AUSTRIAN MEDIA HIGHLIGHTS: August 8, 2007

UNCLAS VIENNA 002092 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: August 8, 2007 Verzetnitsch Defends Himself ¶1. All media report that former Austrian Unions Association (OeGB) boss Fritz Verzetnitsch has come under fire in connection with the bank Bawag trial currently underway in Vienna: It has been alleged that he made false statements earlier this year before the parliamentary committee looking into the losses incurred by the bank. Verzetnitsch may be facing legal proceedings should it turn out he knew about the Bawag's disastrous currency speculations as early as 1998, and not in 2000, as he has been claiming. The former OeGB boss has now gone on the offensive, with his lawyer dismissing the allegations. The majority of Austrian media, including mass-circulation provincial daily Salzburger Nachrichten and mass-circulation daily Kurier, are suggesting false testimony charges against former OeGB President Fritz Verzetnitsch are extremely likely. The Kurier quotes a spokesperson for the Vienna Public Prosecutor's office as arguing an indictment is "realistic," given that Verzetnitsch is suspected to have facilitated the concealment of the bank Bawag's huge losses. The bank Bawag trial on Tuesday meanwhile continued to focus on the questions of which of the defendants, including former bank CEO Helmut Elsner and investment banker Wolfgang Floettl, knew what about the failed currency speculations and when. Debate over Early Tax Reform Continues ¶2. In Austria, strong economic growth has led to a healthy increase in federal tax revenues and produced numerous calls for tax breaks before 2010, when they are scheduled to occur. Government revenues were seven percent higher in the first half of this year than they were in the first six months of 2006. The increase in revenues from corporate taxes on company profits has been especially strong. Finance Minister Wilhelm Molterer of the People's Party, however, has so far been adamant in his refusal to introduce tax reforms prior to the date agreed on in the coalition pact between the Social Democrats and the OeVP. All Austrian media continue to report on the current growth in tax revenues in Austria. Liberal daily Der Standard writes that the economic boom has resulted in a surplus of two billion Euros in tax revenues: This has increased pressure on Finance Minister Wilhelm Molterer to use the additional money for tax reform before 2010. The government partners have so far dismissed such calls, however, the daily adds. Likewise, centrist daily Die Presse reports on "record revenues" and "record spending." The daily explains that the surplus from tax revenues will likely be "spent immediately," as federal expenditures have also increased this year. A reform cannot be expected prior to the scheduled date of 2010, for which the government is planning tax cuts of up to three billion Euros. It is not yet clear, however, which income groups can expect to profit from the reform measures, says the Presse. UN to Decide On Its Role in Iraq ¶3. Iraq's Prime Minister Nuri al-Maliki is visiting Iran today for talks aimed at reducing violence in Iraq. Meanwhile, the union representing the United Nations staff in Iraq says workers should be pulled out of the country until their security can be guaranteed. The union claims that UN personnel cannot be properly protected by the US-led forces in Iraq. The call comes as UN officials are preparing to pass a draft resolution, which would give the organization an expanded role in Iraq. The United States and Britain had presented the draft in the face of growing calls at home for a pullout of their troops from Iraq. Meanwhile, in Baghdad, the crisis in the Iraqi government continues, with additional Sunni representatives leaving the administration, semi-official daily Wiener Zeitung says. Five Sunni politicians from the circle around the former Iraqi head of government Iyad Allawi have announced they would not participate in cabinet meetings for the time being because Shiite Prime Minister Nuri al-Maliki appears to be unwilling to meet demands presented by the Sunnis. With the boycott of the five ministers there a no Sunni representatives left in al-Maliki's government, the daily notes, and adds that this makes the government's task to boost reconciliation beyond ethnic and religious boundaries in Iraq even more difficult. North-South Korea Summit Scheduled for August ¶4. Leaders of North Korea and South Korea will meet for a summit later this month in Pyongyang -- the second such meeting between the two countries that are still technically at war. South Korea's national security advisor says the aim of the summit is to "connect and develop in a positive way the progress made at the six way talks and North-South relations." The scheduled summit is a "natural result," which is part of that "positive development." The United States has meanwhile welcomed the announcement. ORF online news reports on the current "thaw" between North Korea and South Korea: After their last summit meeting in 2000, Pyongyang and Seoul have now taken another step toward a normalization of relations between North Korea and South Korea, scheduling another meeting for late August. The summit aims at further defusing the nuclear conflict between the two states that are officially still at war, and at launching a "phase of peace," ORF online news says. Welcoming this development, spokesperson for the US State Department Joanne Moore said that the US "has been welcoming and supporting the North-South dialogue for a long time, and we hope this meeting will help promote peace and security on the Korean Peninsula." The Allies Have Fallen Out ¶5. ... headlines independent provincial daily Salzburger Nachrichten, publishing an analysis of the US-Afghan relations. The provincial daily suggests that the two allies have chosen different paths on a key issue: While President Bush wants to isolate Iran, his Afghan colleague Hamid Karzai is doing everything not to jeopardize his country's relationship with Tehran. US President Bush and Afghanistan's President Karzai may be close allies, but when it comes to Iran, the two leaders are apparently unable to agree on a joint course, the daily says. For Karzai, the situation seems to be clear: "Iran supports Afghanistan in promoting the peace process and in its fight against terror and drugs," the daily quotes. Meanwhile, Karzai's key ally George Bush recently stressed at a press conference that the US would "continue to isolate Iran, as that country is up to no good." Only rarely will two allied heads of state voice their different views so openly, and only rarely is it as apparent to what extent the positions of governments are determined by individual interests, the Salzburger Nachrichten points out. Nonetheless, both Karzai and Bush are right, considering that Iran, intent on safeguarding its own interests, has for months been playing on both sides of the road in the area, according to the Salzburger Nachrichten. Kilner