identifier
Created
Classification
Origin
06VIENNA2689
2006-09-08 15:35:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Vienna
Cable title:  

SCENESETTER FOR HHS DEPUTY SECRETARY AZAR'S VISIT

Tags:  OTRA OVIP TBIO KSCA AU 
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VZCZCXYZ0019
PP RUEHWEB

DE RUEHVI #2689/01 2511535
ZNR UUUUU ZZH
P 081535Z SEP 06
FM AMEMBASSY VIENNA
TO RUEAUSA/DEPT OF HHS WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 4882
UNCLAS VIENNA 002689 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: OTRA OVIP TBIO KSCA AU
SUBJECT: SCENESETTER FOR HHS DEPUTY SECRETARY AZAR'S VISIT
TO AUSTRIA; SEPTEMBER 12-17


UNCLAS VIENNA 002689

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: OTRA OVIP TBIO KSCA AU
SUBJECT: SCENESETTER FOR HHS DEPUTY SECRETARY AZAR'S VISIT
TO AUSTRIA; SEPTEMBER 12-17



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
held the rotating Presidency of the EU Council for the first
half of 2006, which gave the U.S. the opportunity to work
with the government at an unusually high level of intensity.

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

Austrian Health Care System


2. (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


3. (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 ICE talks took place in March 2006, with
a follow-up in June 1006. 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


4. (U) In February, the H5N1 strain of avian influenza
surfaced in Austria. To date, 92 birds (mainly wild swans
and ducks) have tested positive. Authorities required
farmers to 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 hosted
an International Partnership on Avian and Pandemic Influenza
(IPAPI) Senior Officials' Meeting on June 6-7.


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


5. (SBU) Chancellor Wolfgang Schuessel's Austrian People's
Party (OVP) governs Austria in coalition with the Alliance
Future Austria (BZO). Schuessel faces parliamentary
elections on October 1. 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
--------------


6. (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 started 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 facilitated progress on status
questions in Kosovo and elsewhere. Austrian diplomats played
key roles, working closely with the U.S. and with UN Special
Envoy Martti Ahtisaari. A broader area of emphasis for the
Austrian Presidency was the EU's "New Neighborhood" policy.
The Austrians sought to promote democracy and reform in
Belarus, supporting the U.S. strategy to isolate Belarussian
President Lukashenko.


7. (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.


8. (SBU) In the Broader Middle East, Austria has encouraged
the identification of common values as a response to
extremism. In November 2005, 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 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. Austria supported UNSCR 1701 calling
for a ceasefire in Lebanon, but has for the moment declined
to commit forces for the revamped United Nations Forces in
Lebanon (UNIFIL).


9. (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
--------------


10. (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.


11. (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 Ukrainian businessman Dmitr Firtash in a joint
venture with Gazprom. The joint venture (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.


12. (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.


13. (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.


14. (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
--------------


15. (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 made anti-corruption and law enforcement
cooperation a cornerstone of its presidency. Austria had
previously taken the lead for the EU in coordinating law
enforcement activities in Central and Eastern Europe and
Central Asia.
McCaw