SPAIN SCENESETTER FOR UNDER SECRETARY BURNS'

C O N F I D E N T I A L SECTION 01 OF 03 MADRID 002142

SIPDIS

SIPDIS

FOR P - U/S BURNS, ALSO FOR EUR - A/S FRIED

E.O. 12958: DECL: 11/20/2017
TAGS: PREL SP
SUBJECT: SPAIN SCENESETTER FOR UNDER SECRETARY BURNS'
ATTENDANCE AT OSCE MINISTERIAL

MADRID 00002142 001.2 OF 003


Classified By: CHARGE D' AFFAIRES HUGO LLORENS, REASONS 1.4B AND D.


1. (C) Summary: Embassy Madrid warmly welcomes your visit.
We realize much of your time will rightly be occupied by the
OSCE ministerial, but we are certain that when you engage on
bilateral issues, you will find the Spanish keenly interested
in what you have to say. The country is absorbed with the
coming elections (Spaniards go to the polls March 9),but
this is an opportune moment to reinforce U.S. interest in
continuing and strengthening bilateral cooperation on
counter-terrorism, law enforcement, and promoting the spread
of democracy. Internationally, Spain does more than most
Americans realize and less than it could. With your help, we
will keep driving home the message that Spain has a larger
role to play in the world, whether in Afghanistan, Kosovo, or
Latin America. End summary.

Bilateral Relations
--------------


2. (C) Although the press feels obliged to trot out Spain's
withdrawal from Iraq and the absence of presidential visits
every time the bilateral relationship is mentioned, the fact
is that we have a solid partnership with Spain based on
strong mutual interests in counter-terrorism, fighting
narcotics trafficking and organized crime, and an effective
Transatlantic relationship. The real bilateral story does
not lend itself readily to headlines, but it is found in
initiatives such as the HSPD-6 agreement we signed in
September to facilitate the sharing of information between
our national counter-terrorism authorities. Spain is home to
a large and growing Muslim population, mainly young male
immigrants whose identification with Spain may be tenuous at
best. The March 11, 2004, train bombings were a shock to
Spain (21 of the suspects were convicted here in October),
and, coupled with the Aznar government's initial insistence
on blaming ETA, likely helped propel the socialists to
victory in elections held a few days afterwards. However,
Spanish authorities understand that event had less to do with
Iraq than with the global phenomenon of Islamic radicalism.
They know Spain remains a target and expect to be hit again
(al-Qaeda has called for attacks to recapture the medieval
"Al Andalus"). The Spanish are actively pursuing several
hundred investigations that involve more than 1,500
individuals suspected of possible links to Islamic extremism
and have arrested several hundred suspects in the past year.
Neither has the threat of ETA terror gone away, although we
believe the organization has been weakened.


3. (C) Spain continues to play a very valuable role through
military cooperation with the U.S. The Spanish bases of Rota
and Moron are strategic hubs for moving men and material into
the Iraq and Afghanistan theater of operations. Some 5,000
logistical flights of giant Galaxy aircraft and 250 port
calls a year speak to the level of activity. Regardless of
the government in power, the Spanish military remains
pro-U.S., and its employment of the AEGIS system in its
frigates and its eagerness to acquire the Tomahawk missile
evidence this predisposition.

Elections
--------------


4. (C) Spain will hold general elections March 9. The ruling
Spanish Socialist Workers' Party (PSOE) candidate is
President Jose Luis Rodriguez Zapatero. Despite a strong
economy, a budget surplus, and a variety of social spending
initiatives, the early polls consistently show a race too
close to call. This should be good news for Partido Popular
(PP) candidate Mariano Rajoy, but he has so far had little
evident success capturing the attention of the all-important
swing voters. Spanish voters customarily make up their minds
late, so the polls may not tell us much until February. The
PSOE will trumpet a good economy and its social programs. We
expect the PP to run on patriotism (flag and King and
standing up to Basque and Catalan demands for even greater
regional autonomy),a softening economy, and fears about
illegal immigration.


5. (C) To the extent foreign affairs is an issue, it will be
the PSOE reminding voters that it got Spain out of Iraq after
the PP led it in and the PP arguing that PSOE unwillingness
to take principled stands internationally has cost Spain
prestige. The PP will point to Cuba and Venezuela. Although

MADRID 00002142 002 OF 003


we will do everything we can to stay out of the limelight,
our name could be taken in vain, possibly in the context of
Iraq, Guantanamo detentions, or Cuba. The leftist press
(acting for the PSOE) has already dragged out Aznar's
relations with President Bush and the decision to go to war
in Iraq. The right will publicly argue that Spain's
international influence has been weakened by its less than
optimal relationship with Washington. Although we expect
Spain to continue its efforts in Afghanistan, Lebanon, etc.
through March and beyond, we should not expect it to increase
overseas commitments or launch any major foreign initiatives
in the midst of a bruising election campaign. If the PP
wins, we anticipate easier sailing with a party that shares
many of our views on a host of foreign policy and security
issues, including Cuba. If the PSOE wins, our challenge will
be to build on the increasing trust of the last two years and
persuade politicians like Zapatero, who is very domestically
focused, that there is much to be done in the wider world.


6. (C) The economy has grown in each of the last 15 years,
and the Spanish are blessed with the world's ninth largest
economy and per capita income levels reaching the EU average.
In the last several years, a housing boom has contributed
greatly to growth, but as elections approach, housing prices
are stagnating, construction is slowing, and unemployment and
inflation are staring to creep up. U.S. investment has long
been important to the economy (more so than bilateral trade),
but the tables have turned. This year, Spain has been the
fourth largest foreign investor in the U.S., with particular
emphasis in banking, construction, and renewable energy. In
the latter sector, Spain has the world's largest and third
largest wind power firms, and Spanish firms also are active
in U.S. solar and biofuels projects.

Spain's Role Abroad
--------------


7. (C) It would be useful if you conveyed to your Spanish
interlocutors that the U.S. values the contributions Spain is
making internationally and hopes that Spain can increase that
level of commitment and participation in the future. As a
major economic power with a reasonably capable military, and
as a uniquely successful example of democratic transition,
Spain can and should do more.


8. (C) FM Moratinos is deeply committed to the MEPP and is
eager to participate in Annapolis. Although his
conversations with the Syrians sometimes cause concern,
Moratinos sees himself as working to support Secretary Rice
-- for whom he has genuine respect and the highest regard --
and U.S. initiatives to help the parties move toward lasting
peace. We believe he and Spain will continue trying to play
a constructive role.


9. (C) On Iran, CFE, and missile defense, we expect Spain
will follow the EU, but your interlocutors would appreciate
hearing your views on these issues. They appreciate the
flexibility the U.S. has shown on all three. You may want to
take this opportunity to encourage the Spanish on Kosovo.
Mainly for domestic political reasons, they are concerned
about the legal basis for their continued presence there if
the Troika process does not yield results and no new UNSCR is
forthcoming. They have told A/S Fried that they want
European consensus and will stand with it, but it would be
helpful if they could be more forward-leaning in shaping it.


10. (C) Spain has 750 troops with ISAF in Afghanistan and a
PRT in Badghis province. They have contributed some 150
million Euros in Afghan reconstruction funds. Spain has
recently deployed troops for its NATO training commitment of
two OMLTs. Planning is also underway to allow the Spanish to
train and equip an Afghan Army company, if successful this
may be the prelude to the training and equipping of an
additional full battalion. On Iraq, Spain has contributed
$22 million to the Basrah Children's Hospital and a further
$28 million in development funding for Iraq. Spain has
nearly 1,100 troops with UNIFIL in Lebanon and about 700 in
Kosovo.

Latin America
--------------


11. (C) Spain is the second largest investor in Latin America
(after Brazil). This, along with the obvious linguistic and

MADRID 00002142 003 OF 003


cultural ties, means that Spain is second only to the U.S. in
terms of its interest and influence in the region. In
general, we see eye to eye. Spain wants strong democratic
and free market institutions in Latin America. The Ministry
of Foreign Affairs and Cooperation's senior officials on
Latin America place a high value on their interactions with
A/S Shannon and his team. The exception that proves the rule
is Cuba. Despite our continued urging to the contrary, Spain
has opted for the path of engagement with the regime. They
claim they are positioning themselves to influence and
encourage regime elements that might want change. We point
out the regime is interested in survival, not change, and
that the Cuban dissidents need and deserve the active and
visible support of democracies everywhere.


12. (C) Venezuela is an interesting case. Zapatero came to
office interested in building bridges to Chavez (hence the
sale of patrol boats and the erstwhile attempt to sell
military aircraft). By the time the King told Chavez to shut
up during the Iberoamerican summit earlier this month, it
merely crystallized for the public what the government was
already telling us privately it understood: Chavez is a
problem for Spain and relations are on a downward spiral.
The government is NOW constrained by two factors. Spanish
investors in Venezuela are worried Chavez may take his
revenge on them (and Chavez has fanned those fears),while
the Spanish electorate is overwhelmingly behind the King and
would be offended if the government goes overboard
conciliating Chavez. The PSOE tendency may be to hide its
head in the sand, but Spain needs to speak out more
forcefully in favor of democracy in Venezuela, as Moratinos
did several months ago in criticizing Chavez's closure of the
independent television station RCTV. Spain also needs to
work with us behind the scenes in countries such as Bolivia,
Nicaragua, and Ecuador.


13. (C) And speaking of Venezuela, counter-narcotics is
another area of common interest where you should let the
Spanish know we can do more together. Andean cocaine is a
serious problem here, and Colombian trafficking organizations
have their claws into Spain. We have been reaching out at
many levels and in various ways to convey a central message:
we need to look for ways to increase bilateral cooperation.
With strong support from USSOUTHCOM (Admiral Stavridis
visited in October),we have been encouraging Spanish
officials to visit Miami and Key West as well as their
counterparts in Washington to see first hand the level of
U.S. interagency cooperation on the drug front and to explore
opportunities for Spain to get more involved.

Conclusion
--------------


14. (C) Again, welcome to Madrid. We need to hit the ground
running with the new administration in March, regardless of
who wins. Your visit is an important opportunity to signal
to the Spanish, privately and publicly, that ours is a
forward-looking partnership, between two institutionally
strong democracies, based on fundamental, shared values and
mutual interests.
LLORENS