AUSTRIAN MEDIA HIGHLIGHTS: July 19, 2007

UNCLAS VIENNA 001917 SIPDIS SIPDIS DEPT FOR EUR/AGS, INR/EU, AND EUR/PPD FOR YVETTE SAINT-ANDRE OSD FOR COMMANDER CHAFFEE WHITEHOUSE FOR NSC/WEUROPE E.O. 12958: N/A TAGS: OPRC KPAO AU SUBJECT: AUSTRIAN MEDIA HIGHLIGHTS: July 19, 2007 Elsner Blames Floettl ¶1. When questioned by presiding judge Claudia Bandion-Ortner how bank Bawag came to lose around 1.4 billion Euros in currency speculations in the late 1990s, former bank CEO Helmut Elsner blamed his co-defendant, investment banker Helmut Floettl. Losses incurred prior to 1998 were the result of "bad luck, not criminal acts," Elsner said. The huge amounts lost in currency speculations after 1998 were "Floettl's fault," because he "ignored all written directives from the Bawag, staking everything on the Japanese Yen," the former CEO claimed. Like all Austrian media reporting on the bank Bawag trial, mass-circulation tabloid Kronen Zeitung quotes former bank CEO Helmut Elsner, who in his testimony yesterday blamed all losses from the Bawag's so-called "Caribbean deals" on investment banker Helmut Floettl. According to Elsner, his co-defendant Floettl had "failed to stick to agreements, lost the money in speculations," and finally told the former CEO in 2000 that "all the money is gone." Floettl has meanwhile dismissed these allegations, and defended himself, saying that the losses were "no one's fault. The markets just developed differently than anticipated. It was an investment failure." The Kronen Zeitung comments that this was likely the "first major duel in the Bawag case." Semi-official daily Wiener Zeitung also reports a request by Elsner's lawyer that his client be released from investigative detention has been rejected by the court. Elsner has been in detention since his extradition from France in February, because officials consider him a flight risk. Debate over Residence Rights Continues ¶2. Rejecting Austrian Chancellor Alfred Gusenbauer's proposal to grant residence rights to immigrants who have lived in Austria for more than ten years, Interior Minister Guenther Platter of the People's Party said he is opposed to a general right of residence, suggesting that it would be "immigration under the guise of asylum." Gusenbauer earlier said that foreigners who have integrated well into Austrian society after years of living in the country legally, and who have no criminal record should have the right to stay. According to semi-official daily Wiener Zeitung, Chancellor Alfred Gusenbauer appears to have "caused a new quarrel over Austria's asylum and immigration laws" with his call to grant residence rights to foreigners who have been living in the country legally for many years. Interior Minister Guenther Platter has dismissed the Chancellor's proposal and his colleague, OeVP Secretary General Hannes Missethon criticized Gusenbauer's plan as "yet another issue where the SPOe has gone back on its word," and which "would leave the door wide open to immigrants exploiting Austria's asylum laws." SPOe party manager Josef Kalina in turn urged the Interior Minister "not to permit pointless hardship cases." Likewise, centrist daily Die Presse headlines "Quarrel over residence rights for asylum seekers," and quotes experts from the business sector as warning in would be a bad move economically to force skilled workers seeking asylum in Austria to leave the country. US Warns Of Kosovo Plan Failure ¶3. The US Ambassador to the United Nations has warned Russia not to block a UN Security Council resolution on the future status of Kosovo. Ambassador Zalmay Khalilzad said failure to pass the resolution could lead to the UN losing control of the political process in the Serbian province. Independent provincial daily Salzburger Nachrichten, reporting on Russia's threat to block a UN Security Council resolution on the future status of Kosovo, writes that Serbia - being vehemently opposed to independence for Kosovo -- is apparently banking on Moscow's assistance in the dispute. The daily speculates that Russia's unrelenting stance on the issue may be an attempt at affirming its role as a superpower that has re-emerged on the scene. In addition, there might be a psychological motive: Moscow may still be smarting from the "humiliation of 1999," when the weakened Russian state under President Yeltsin had nothing to set against NATO's involvement in the conflict, the daily suggests. A Permanent and Growing Threat ¶4. ...headlines a leading Austrian daily, publishing an analysis of al Qaeda's recovered strength. It seems that the United States has been unsuccessful in its fight against terrorism: The organization is now as strong as in 2001, and the threat it poses has not lessened, US intelligence services have found. In an analysis in centrist daily Die Presse, Washington correspondent Norbert Rief argues that the latest intelligence reports from the US concerning the strengthening of al Qaeda "are bad news for the Bush administration for several reasons: President Bush and his government have made the war on terror their top priority. Also, the US has contributed to increasing the threat of new attacks with its invasion of Iraq." According to Rief, the Senate Intelligence Committee warned the President before the US-led military operation in Iraq that invading the country could indirectly boost Osama bin Laden and his fellow terrorists, as it would only provide al Qaeda with more options to increase its influence. The Presse also says that the US intelligence services believe a key reason for al Qaeda's re-emergence is the relative security the organization can rely on in the border region between Afghanistan and Pakistan. The United States, however, has been reluctant to increase pressure on Pakistani President Pervez Musharraf, who the White House sees as a key ally in its fight against terrorism. Meanwhile, US policy has also radicalized Lebanese organization Hezbollah, Rief writes. Mideast Quartet Meets in Portugal ¶5. British Prime Minister Tony Blair will make his first appearance today as the new Middle East envoy for the international quartet - the UN, the EU, the US and Russia. Diplomats are gathering in Lisbon, Portugal, to discuss strategies for the long-stalled peace talks between Israel and the Palestinians. US Secretary of State Condoleezza Rice, UN Secretary General Ban Ki Moon, and EU foreign policy chief Javier Solana will also attend the meeting, says independent daily Salzburger Nachrichten. New Suicide Attacks in Pakistan ¶6. At least five people have been killed and more than twenty injured in a suicide car bombing at a police college in northwestern Pakistan. In another bombing near Karachi, at least four people were killed in an attack aimed at a convoy of Chinese workers. There has been a series of bomb attacks since troops stormed the Red Mosque in Islamabad earlier this month, which was run by Islamist radicals, according to ORF online news. Kilner