AMBASSADOR RAISES IPR, IRAN CONCERNS WITH NEW

C O N F I D E N T I A L SECTION 01 OF 02 MADRID 000477

SIPDIS

SIPDIS

STATE FOR EEB/ESC, EEB/TPP/IPE ISN/CPI, T, EUR/WE, NEA
TREASURY FOR IA/OEE W.LINDQUIST
STATE PASS USTR

E.O. 12958: DECL: 04/29/2013
TAGS: EFIN KIPR KNNP IR SP
SUBJECT: AMBASSADOR RAISES IPR, IRAN CONCERNS WITH NEW
TRADE MINISTER

REF: A. MADRID 465

B. MADRID 286

Classified By: Ambassador Eduardo Aguirre for reasons 1.4(b) and (d)


1. (C) Summary: On April 24, Ambassador Aguirre informed new
GOS trade minister Sebastian of Spain,s placement on the
Special 301 Watch List. Sebastian expressed disappointment
but vowed to work with the USG and set as a goal getting
Spain off the Watch List by 2009. The Ambassador reviewed
USG concerns about Iranian attempts to evade UN sanctions and
obtain nuclear capability. Sebastian emphasized that Spain
followed all EU policies on dealings with Iran. He had not
known about GOI efforts to use Iranian banks for nuclear
proliferation purposes, and he said his ministry would look
into Spanish trade with Iran. The Ambassador also raised USG
agricultural biotechnology concerns, and the two discussed
crop prices, the USAF award of an air refueling tanker
contract to EADS over Boeing, and Sebastian,s interest in
increasing knowledge of English in Spain. Although we will
need to continue explaining USG concerns on a wide range of
issues to the new minister and his staff, we expect him to be
an activist who will be responsive to our concerns. End
Summary.


2. (U) Ambassador Aguirre, accompanied by DCM and econcouns,
paid an introductory call on new Minister of Industry,
Tourism, and Commerce Miguel Sebastian on April 24.
Sebastian was accompanied by his chief of staff and deputy
chief of staff. Sebastian is a former head of the presidency
economic office who is close to President Zapatero. He has
little experience with IPR or Iran but is likely to be
responsive to USG concerns. Post is sending biographic
information septel.

IPR
---

3. (SBU) The Ambassador informed Sebastian that Spain would
be on the 2008 Special 301 Watch List that would be announced
the following day, and he explained the Special 301 process
to the Minister. He emphasized that the primary USG concern
was over Internet downloads. He noted the Justice
Ministry,s 2006 circular that had given many Spaniards the
incorrect impression that downloading of copyrighted material
was legal. He also cited encorcement problems with
prosecutors and especially judges.


4. (SBU) The Ambassador said he had explained USG IPR
concerns to three trade ministers, two culture ministers, one
justice minister, and Sebastian,s successor as head of the
presidency economic office, but that the problems continued.
He added that one important difference between Spain and
France (note: which is not on the Watch List) was the
leadership shown by the French government that we have not
seen in Spain. He noted that the Motion Picture Association
(MPA) was so concerned about Spain that it was opening an
office here and that its representative had expressed
concerns about his lack of access to GOS policymakers. He
also pointed out that Sebastian had said earlier in the
meeting that Spain was moving away from an economy based on
construction; if Spain could not protect intellectual
property, the government,s effort to move the economy into
new industries would not work.


5. (SBU) Sebastian expressed disappointment with the decision
but acknowledged the seriousness of Spain,s IPR problem. He
noted that, even if there were no direct economic sanctions
associated with Watch List placement, it was something that
investors certainly would take into account. He added that
Spain,s cultural sector was also concerned over deficiencies
in IP protection. He said the GOS wanted to pass a new
intellectual property law during this term. He did not want
to blame only internet service providers for illegal
downloads, but he emphasized that they would have to
cooperate. He said that the same mentality that led many
Spaniards to drink and drive or to ride motorcycles without
helmets led many to view favorably illicit downloads.
Sebastian promised that his ministry would work with the USG,
and he set a goal of getting Spain off the Watch List by 2009.

Iran
--------------

6. (C) The Ambassador noted that Deputy Treasury Secretary
Kimmitt had raised concerns over Iran with Spanish banks
during his March visit (ref b),particularly with those banks
that wanted to do business in the U.S. He noted that the GOI

MADRID 00000477 002 OF 002


was trying to buy whatever it could despite UN sanctions, and
he said the banks had understood USG concerns. On 4/21 the
Ambassador had expressed similar concerns to the head of
Spain,s export credit insurance bank, CESCE (ref c),which
has Iran as one of its top markets. He wanted to make sure
that CESCE,s main shareholders (Note: the GOS, which owns
50.25 percent, and the BBVA and Santander banks) understood
USG concerns about Spanish trade with Iran. He also wanted
to make sure that the GOS thoroughly understood the items
Spanish companies were trading with Iran.


7. (C) Sebastian emphasized that Spain accepted and followed
EU policies on dealings with Iran. He said he could inform
banks of the USG,s concern. He had not known about GOI
efforts to use Iranian banks for nuclear proliferation
purposes, and he said his ministry would look into Spanish
trade with Iran. (Comment: Post has sent Sebastian,s chief
of staff information about Iranian banks, illicit
activities. The Ministry,s Director General for Trade and
Investment is on CESCE,s board. We expect that position to
be filled in the next week, and we will seek an opportunity
to reiterate our concern over CESCE's dealings with Iran.)

Renewable Energy
--------------

8. (U) The Ambassador informed Sebastian of the amount of
cooperation between the USG and the GOS on renewable energy.
He described the government/business mission to Washington
and Colorado that post had organized with Sebastian,s
ministry and its focus on research. He said that one result
of the mission had been an interest by previous ministry
officials in replicating the U.S. National Renewable Energy
Laboratory in Spain. He also noted upcoming energy-related
events such as a September 29-30 conference being organized
by the American Chamber of Commerce at which State Under
Secretary Dobriansky would speak; Minister Sebastian

SIPDIS
expressed interest in participating. The DCM emphasized the
Administration,s focus on research, saying the U.S. had
spent $36 billion on research related to clean energy and
climate change.

Biotech, Airbus, and English
--------------

9. (U) The Ambassador raised USG interest in encouraging
science-based decisions on agricultural biotechnology and
noted that current high crop prices made this a favorable
time for expanding use of high-yield biotech crops.
Sebastian expressed concern about high agricultural commodity
prices. The Ambassador informed the minister of U.S. Energy
Department funding of Spanish company Abengoa to build a
biofuels plant that would make celulosic ethanol rather than
using food crops. Minister Sebastian welcomed the recent Air
Force decision to award a multi-billion-dollar contract to
build a new generation of in-flight refueling tankers to
Airbus rather than Boeing; the Ambassador explained the
appeals process and insisted that the Administration had
ensured that the decision to award the contract was based
only on the technical merits of the competing proposals.
Sebastian also reminded the Ambassador of his interest in
increasing the number of Spaniards who spoke English and said
that although it was not his ministry,s responsibility, the
GOS needed to take action.

Comment
--------------

10. (C) Sebastian has replaced nearly all of his ministry,s
senior staff except the secretary of state dealing with
intellectual property, Francisco Ros. Although we will need
to continue explaining to Sebastian and his advisors USG
concerns on a wide range of issues, we expect that he will be
an active and responsive minister. One sign of his interest
in quick action came when he noted that the first year of a
government was the best time to get things done. He showed
determination to improve Spain,s intellectual property
protection, and we will work with his ministry to follow up
on this and other issues.
AGUIRRE