SCENESETTER FOR CODEL LOWEY'S VISIT TO PRAGUE APRIL 5

UNCLAS PRAGUE 000347 SIPDIS SIPDIS H PASS FOR CODEL LOWEY FROM AMBASSADOR GRABER E.O. 12958: N/A TAGS: OVIP PREL PGOV ECON EZ SUBJECT: SCENESETTER FOR CODEL LOWEY'S VISIT TO PRAGUE APRIL 5 ¶1. I look forward to welcoming Codel Lowey to Prague on April 5. In anticipation of our luncheon discussion at my residence, I offer some background information in this scenesetter. ¶2. Seventeen years after the Velvet Revolution, the Czech Republic is today a stable and rapidly developing country. The economy has grown at 6% for the past two years and is fueled by healthy export and foreign investment. Inflation is low and the country intends to adopt the euro in 2012. The current center-right government has an ambitious agenda to lower taxes and tackle overdue reforms in health care and pensions, although it remains to be seen if they will be able to overcome political opposition to these reforms. Many U.S. companies are active in the country. While most are very satisfied with the business climate, the country is hampered by a prevalence of corruption that had lingered since the communist era. Promoting transparency and ethics is a top priority of the U.S. embassy. ¶3. The United States and the Czech Republic enjoy excellent relations. All governments since 1989 have placed a high priority on transatlantic relations. The Czech Republic entered NATO in 1999 and joined the European Union in 2004. The military has been reformed and cooperates closely with the United States in Afghanistan, Iraq, the Balkans and elsewhere. The Czechs place a high priority on democracy promotion and spreading the lessons learned from their recent political transformation. They have been particularly active in support of democratic reform in Cuba. As a small country they have limited their active foreign policy engagement. They do not have a particularly active role in either India or Pakistan. Czech companies are eagerly eyeing the Indian market, and the largest Czech firms, including automaker Skoda, have operations in India. ¶4. Let me highlight three aspects of our bilateral relationship: visas, missile defense, and Radio Free Europe/Radio Liberty. ¶5. The only sensitive issue in our bilateral relations is visas. Although Americans can travel freely to this country, Czechs still need visas to travel to the United States. As an American ally in NATO, as a strong supporter of the war on terror, and as an EU member, the Czechs believe that they should be able to travel to the United States on the same terms as Germans, French and other Western European countries in the U.S. visa waiver program. President Bush recognized the aspirations of our Central European allies, and the importance of cementing closer ties with the Czech Republic and its neighbors, when he announced in Tallinn in November 2006 that he would seek legislation to revise the terms of the visa waiver program, placing greater emphasis on security cooperation, which would accelerate entry into the program for countries like the Czech Republic. The Senate version of the 9/11 Bill approved last month contains language on this. It is not in the House version, and the fate of the Senate provision in conference committee is uncertain. ¶6. In January, after several years of quiet talks, we asked the Czech Republic to host a radar station as part of the U.S. missile defense network. This facility, together with a small number of interceptor missiles to be based in Poland, would protect the eastern United States as well as U.S. allies and troops in Europe against ballistic missiles launched from the Middle East. While the current government supports the proposal, and last week formally accepted our offer to launch negotiations on the facility, the issue is controversial. About 70% of Czechs say they oppose the radar. With memories of the Soviet invasion of 1968 still fresh in many minds - the last Russian troops did not leave the country until 1992 - many Czechs are instinctively wary of the idea of foreign troops on their soil. Many also believe the country should only take on military obligations through NATO, not on a bilateral basis. Negotiations will begin next month and are likely to last through the end of the year. The deal will need to be approved by Parliament. ¶7. The Czech Republic has been home to the U.S.-funded Radio Free Europe/Radio Liberty since 1995 when then-President Vaclav Havel offered to host the Radios in recognition of the important role they played in promoting Czech democracy. RFE/RL today broadcasts to countries in transition in the former Soviet Union and the Balkans, and to Iran, Iraq and Afghanistan. The operation has not been without cost to the Czech Republic. Iran has a trade embargo against the Czechs in retaliation for the broadcasts from Prague. Security threats since 9/11 have forced the RFE/RL headquarters in downtown Prague to expand their security perimeter, partially closing streets. Last year ground was broken on a new, more secure facility in Prague that will house the Radios starting in late 2008. The national and city governments strongly support RFE/RL's continued presence, and have contributed nearly $1 million to fund the move. You will have the opportunity to see the current RFE/RL facilities during your stop in Prague. ¶8. Of course the Czech Republic is also a destination for thousands of American visitors every year, with Prague its crown jewel. I look forward to welcoming you during your brief rest stop. I will host you for lunch in the historic U.S. Ambassador's Residence where you will have the chance to talk with me and members of my staff. GRABER