SCENESETTER FOR U.S.-GREEK ECCC MEETING MARCH 12

UNCLAS SECTION 01 OF 02 ATHENS 000462

SIPDIS

SENSITIVE
SIPDIS

COMMERCE FOR DAS DYCK; AID FOR DAA MEFFORD

E.O. 12958: N/A
TAGS: PREL PGOV PTER PHUM ENRG ECON GR
SUBJECT: SCENESETTER FOR U.S.-GREEK ECCC MEETING MARCH 12

REF: A) THESSALONIKI 19 B) THESSALONIKI 16

ATHENS 00000462 001.2 OF 002



1. SUMMARY: U.S. Embassy Athens warmly welcomes DAS Bryza,
USDOC DAS Dyck and AID DAA Mefford's March 12 visit to
participate in the 2007 meeting of the U.S.-Greek Economic
and Commercial Cooperation Commission (ECCC). The visit
offers an opportunity to strengthen our "strategic
partnership," not only on economic but also on political
issues. With GOG officials shifting focus to the upcoming
Greek general elections, the ECCC itself and side meetings
will allow us to advance our economic interests as well as
underscore the importance of continued progress on energy
security, counter-terrorism, and stability both in the
Balkans and in the region. On most of these issues, the
Karamanlis government has demonstrated its (quiet)
willingness to work with us. END SUMMARY.

POLITICAL CONTEXT: WORKING WITH THE KARAMANLIS GOVERNMENT


2. Politicians are gearing up for elections this year, with
analysts predicting they will be held either in the late
spring or early fall. Karamanlis' center-right New Democracy
government holds a small but steady lead in the polls, asking
voters to judge its "reform" agenda. This agenda has
affected not only domestic issues (like the education
system),but also the GOG's approach to foreign affairs. As
a result, the Karamanlis government has been quietly willing
to work with us -- even if it still pref%rs to a6oid dra7ing
public attention to it*Q


3. That has been true in Afghani3tan, Where the GOG is
providing an engineering and med)cal unit (recently pledging
increased fifancial s5pport). While debilitating caveats onQ
m/vement outside Kabul re-ain, 5e co.ti.ue to press the GOG
to lift them. It has also been true in Iraq, where Greece
has provided funding for the NATO training mission as well as
equipment and supplies. Greece's 2-year tenure on the UNSC
provided a useful platform to leverage Greek support for
Lebanon as well as the P5 1 efforts with Iran. In response
to recent Russian threats against the Czech Republic and
Poland, the MFA spokesman made a statement criticizing
Russian rhetoric that went far beyond those of other EU
capitals.


4. Growing Greek investment in the Balkans means that rule
of law, economic stability, trafficking in persons and
democratization in the region are now on the GOG's radar
screen in a serious way, and the Karamanlis government has
put its money where its mouth is. On Kosovo, while the GOG
carries some Serbian interests in EU deliberations, FM
Bakoyiannis has stressed (both to us and to her staff) that
Greece will not veer from EU policy on the Ahtisaari plan.
Macedonia's name remains an irritant, although GOG officials
assure us that they hold to the 1995 "Interim" agreement that
Greece will not block the country's entry into NATO/EU
structures as "FYROM." And, as was evident during the recent
visit by Cypriot President Papadopoulos, there are more
differences in perspective between Athens and Nicosia than
there have been for some time.


5. Following the January 12 RPG attack on the Embassy, FM
Bakoyiannis and MPO Polydoras demonstrated that the GOG
recognized it as an attack not only on the U.S., but also on
Greece. Cooperation with GOG authorities has been collegial
and well-resourced, although endemic press leaks have not
helped the investigation and progress is slow. The
Karamanlis government also recognizes that the RPG attack
makes achieving one of its own goals -- participation in the
Visa Waiver Program -- harder to achieve.

KEY ISSUES FOR THE ECONOMIC AND COMMERCIAL COOPERATION
COMMISSION


6. Greece's eagerness to hold 2007 meeting of the U.S.-Greek
Economic and Commercial Cooperation Commission (ECCC) is a
direct expression of Foreign Minister Bakoyiannis' commitment
to enhanced U.S.-Greek bilateral relations. Our goal: to
intensify the economic portion of our "strategic
partnership." In many key areas of interest to the U.S.,
Greece has the ability to punch above its weight -- energy,
the fight against money laundering, promoting stability in
the Balkans. While we already cooperate with Greece on these
issues, there is potential to do much more. Equally
importantly, the GOG is looking to the U.S. for ideas on how
it can use its new muscle effectively. Finally, Greece's
interest in attracting U.S. investment gives us a lever to
push for greater transparency and openness in the Greek
economy.

ATHENS 00000462 002.2 OF 002




7. The ECCC will focus on four issues. The first is energy.
Greece is expanding its role as a transit country for both
oil and gas. In oil, it is finalizing the intergovernmental
agreement with Russia and Bulgaria on the
Burgas-Alexandroupolis oil pipeline -- potentially the
second major Bosphorus bypass pipeline after Baku-Ceyhan. In
gas, Greece is a key player for TGI, the first pipeline that
could bring Caspian gas supplies directly to Europe,
increasing European energy security. As these projects go
forward, we want to ensure a level playing field for U.S.
companies. The ECCC will be an opportunity to keep the GOG
committed to reserving TGI capacity for Caspian gas, and to
urge the GOG to facilitate participation of U.S. firms in
Burgas-Alexandoupolis.


8. The second key issue is the fight against money
laundering and terror finance. Strong Greek performance is
essential, particularly as Greek banks have increased their
investment in the Balkans. We understand that a recent
Financial Action Task Force review of Greece revealed that
the Greek financial intelligence unit (FIU) is simply not up
to the task of tracking illegal financial flows. The GOG is
supposed to receive the first draft of the FATF report (NOTE:
which the U.S. is supposedly not privy to) the week of March

5. This should mean that the GOG is aware of the seriousness
of this issue to the international community.


9. The third key issue is the impediments U.S. firms face
doing business in Greece. The GOG currently requires far
more paperwork from U.S. bidders on government tenders than
do other EU member states. As a solution, we should
recommend that the GOG identify and adopt "best practices"
used by other EU countries which do not disadvantage U.S.
companies. U.S. pharmaceutical companies face a separate
obstacle. The GOG frequently pays its bills late, and
currently owes these firms millions of dollars. During the
ECCC, we look for a reasonable proposal from the GOG to
address this problem.


10. The fourth key issue is IPR. Greek performance has
improved greatly over the past year. The GOG set up an
effective public-private IPR working group and has also
conducted judicial training. However, the Greek judiciary
remains loath to impose any sentences on IPR violators. We
will need to underscore that we continue to expect progress
on sentencing, which will require on-going GOG engagement.

GETTING THE NORTHERN PERSPECTIVE


11. In northern Greece, there is renewed interest (and
sensitivity) about Muslim/Turkish minority issues. FM
Bakoyiannis visited Thrace February 5-7, announcing a series
of measures aimed at meeting some key Muslim demands
(reftels). The measures include giving Muslims more direct
control over management of charitable foundations and
reducing the taxes they owe; restoring Greek citizenship to
"stateless" Muslims; hiring 240 imams as civil servants; and
possibly establishing a 0.5 percent Muslim quota for Greece's
civil service. Thrace Muslims initially welcomed the
measures, but subsequently complained about continued GOG
control over the appointment of muftis, continued
restrictions on the ability of Thrace groups to call
themselves "Turkish," and lack of aid to Thrace farmers.


12. Congen Thess has been engaged in efforts to help Thrace
farmers find a replacement crop for tobacco, and understands
that EB supports post's request for a Business Facilitation
(BCIF) grant to support this effort. Other issues of
bilateral interest include TIP, illegal immigration, and
narcotics. ConGen Thess is organizing an April 11-13 seminar
on trans-border cooperation for law enforcement officials
from seven countries of the region, including Greece,
Macedonia, Turkey, Bulgaria, Moldova, Romania and Albania in
Alexandroupoli. To help promote American investment,
Ambassador will give a previously-scheduled speech on the
evening of March 12 on the obstacles and opportunities faced
by foreign investors in Greece.

RIES