SPAIN: POTENTIAL ECONOMIC BENEFIT OF EXPANDED

C O N F I D E N T I A L SECTION 01 OF 03 MADRID 000034 SIPDIS SIPDIS DEPARTMENT FOR EUR/WE, NEA/ELA E.O. 12958: DECL: 01/18/2018 TAGS: PREL ETRD LY SP SUBJECT: SPAIN: POTENTIAL ECONOMIC BENEFIT OF EXPANDED LIBYA RELATIONSHIP LAUDED AFTER QADHAFI VISIT MADRID 00000034 001.2 OF 003 Classified By: DCM Hugo Llorens for reasons 1.4 (b) and (d) ¶1. (C) SUMMARY. During Libyan leader Qadhafi's first official visit to Spain, December 15-18, MOUs were concluded on defense, economic cooperation and investment. Negotiations are still underway on a double taxation treaty. Qadhafi's visit began with a private two-day visit to Andalucia, followed by a productive official visit in Madrid that focused on Libya's renouncement of terrorism, as well as potential trade and investment opportunities. The Spanish Government estimated that Spanish trade and investment with Libya could increase by 17 billion dollars (2 billion in the defense and aeronautical areas, 5 billion in the energy sector, and 10 billion in infrastructure). The Spanish MFA, in both the meeting agenda and public statements, sought to reinforce the message that Libya was moving in the right direction since it had renounced terrorism, and that Spain was helping it stay the course. Despite the agreements signed with Spain, Qadhafi left a clear impression that Africa continues to be his main priority. END SUMMARY. ¶2. (SBU) Libyan leader Qadhafi's first visit to Spain, December 15-18, ended with the announcement of several accords and the lauded potential of significant opportunities for Spanish business interests. Apart from criticism by the United Left (IU) political party, and an initial, negative editorial in the influential daily paper El Pais, most of the press was very positive at the end of the visit. However, the initial El Pais editorial argued, "Qadhafi's visit goes against the GOS declared principles on foreign policy. No matter how succulent the economic deal might be, the effect of this contradiction for democracy in Africa is devastating." Counteracting the initial negative press, Qadhafi spoke out against terrorism during his visit, citing the commonality of interests between Spain and Libya. He also called for action to end illegal migration flows through increased investment in Africa to address economic and social problems. Qadhafi told the press he believed there was a special closeness between Libya and Spain, saying, "Spaniards who work in my country do not seem like foreigners." Qadhafi's positive statements about the need to confront terrorist threats resonated with the Spanish populace. Spanish officials used their public statements to emphasize common interests in promoting peace and security, continually hitting on the theme of rejection of violence. ¶3. (C) Apart from the news accounts about potential business opportunities and the anti-terrorism statements, Qadhafi's presence provided many picaresque descriptions of his idiosyncrasies -- his unusual clothing, the size of his huge entourage, the motorcade of over fifty vehicles, the tents staked on the grounds of his accommodations, the butchers providing fresh meat for his banquets, his fascination with the Spanish flamenco performers... Qadhafi, sporting scraggly, dyed black hair and sparse mustache and goatee, arrived in Seville on Saturday, December 15 for a personal visit in advance of his official program on December 17-18. Instead of meeting, as anticipated, with the Spanish Islamic Community and a workers' union, Sindicato de Obreros del Campo, Qadhafi invited former President Aznar and his wife, Ana Botella, to dinner. Aznar was the first world leader to visit Libya in 2003 after UN sanctions were lifted. It was expected that Qadhafi would tour historic Islamic sites in the Andalucia region or go hunting in the foothills of the Sierra Nevada. However, unexpectedly, he left Seville on Sunday to visit Marbella on the coast, where he reportedly enjoyed a flamenco performance (and paid an extravagant amount to have the performers give a repeat performance later in Madrid). MFA officials did not have any role in the weekend agenda, which was arranged and paid for by the Libyan Embassy, although Spanish government protocol officials liased with the Libyan Embassy staff. MFA contacts confided to poloff that the schedule was a planning nightmare, with the Spanish protocol staff bearing the brunt of constant changes and demands from the estimated 350-person Qadhafi entourage that filled three Afriqiyah Airline planes. While Qadhafi's appearance was disheveled and his face, in photographs, seemed swollen and with limited range of motion, MFA officials who saw him during meetings said that he was able to communicate effectively and his health appeared stable. The MFA staff after the visit seemed to give a collective sigh of relief and on balance the visit was considered a positive development. Indeed, Qadhafi refrained from making any outrageous statements and the government did not face criticism on human rights issues. In addition, the visit offered the potential for major economic and commercial MADRID 00000034 002.2 OF 003 gains and the Libyan leader left feeling pleased with the reception from his Spanish hosts. ¶4. (C) In order to counteract any criticism about Qadhafi's visit, the MFA carefully constructed an agenda focused on positive aspects of engaging with Libya and bringing it into more constructive activities. There had been concern among MFA officials that potential Qadhafi outrageous statements or behavior might open the government to strong criticism, but it seemed that Qadhafi got all the vitriol out of his system during his prior stay in Paris. MFA North Africa Deputy Director General Manual Gomez-Acebo told poloff that his team was careful to make sure that the GOS' public statements did not overstate any results from the Qadhafi visit, only alluding to potential trade and commercial ties on the horizon. The main message was that Libya was moving in the right direction since it had renounced terrorism, and that Spain was helping it stay the course. Asked why Qadhafi seemed to be relatively tame during the visit to Spain, Gomez-Acebo gave three theories. He gave most credence to the theory that Qadhafi was "enchanted" by Spain, given the affinities with Libyan culture Qadhafi would have noted during his introduction to Andalucia with its Moorish heritage and the remaining goodwill from Aznar's earlier visit to Libya. The second theory was that Qadhafi "got it out of his system" during his time in France, or that his Libyan advisors got him to tone down his statements after negative remarks by the French press corps. Third was the speculation that Qadhafi was always unpredictable, and it was just luck that his visit to Spain ended smoothly, despite all the logistical complications behind the scenes. The MFA final assessment was that despite the many benefits that could accrue to Libya through good governance and other multilateral activities, Qadhafi was still not interested in any meaningful engagement. Qadhafi left a clear impression that Africa continues to be his main priority, despite the recent stops in France and Spain. Gomez-Acebo said that Qadhafi gave Spanish interlocutors plenty of rhetoric about his self-styled leadership role for the African continent. ¶5. (SBU) In Madrid for the official program, after a military review at the Pardo Palace where the government provided accommodation, Qadhafi had lunch with King Juan Carlos, Minister of Culture Cesar Antonio Molina, Minister of Health Bernat Soria, and Madrid Mayor Alberto Ruiz-Gallardon. Qadhafi also dined with President Zapatero, Minister of Economy Pedro Solbes, Minister of Foreign Affairs Miguel Angel Moratinos and business representatives. In terms of ongoing trade and commercial projects, the Spanish construction firm Sacyr Vallehermoso has an agreement to participate in infrastructure development. Abengoa has contracts for electric cabling and water infrastructure. Indra is developing a new air traffic control system for Libya. In addition to the oil exploration and production activities of Repsol, other firms cited for potential Libyan investment include Conservas Calvo (fish canning) and Mantas Mora (wool products). Qadhafi told Javier Gomez Navarro, President of the High Council of Chambers of Commerce, that Libya sought offers for joint projects in tourism, construction, textiles, electronics, defense and hydrocarbon infrastructure. ¶6. (C) At the end of the visit, Qadhafi and Zapatero signed memoranda of understanding (MOUs) on promotion and protection of investments, economic cooperation, and defense cooperation. The two governments were not able to conclude a double taxation agreement, but Spain agreed to consider the Libyan text of its existing taxation treaties with France and Germany. In addition to the MOUs, Spain and Libya issued a political declaration in which they agree to strengthen coordination and exchange information in a number of areas, including counterterrorism and illegal migration. The political declaration specifically rejected linking terrorism to any nation, culture, or religion, and called for dialogue through initiatives such as the Alliance of Civilizations. Spain and Libya agreed to hold yearly meetings of their Ministers of Foreign Affairs and to increase bilateral contacts among other institutions (Parliament, Autonomous Communities, municipalities, universities, etc.). Both countries agreed to Armed Forces cooperation through training courses and joint exercises. The MFA said that the Libyans had pressed at the last minute for some MOUs that could be signed, after months of stalling on any negotiations broached by the Spanish Embassy in Tripoli. It was only in the week before the visit that some innocuous general agreements were finalized for signature. (Copy of Spanish text obtained from MFA has been scanned and emailed to Embassy Tripoli). MADRID 00000034 003.2 OF 003 Asked if Libyan Secretary for European Affairs Abdulati Obeidi participated in the visit or negotiated any of the documents, Gomez-Acebo said that Obeidi was not an important contact for the Spanish mission. They worked their interests directly through Qadhafi's personal staff and his "chef de cabinet" or through Musa Kusa, one of whose sons lives in Andalucia. ¶7. (SBU) In the assessment of palace watchers and protocol experts, the level of ceremony accorded to Qadhafi fell short of that accorded other dignitaries. It was noted that King Juan Carlos was gracious and polite, but seemed to have little patience for Qadhafi's quirkiness. Newspaper accounts described "an abbreviated" military review for the Libyan leader and speculated that the palace protocol reflected the ambiguity of the "brother leader's" position on any government organization chart. The Partido Popular (PP) and Partido Socialista de Obreros Espanol (PSOE) generally agreed on their assessment of the visit. PP Secretary General Angel Acebes said that Spanish foreign policy must be based on the defense of national interests and respect for Human Rights, while PSOE Secretary General Pepe Blanco said that the GOS had considered that this was the right moment to establish commercial relations that will be very positive for Spain. Spain is Libya,s third largest customer for fuel, after Italy and Germany. In 2006 Spain imported 3.7 billion euros, and exported 85 million to Libya. The Spanish Government estimated that Spanish trade and investment with Libya could increase by 17 billion dollars (2 billion in the defense and aeronautical areas, 5 billion in the energy sector, and 10 billion in infrastructure.) ¶8. (U) Tripoli minimize considered. AGUIRRE