HAMBURG, GERMANY: SCENESETTER FOR CODEL COSTELLO

UNCLAS SECTION 01 OF 03 HAMBURG 000058 SIPDIS DEPARTMENT PLEASE PASS TO CODEL COSTELLO. DEPARTMENT FOR H /MARK SMITH AND EUR/AGS. SIPDIS E.O. 12958: N/A TAGS: OREP PREL PRGOV ECON GM SUBJECT: HAMBURG, GERMANY: SCENESETTER FOR CODEL COSTELLO REF: STATE 107590 ¶1. (U) Consulate General Hamburg warmly welcomes Congressman Jerry Costello and his delegation to Hamburg, Germany August 24-27. The U.S. has had a strong relationship with the Free and Hanseatic State of Hamburg for almost 220 years. Commissioned in 1790, ConGen Hamburg has been working to foster U.S. - German relations and trade. Your visit will further this on-going cooperation, particularly in the areas of airport and harbor security. Your appointments will include a visit to Lufthansa Technik's Hamburg headquarters and facilities, a tour of the Port of Hamburg with representatives of the Hamburg Harbor Police and the U.S. Department of Homeland Security's (DHS) Container Security Initiative (CSI),and a discussion with HOCHTIEF Airport and Hamburg Airport representatives on the recent privatization of the facilities. ConGen Hamburg is also pleased to host a reception for the delegation with members of the German Parliament, state parliaments, interior ministry representatives, law-enforcement officials (harbor police, police, customs) and representatives of U.S. and German companies in the shipping, transport, and aerospace sectors. GERMANY: POLITICAL AND ECONOMIC OVERVIEW ¶2. (U) After nearly two years in office, Chancellor Angela Merkel's grand coalition between her own party, the right-of-center Christian Democratic Union (CDU, joined by its Bavarian sister party the Christian Social Union, or CSU),and the left-of-center Social Democratic Party of Germany (SPD) is in good shape and seems likely to survive until its four-year term expires in 2009. Chancellor Merkel's consensus-style leadership keeps a lid on tensions between the two parties, Germany's largest and traditional opponents, and wins her high ratings in public opinion polls. She is a strong advocate of close ties with the United States, and bilateral relations have improved since she took office in November 2005. This positive cooperation was particularly noticeable in the outcomes of the U.S.-EU Summit in April in Washington and the G8 Summit which was hosted in June in the Northern German town of Heiligendamm. Among the German people, however, skepticism towards the United States over the invasion of Iraq, climate change, counter-terrorism, NATO cooperation in Afghanistan and other 
issues remains high. ¶3. (U) The German economy in 2006 had its best year since 2000. Its GDP grew 2.7 percent, and economists are predicting growth of over 2 percent in 2007 and 2008. Tax revenues are up and the government's budget deficit is now well within the European Union's "Maastricht criteria" (3 percent of GDP). Business confidence is high. Employment is increasing and some employers complain of a shortage of skilled workers. Unemployment continued to drop over the summer months to 8.9 percent in July, seasonally adjusted, and economists now forecast annual unemployment of 8.7 percent in 2007. (Unemployment is still nearly twice as high in the states of the former GDR, however, and long-term unemployment also remains high in the Ruhr and some other parts of western Germany where old smoke-stack industries have shut down in the face of global competition.) German companies have cut costs, and labor productivity per capita rose 1.8 percent in 2006. Germany's trade unions feel they might be regaining political and economic power and after years of wage restraint are again demanding higher pay. Although unions only represent about 25 percent of German workers, union contracts cover 65 percent of the workforce. WORLD LEADER IN AIRCRAFT REPAIR AND MAINTENANCE ¶4. (U) Lufthansa Technik, which is headquartered in Hamburg, is the world leader in the repair and maintenance of commercial aircraft, their engines, and their components. The company has bases at every major airport in Germany, as well as 50 others world wide. Lufthansa Technik is certified not only as a maintenance, repair and overhaul services (MRO) provider and design organization but also as a manufacturer of aircraft parts. The company boasts a wide array of experts as well as repair services for over 50 different types of commercial and private aircraft. U.S.-based airlines such as United Airlines and American Airlines use Lufthansa Technik for their aircraft maintenance and repair. With the growth of air travel over the last few years, Lufthansa Technik has expanded to meet market demand and the company has been able to further strengthen its leading position in the MRO sector. In 2006, Lufthansa Technik's revenues increased by 294 million euros (+ 9.4 percent) to 3.4 billion euros compared to 2005. On August 25, you will tour the Hamburg facilities, which are attached to the Hamburg Airport. HAMBURG 00000058 002 OF 003 GERMANY'S PORT TO THE WORLD ¶5. (U) The port of Hamburg was first founded on May 7, 1189 through a charter in which the Emperor Friedrich Barbarossa secured privileges for the people of Hamburg such as duty-free passage on the lower Elbe river as far as the North Sea and the right to hold markets. Over 800 years the port has developed into the central hub for trade with Eastern and Northern Europe. It is the second largest container port in Europe and currently is the seventh largest in the world. Despite its location 120 km from the sea, the port is capable of handling the largest container ships in the world. The port, which covers over 7,000 hectares, handled 134.9 tons of total cargo in 2006 - an increase of 7.3 percent from the previous year. Not only is Hamburg the largest German seaport, it is also the port of registry for half of the German fleet and the head office of numerous German shipping companies. Many foreign shipping companies also have branches here. The city of Hamburg has extensive plans to further develop the port's infrastructure and bring it closer to the everyday lives of the city's citizens. Your program's tour of the Port of Hamburg will not only provide an up-close observation of trade activities within the port but also the opportunity to discuss with the Superintendent of Hamburg's Harbor Police and his staff the implementation of International Port Security Codes and the monitoring of container shipments. CSI representatives will also brief you on their cooperation with German customs officials in the screening of all U.S. bound containers. ¶6. (U) DHS's Container Security Initiative was developed by U.S. Customs, now U.S. Customs and Border Protection (CBP),in the aftermath of the terrorist attacks of September 11. The primary purpose of CSI is to protect the global trading system and the trade lanes between CSI ports and the U.S. Under the CSI program, a team of officers is deployed to work with host nation counterparts to target all U.S.-bound containers that pose a potential threat for weapons of mass destruction (WMD). In Germany, CSI teams have been stationed at the ports of Hamburg and Bremerhaven since early 2003. Currently, seven permanent and three temporary staff (consisting of eight CBP officers, one intel analyst, and one special agent) are embedded with German customs (Zoll) counterparts at these locations. Maritime freight transiting German seaports is considered a heightened threat due to historical use of Germany as a logistical base by international terrorist organizations. Specifically, the al-Quds mosque in Hamburg was a meeting place for the "Hamburg Cell", which included three 9/11 suicide pilots and supporting members. Recent arrests and investigations have shown that al-Qaida and various other trans-national terrorist organizations maintain active interest in Northern Germany. It is the goal of CSI Germany to detect, deter, and disrupt exploitation of maritime shipping infrastructure to support, facilitate, or conduct a terrorist attack via container shipments transiting the ports of Hamburg and Bremerhaven. ¶7. (U) In the evening of August 25, you will have the opportunity to meet with German parliamentarians, who sit on the Bundestag's transportation committee as well as local politicians who work in the transport and infrastructure field for a relaxed exchange of ideas at a Consulate-hosted reception. We have also invited representatives from Hamburg's Interior Ministry, customs, (harbor) police as well as U.S. and German companies in the shipping, ship-building, transportation, and aerospace industries. The companies regularly trade with the United States and their leadership has expressed keen interest in our new shipping regulations, such as 100 percent screening, as well as programs such as CBP's Custom-Trade Partnership Against Terrorism (C-TPAT). HAMBURG AIRPORT: AN EXAMPLE OF A SUCCESSFUL PUBLIC-PRIVATE PARTNERSHIP ¶8. (U) Prior to your departure on August 27, you will visit one of Germany's oldest airports, the Hamburg Airport, which was partially privatized in 2000. The airport has become an example for a successful public-private partnership. 49 percent of the airport's stock is held by Aer Rianta International (9.8 percent),HOCHTIEF AirPort (26.1 percent) and the HTAC investment partnership (13.1 percent). The HTAC stake is managed by HOCHTIEF AirPort (HTA). The City of Hamburg has retained a 51 percent interest. The airport is currently undergoing extensive modernization. In May 2005, the new Terminal 1 was opened and construction is expected to be completed in 2008 on a shopping plaza (Airport Plaza) that will link the two passenger terminals and contain a local rail station. With more than 10 million passengers every year HAMBURG 00000058 003 OF 003 Hamburg Airport ranks as Germany's fourth-largest airport and in 2006 the airport reported a 12 percent growth rate. Over 72 airlines offer flights from Hamburg, including Continental's direct flight to Newark and Emirates' flight to JFK. The companies based at the airport employ more than 13,000 people and generate 1.5 billion euro every year. SUNDAY EXCURSION TO LUEBECK ¶9. (U) On Sunday we will visit the Hanseatic city of Luebeck on the Baltic Sea coast. Luebeck was founded in 1143 and was for several centuries the "capital" of the Hanseatic League. Because of its brick gothic architectural heritage Luebeck is on UNESCO's list of World Heritage Sites. Much of the old town has kept a medieval look with old buildings and narrow streets. The town once could only be entered by passing one of four town gates, of which two remain today, the well-known Holstentor (1478) and the Burgtor (1444). The old town center is dominated by seven church steeples. The oldest ones are the Luebecker Dom (the city's cathedral) and the Marienkirche (Saint Mary's),both from the 13th and 14th centuries. Luebeck is very famous for its excellent marzipan industry, and according to local legend, marzipan was first made in Luebeck possibly in response to either a military siege of the city, or a famine. According to local legends, the town ran out of all foods except stored almonds and sugar, and used these to make loaves of marzipan "bread". ¶10. This message has been coordinated with Embassy Berlin. LIBONATI BUTCHER