DAS BRYZA'S APRIL 10-12 VISIT TO GREECE

C O N F I D E N T I A L SECTION 01 OF 06 ATHENS 000576 SIPDIS E.O. 12958: DECL: 04/12/2018 TAGS: PREL ENRG EPET GR SUBJECT: DAS BRYZA'S APRIL 10-12 VISIT TO GREECE Classified By: Ambassador Daniel Speckhard for Reasons 1.4 (b,d) ¶1. (C) Summary. Arriving in the wake of the Bucharest Summit, EUR DAS Bryza found his Greek counterparts expressing a strong commitment to work with the United States on a range of issues including, but not limited to, the Macedonia name issue. On Macedonia, his counterparts promised that Greece would work towards a solution, but as ONE interlocutor told him, "in your dealings with us, please do not treat your old ally Greece and FYROM as equals." GoG officials spoke uniformly of Greece's effort to seek diversification of natural gas supplies, promising full commitment to the TGI pipeline. While Bryza did not try to convince them to drop support for Gazprom's South Stream proposal, he urged them to make TGI their state's top energy priority, and to do so publicly. Greek officials expressed no clarity on whether and how Greece would recognize Kosovo, particularly in view of uncertain Serbian elections. Discussions of Cyprus ge`h ONE minister calle President Sioufas, Foreign Affairs Minister Bakoyannis, Deputy Ministers of Foreign Affairs Valynakis and Doucas, Foreign Affairs Secretary General for International Economic Affairs Skylakakis, Minister of Development Folias, Deputy Diplomatic Advisor to the P.M. Bitsios, PASOK Foreign Affairs Advisor Dolis and National Gas Company of Greece (DEPA) President Papageorgiou. End Summary. - - - - - - - - - - - - - - - - - - - - The Name Issue: Alliance Solidarity Key; Ready to Move Forward - - - - - - - - - - - - - - - - - - - - ¶2. (C) On Macedonia, FonMin Bakoyannis said that it is key for Greece that Bucharest had ended with a display of Alliance solidarity, and she emphasized that Greece remains committed to continuing negotiations aimed at a final resolution. She lamented, however, that "Skopje has a long way to go." With an eye towards the political stand-off in Skopje over elections, Bakoyannis noted that Greece would reject at this point any name offer by Gruevski that was predicated on the results of upcoming elections. Moreover, she noted the paramount importance to Greece that any solution be truly final, and invoked the resultant need for a Security Council resolution to seal the deal. "Anything else will not solve the irredentist logic, which we want to bury once and for all." Bakoyannis claimed that she was in a delicate position: while she wanted to address the issue in a forward-leaning, logical way, she was hearing "incredible things" in Parliament that highlighted the popular passions associated with the issue. Nonetheless, she stated outright that she was ready to go wherever asked to continue talks: "I'll go to Geneva, New York, Skopje, or stay here. All are ok." ¶3. (C) For his part, Deputy FonMin Valynakis demonstrated a certain amount of showmanship, handing Bryza a picture of the Macedonian PM laying a wreath on a map of an enlarged "united" Macedonia. He also read a quote from a 1944 Circular Airgram from then-Secretary of State Stettinius that characterized any talk of a "Macedonian nation or Fatherland" as "unjustified demagoguery" and a "possible cloak for aggressive intentions against Greece." Valynakis could not concede that Skopje had demonstrated flexibility in accepting Nimetz,s "Republic of Macedonia (Skopje)" proposal, discounting "parenthesis and dashes" as unacceptable. He urged the U.S. and others to send positive messages to Skopje for genuine compromise through UN auspices. He furthermore reiterated that Greece's strategic goal was to see Skopje integrated into the EU and NATO, but that Greece took the good neighborly relations criteria very seriously. ¶4. (C) Lastly, Deputy PM Diplomatic Advisor Bitsios emphasized that, for him, the basic issue with the name was that ONE part of historical Macedonia could not be allowed to "claim the whole." He said any solution must take account of Greece's key three principles: the final solution must lead to "a name that makes a difference," ONE that will be used "for all international relations", and ONE that must be enshrined in the ROM's constitution. "This is the best way to enforce any final solution." Bitsios discounted the chance that political instability in the Republic of Macedonia could lead to that country's break up. Lastly, he urged the U.S. not to treat "Skopjeans" and Greeks as equals in view of the tremendous shared history of the American and Greek people. ¶5. (C) DAS Bryza underlined that the UN was and remained in the lead on the name issue: the USG would, however, help whenever and wherever possible. "We were invited by you, the Macedonians, and Matt Nimetz to assist, and we will." He conveyed the impressions of US NATO Ambassador Nuland from her April 9 visit to Skopje that, after Bucharest, the Macedonian officials were ready to find an acceptable compromise. "They realize they have to move, and in fact, have moved by apparently accepting Nimetz' last proposal." Bryza urged Greece to take advantage of this opening. - - - - - - - - - - - - - - - - - - - - Kosovo: No Clear Way Forward for Greece - - - - - - - - - - - - - - - - - - - - ¶6. (C) Greek officials did not outline a clear path towards Greek recognition of Kosovo. Bakoyannis noted that the GoG had had a "very hard time in Parliament -- the political parties want Greece out of Kosovo and Afghanistan." Personally, she felt that "UNMIK is hugely important, as is the Greek role within it. Nonetheless I see a raft of problems, such as the legal basis for UNMIK moving into Northern Kosovo." She linked the parlous political situation in Serbia with the GoG's wait-and-see attitude vis-a-vis Kosovo. "If Tadic wins the elections, ok, we can make positive moves -- we would consider recognition by UNGA. If someone else wins, that's a problem." She was in close contact with 5-6 like-minded European allies (Spain, etc), and they were all looking for a "good way forward" that would "keep Serbia calm." She highlighted a problem with the Dutch Parliament, which wanted to predicate an EU SAA on extradition of Mladic, a position she found unworkable. ¶7. (C) Bryza reminded Bakoyannis of the continuing U.S. commitment to Kosovo. He was concerned by EU Foreign Affairs Commissioner Solana's recent statements and attitude, which we thought made the EU look a bit desperate on the issue. It is important that we not allow ourselves to seem too eager to base our actions on hoped-for Serbian good will as we believe this could end up being counterproductive. Nonetheless, Serbian integration into Euroatlantic institutions remains a cornerstone of our policy for Europe. - - - - - - - - - Cyprus and Turkey - - - - - - - - - ¶8. (C) Bryza's discussions about Cyprus quickly evolved into a broader discussion of the recent AKP court case and the evolution of Turkish democracy. All of Bryza's interlocutors showed themselves to be strongly supportive of Turkey's European aspirations and equally worried that the AKP court case could have a fundamental and damaging impact on this. Bakoyannis noted her renewed hopefulness on Cyprus in the wake of the Ledra Street opening and the restarting of the July 8 framework process, but said "we simply do not know what Turkey aims for in Cyprus." In perhaps the most intQmments, and ones that rrealities and not grounded in the past. He explained that, now that a confident Cyprus had successfully integrated into the EU, security issues facing the island had changed and it was time to start viewing security and Turkey from a different, updated angle. In short, Valynakis did not see how the concept of Turkey as a Guarantor Power made any sense in the new, post-EU accession world. Bryza cautioned Valynakis against deploying opposition to the 1960 Treaty of Guarantee at this point, just as settlement talks are about to recommence; such a move at this point would poison the atmosphere and risk a new breakdown in a process that is just gathering steam. - - - - - - - - - - - - - - - - - - - Energy: We're Committed to Diversity through TGI (and South Stream) - - - - - - - - - - - - - - - - - - - ¶9. (C) Minister of Development Folias, FonMin Bakoyannis and other Greek officials repeatedly and emphatically stressed their government's firm commitment to assuring energy security through multiple routes and sources of energy. Bakoyannis said "diversification is our policy," and Folias emphasized that it was his "deep-rooted principle to have diversity of energy supplies." Folias told Bryza he was dedicated to achieving TGI through action and not just words. "If I have to travel to Baku every six months to make TGI happen, I will do so." Folias had conducted a very positive visit to Baku in March, where he found the Azerbaijanis clearly committed to making TGI work. He saiQhe wanted to purchase an additional 1 bcm from Baku asap; this, combined with Greek Algerian purchases, would bring the Russian share of Greek gas imports from 80% to below 60%. Bakoyannis noted that she had told Russian Deputy Foreign Minister Titov earlier in the day that Greece was dedicated to completing TGI. (Note: As well as participating in South Stream. End note). She informed DAS Bryza that, while Folias has the lead on energy issues, she would be as supportive as possible. ¶10. (C) All interlocutors expressed concern over Turkey's commitment to TGI. Folias said it was essential that Turkey serve "as a transit country and not a reseller." Both he and Bakoyannis expressed concern over the ramifications of Turkey's gas cutoff to Greece in the winter, although Folias noted that the situation had improved tremendously: "The flow from Turkey is up to the level it should be, and the quality of the gas we are receiving has improved." He moreover admitted that Turkey had had the contractual right to reduce flows of gas to Greece as a result of its own gas shortfall. Folias said he was about to invite his counterparts from Italy, Turkey and Azerbaijan to meet in Athens in order to help resolve outstanding TGI issues, including the Turkish transit dispute. Parliament President Sioufas also noted the importance of resolving the Turkey transit issue, but was emphatic in his appreciation for the support shown by Turkish Energy Minister Guler for TGI. "In order to sign the Turkey-Greece-Italy gas inter-governmental agreement, he traveled five hours from his electoral district to meet with me, which he did for six hours. Then he drove back to his district the same day. And he did all this four days before the national elections." ¶11. (C) DAS Bryza's GoG interlocutors told him that Greece wanted to participate in South Stream, but put this into the context of Greece's search for more gas from whatever source. "We need more gas, and it is essential that supply meet demand," Folias emphasized. He noted that a Greek technical group had recently returned from discussions in Moscow over the modalities of South Stream, and said that another Russian technical group "might come to Athens soon." FonMin Bakoyannis said that "On South Stream, Greece wants diversification -- I have been to Algeria, my Deputy Minister has been to Egypt. Our Government has told our shippers to build LNG tankers..." ¶12. (C) DEPA President Papageorgiou told Bryza that Gazprom was playing hardball in its negotiations with the GOG. He urged Bryza to use his meeting with Folias to stiffen Folias' backbone. He noted that Gazprm was predicating extension of the 2016 gas areement on reduced DEPA offtake of Gazprom gas in order to allow Gazprom to begin marketing its gas in Greece directly. Gazprom was also working through its Italian partner ENI to enter the Greek market through purchasing ONE of the new regional gas companies (EPAs) that DEPA was in the process of establishing. Gazprom was also likely to try to bid for a controlling share of DEPA, once the GoG privatized the firm. Papageorgiou stressed that, from his optic, Gazprom wanted to take over all aspects of Europe's gas system -- from upstream production, through transit pipelines, to downstream sales. It was an avaricious, monopolistic, all-controlling monster that needed to be countered. ¶13. (C) DAS Bryza welcomed the Greek commitment to diversity and to TGI in particular. He noted that the USG was "quite confident" that Azerbaijan had enough gas in the ground for TGI, the first phase of Nabucco, and perhaps for all of Nabucco. The challenge was to secure sufficient volumes of Azeri gas when needed by TGI's and Nabucco's investors. He admitted that dealing with Azerbaijan could be complex: "The Azeris would like to welcome you into their bazaar, but they want you to beg them to buy their carpet." This led the GOAJ to send unclear signals that Bryza urged the Greeks not to misconstrue as a lack of commitment to the Southern Corridor. ¶14. (C) On Turkey's role in the Southern Corridor, Bryza noted that a corner had been turned. Once Azerbaijan's supply agreements expired April 1, the GOAJ had felt in a position to begin negotiations over both the cost of future gas sales to Turkey and transit arrangements in earnest. Most importantly, both national leaders were now personally involved in the negotiations. He noted that the best way for Greece to assure the flow of gas through Turkey was to make certain it negotiated smart contracts with Turkey. "Turkey will uphold whatever you negotiate." ¶15. (C) Bryza made it clear that the USG did not seek a new Cold War with Russia, and recognized absolutely that Russian gas would remain the largest source of Europe's future gas needs. This, however, did not undercut the need for diversity, but rather strengthened it. While he recognized the GOG's commitment to TGI, he repeatedly stressed that South Stream was aimed at undermining it, and Greece needed to be careful in sequencing the two pipelines. Making certain that TGI was completed first would put Greece in a far superior negotiating position with Russia over South Stream, while doing the opposite -- giving South Stream priority -- could well scare off both the Azerbaijani Government as well as potential investors from TGI. In response to a question from Bitsios as to the cost to Greece of signing agreements now without content on South Stream, Bryza admitted there did not seem to be a cost. The problem was that, if TGI was thrown off track by South Stream, Greece and its consumers would end up paying a higher cost for gas supplies in the future. Bryza told Folias that the Bulgarian Government had kept a small number of basic principles in mind when negotiating over South Stream: 1. All South Stream contracts must contain ship-or-pay clauses; 2. Contracts should include an explanation of the source of South Stream's gas; 3. Contracts should show that a reasonable amount of rate-of-return would be realized on any investment in a reasonable time frame; 4. Host countries should own a majority of South Stream pipelines transiting their territory; and 5. third-party access provisions must be protected. - - - - - - - ECCC Issues - - - - - - - ¶16. (C) MFA Secretary General Skylakakis expressed his strong commitment to the Economic and Commercial Cooperation Commission (ECCC) process in his meeting with DAS Bryza. He called the Commission a "useful tool" that allowed the two sides to discuss the economic side of the relationship on a regular basis. He said he was looking forward to holding the next ECCC on June 19 in Washington, and promised to do whatever he could "to have as good a meeting as possible." Skylakakis and Bryza went through the entire ECCC agenda: a. IPR. Skylakakis said that Foreign Minister Bakoyannis had finalized creation of the IPR Interministerial Committee under Skylakakis' leadership and that its creation had been officially published in the Government's Gazette. He noted that the Ministry of Culture's Copyright Office (OPI) had spent $1 million in the creation of an information portal on good IPR practices. The Special Tax Police (YPEE) had now completed the process of sending a fourth tranche of letters to 5000 companies with 20-39 employees, asking the firms to supply software licenses or risk a detailed tax audit. The last letter had been sent at the end of January, and firms had until the end of February to respond. YPEE was now collating the responses and would decide which firms to audit. Skylakakis noted that 92% of large companies (i.e. those firms who received YPEE's first tranche of letters in 2006) had responded in a satisfactory way. "I promise that the Business Software Alliance (BSA) will see increased software sales as a result of our efforts. This is the first time that the Greek state has done this." Skylakakis said that new Greek laws finally allowed municipalities immediately to destroy seized counterfeit/pirated goods estimated to posses any value. In the past, he admitted, the municipalities did not have the authority to do this and were instead forced to auction off such goods. Skylakakis raised the new, interagency confiscation teams, which had started work in January. "This is moving too slowly; I admit that even I am not satisfied, and promise new energy will be given to this task this month." He noted that, as a former head of the Athens municipal police, he recognized that this task was a particularly challenging ONE for municipal authorities, but promised to seek results. "I will also use the new committee to get results." Skylakakis highlighted the fact that, in Greece, the police are viewed as the "evildoers", not those who break the law. Skylakakis ended his presentation by urging Bryza not to support a Special 301 listing this year, as that would just feed into a sense that, after the Bucharest Summit, the USG would try to find whatever means it could to punish Greece. He understood the two issues had no relation to each other, but the Greek public would not understand. Bryza noted that this was an impressive list of achievements. He explained that the 301 process involved many agencies, who were hearing a tremendous amount of information from U.S. industry, most of which was negative. He said the June 19 ECCC meeting represented a unique opportunity for the GOG to present its views directly to the USG's interagency community. b. Commercial Issues. i. Procurement: Skylakakis noted that Greek implementation of European procurement law had already had a very positive effect on the bidding process. Now only victorious companies had to supply the large amount of qualification documents. He admitted that, as ministries learned how the new law worked, procurement was lagging, but this was a universal problem not limited to U.S. bidders. Skylakakis also promised to urge the Ministry of Development to fulfill its commitment to the Embassy to publish by May a list of alternative documents that can be presented by U.S. bidders, which the GoG will accept as fulfilling Greek tendering procedures. ii. Hospital Debt. Skylakakis said he had received some promises from the Ministries of HEALTH and of Finance relating to the resolution of the hospital debt issue. "I am not going to present these to you because they are too vague, and I want to receive them from a high level. I will have more news for you in June." iii. Trade and Investment. Skylakakis said the key issue from the Greek point of view was the lack of U.S. trade and investment in Greece. "You are losing a tremendous opportunity -- access to a market of more than 200 million Euro/year at a time when your currency is particularly competitive." He hoped to be able to discuss this issue on June 19, as well as during the private sector event associated with the ECCC on June 20. iv. Money Laundering/Terror Finance. Skylakakis said the GoG would ratify the Third European Community Directive on Money Laundering/Terror Finance in May. - - - - - - - - - - Visa Waiver Program - - - - - - - - - - ¶17. (C) Deputy Foreign Minister Valynakis pressed Bryza on the Visa Waiver Program, noting that upon completion of their meeting he was to testify before Parliament on the issue. Valynakis stressed that the GoG was committed to solving outstanding MOU technical issues in order to secure Visa Waiver status. He noted that while Foreign Minister Bakoyannis was determined to see the MOU to completion, Greek public opinion complicated matters, and Bakoyannis needed our assistance. Valynakis continued to press Bryza and the Ambassador to show the "political will to help us," noting that success would represent a victory for the U.S. image in Greece. Parliament President Sioufas echoed Valynakis' argumentation, and told Bryza passionately that Greece, a NATO ally for 55 years, whose citizens had repeatedly shed blood with Americans in twentieth century conflicts, should be a member of the VWP. "All we want is proper -- not preferential -- treatment." He offered whatever help he could provide for Greece to enter the program. ¶18. (C) The Ambassador explained that he expected to receive a revised MOU from the GoG shortly, and next steps would largely depend upon suggested MOU modifications -- minor edits could be addressed expeditiously but more significant modifications could result in Greece's delayed entry through an EU-wide exercise. - - - - - - - - - - Business with Syria - - - - - - - - - - ¶19. (C) DAS Bryza expressed surprise to Deputy Foreign Minister Doucas over his recent visit to that country. Doucas indicated that he believes it is important to engage Syrians so they don't move more towards Iran. Bryza said that was interesting, but ONE of the key issues for the USG was the issue of foreign fighters moving through Syria to Iraq adding to Iraq's instability. Doukas agreed this was a problem, but said that the Syrian ministers with whom he met are interested in engaging with the West. Doukas and Bryza agreed that one area of possible opportunity for Greece is to work with the Government of Iraq in order to urge moving more quickly in developing the Akkas gas field. Bryza said he needed to focus on Akkas once back in Washington, but said he saw potential to Greece's support here. SPECKHARD