COMMERCE SECRETARY GUTIERREZ VISIT TO PRAGUE

C O N F I D E N T I A L SECTION 01 OF 04 PRAGUE 000339 SIPDIS E.O. 12958: DECL: 06/06/2018 TAGS: OVIP PGOV PREL MARR ENGR NATO PHUM CU EZ XG SUBJECT: COMMERCE SECRETARY GUTIERREZ VISIT TO PRAGUE Classified By: Charge Mary Thompson-Jones for reasons 1.4 b+d ¶1. (SBU) Summary: Commerce Secretary Gutierrez visited Prague on June 3. His program included meetings with PM Topolanek, FM Schwarzenberg, Deputy Minister of Trade and Industry Hovorka, and a group of NGOs and other activists on Cuban issues. In addition to Cuba, discussion focused on missile defense-related economic cooperation, energy security, and trade issues, including intellectual property rights protection. End Summary. -------------- PM Topolanek -------------- ¶2. (C) PM Topolanek welcomed Secretary Gutierrez and kicked off the meeting with a reference to their February 2008 meeting in Washington and the "Cambio" bracelet which he still wears. While he assured Secretary Gutierrez of the Czechs' commitment to their present policy, PM Topolanek expressed concern that his country "will be all alone in the EU." He noted that others in the EU were willing to accept the "cosmetic changes" that Raul Castro has implemented as reform and, as a result, pay less attention to human rights issues. PM Topolanek was interested in how the U.S. presidential elections may change the U.S. policy on Cuba and reiterated his suggestion, which he discussed with President Bush during his February visit to Washington, that the United States reconsider the economic embargo. Secretary Gutierrez thanked PM Topolanek for the Czech Republic's support and responded on the issue of the embargo that lifting the embargo would give Raul Castro's regime a new lease on life. He noted that the United States would continue calling attention to Cuba's human rights violations in order to raise pressure on the regime. Secretary Gutierrez also discussed briefly the U.S. Interest Section in Havana and efforts by the Cuban regime to discredit both the outgoing and incoming chiefs of mission. ¶3. (C) Both Secretary Gutierrez and PM Topolanek welcomed progress on missile defense. PM Topolanek stressed the importance of the economic benefits of missile defense, and in this regard the need to complete soon the Framework Agreement and the Reciprocal Defense Procurement Agreement. He noted that Czech companies were skeptical that they would be able to compete successfully for contracts associated with the missile defense system and the proposed radar site. He urged closer coordination on this issue and noted that there were many areas in which Czech companies and researchers could cooperate with their U.S. counterparts. PM Topolanek also discussed the last outstanding issue in the SOFA, namely taxation of U.S. contractors, noting that the compromise language proposed by the United States could make ratification of the agreement more difficult because it could be a pretext for the opposition to raise new arguments against missile defense. However, he reassured Secretary Gutierrez that the Czech government is committed to concluding the SOFA as soon as possible so that it could be signed during the possible visit of Secretary Rice in July. He noted that this timing would also fit in well with the government's ratification strategy. ¶4. (C) PM Topolanek also raised what he termed as a "more serious problem" -- energy security. He noted that he discussed his concerns regarding Russia's influence over Europe's energy supplies with Vice President Cheney during his February visit. Specifically, PM Topolanek is worried that Russia is seeking to bypass Central Europe by developing the Northstream and Southstream pipelines. He then focused on the Slovak efforts to buy back the Transpetrol pipeline, which is the Slovak portion of the Druzba pipeline carrying oil from Russia to Western Europe (septel). PM Topolanek acknowledged that "business should not be influenced by politics," but he asked that the United States at least have a conversation with the Slovak government to ensure that the pipeline does not eventually end up in Russian hands. He suggested that the Czech oil pipeline company MERO would be interested in buying Transpetrol. Secretary Gutierrez promised to contact Vice President Cheney's office to follow up on the Prime Minister's concerns. -------------- FM Schwarzenberg -------------- PRAGUE 00000339 002 OF 004 ¶5. (C) Czech Foreign Minister Karel Schwarzenberg covered a range of topics during his time with U.S. Commerce Secretary Carlos Gutierrez. With respect to human rights, Schwarzenberg referenced his growing concerns about conditions in Burma as well as the lack of access to the country, noting that the Burmese regime "makes Lukashenko look kind." On Cuba, Secretary Gutierrez inquired about Czech thinking regarding Raul Castro and the "changes" he has announced. Schwarzenberg noted that economically the country is struggling and that unlike Fidel, Raul Castro does not have the strong partnerships with such sympathetic figures as Hugo Chavez. Reiterating a common theme (and one of the few areas where our two countries agree to disagree on Cuba),Schwarzenberg emphasized that lifting the U.S. embargo would be a "slow killer of the regime" and he encouraged the USG to consider the merit of such action. On missile defense, the Foreign Minister noted that he is looking forward to Secretary Rice's planned July visit and that he hopes we will be able to sign both the BMD Agreement as well as the Status of Forces Agreement during this visit. With respect to Parliamentary approval, Schwarzenberg noted that this is "another matter entirely" and that this will become "more and more difficult" as time goes on. The Foreign Minister also referenced energy issues, with particular reference to concerns about Russian tactics. Schwarzenberg sees the Russians as seducing countries and gaining leverage through energy negotiations, which he believes we should all be watching more closely. In closing, the Secretary and Foreign Minister acknowledged the work that has been done so far to bring the Czechs into the Visa Waiver Program (VWP). Czech Ambassador to the U.S., Petr Kolar, noted that while progress has been made, he had prepared a paper for the Foreign Minister after his discussions with Ambassador Graber on June 2 highlighting what additional steps the Czechs must take in order not to fall further behind on implementation. Both sides acknowledged that we are getting close, but that we need to remain focused on resolving the remaining outstanding issues. -------------- Deputy Trade Minister -------------- ¶6. (SBU) Deputy Minister for Industry and Trade Milan Hovorka opened the discussion with Secretary Gutierrez by giving him a snapshot of the Czech economy, emphasizing strong growth (6% annually) and government commitment to economic reform in a manner that improves the business environment. Hovorka noted that since 2000 bilateral trade (for both goods and services) and investment between the U.S. and the Czech Republic has been increasing and that the government would gladly welcome additional U.S. investment. ¶7. (C) The Deputy Minister then raised the topic of economic cooperation on missile defense and introduced Mr. Jiri Hynek, President of the Defense Industry Association. Mr. Hynek stated that the Czech defense industry wanted to deliver technologies to Raytheon (the likely contractor for the planned radar site) but that the lack of a Reciprocal Defense Procurement MOU between the U.S. and the Czech Republic was a hindrance to bilateral commerce in the defense sector. Hynek explained that the missile defense radar was a sensitive topic and that the Czech defense industry could be a positive influence on public opinion but they needed successes for their companies to support it. Deputy Minister Hovorka then interjected that the Reciprocal Defense Procurement MOU would allow Czech companies to do business with other U.S. companies then just Raytheon. Hovorka also mentioned that missile defense offered Czech companies a unique opportunity to work with U.S. companies in the field of R&D and on commercializing high technology products. The Deputy Minister stated that several Czech firms that participated in the BMD seminar in January and had meetings with U.S. defense contractors were now nearing the conclusion of deals. He also positively cited the ongoing collaborative effort on missile defense-related research and development being led by Dr. Marik of Czech Technical University. ¶8. (SBU) Secretary Gutierrez asked why not having a Reciprocal Defense MOU was a problem. Mr. Hynek explained that according to his sources a U.S. aerospace firm that had invested in the Czech Republic several years ago expressly for the purpose of sourcing high-tech metal parts had recently stopped delivery because they were having difficulty supplying the parts in a timely fashion (the implication being the MOU would accelerate needed licenses and speed up delivery times). Secretary Gutierrez then said that this topic was not part of the Commerce Department,s portfolio but that he would ask the Department of Defense about the PRAGUE 00000339 003 OF 004 status of the Reciprocal Defense MOU negotiations. Deputy Minister Hovorka concluded the discussion on missile defense by stating that the Czech government was working closely with Ambassador Graber and the Embassy and that they sought a level playing field for Czech defense companies in the U.S. market. He emphasized that his government knew that missile defense was a key U.S. objective and that they wanted to make it happen. ¶9. (C) Hovorka thanked the Secretary for recognizing the progress the Czech Republic had made on IPR and noted that it is a government priority to improve IPR protection and get their name off the Section 301 Watch List. He stated that the Czech Republic wants IPR protection for its own economic development and that they were implementing their IPR Action Plan and moving forward. The Secretary pointed out that the border areas were the real challenge. The Deputy Minister acknowledged this and said that this is a serious issue and that the government was taking steps to rectify the situation. The Secretary said that he would follow up with USTR to see where things stand. ¶10. (SBU) Hovorka raised the topic of the EU Presidency which the Czechs assume on January 1, 2009. He said the Czech theme would be Europe Without Barriers, emphasizing that the focus would be on eliminating barriers to trade with all countries. Secretary Gutierrez said that there is still work to do on eliminating trade barriers and that the Transatlantic Economic Council (TEC) could institutionalize this effort. However, he said that both the U.S. and EU sides had push for results from the TEC. ¶11. (C) The conversation then shifted to the Doha Round. Deputy Minister Hovorka said that they were not so happy with the new text but that he remained cautiously optimistic if some adjustments were made. He said agriculture was a problem and that access to the new emerging markets was key, noting that Brazil, India and China have to do more. Secretary Gutierrez replied that the U.S. wants a deal but not a bad deal. Hovorka said that the Czech Republic remains committed and that high-level agreement was needed on new market openings. The Secretary said that we needed to be realistic and to go slower and do it right but that it needs to be done before the Bush Administration leaves office. ¶12. (SBU) Deputy Minister Hovorka discussed how the Czech Republic wants to diversify away from its heavy dependence on trade with the EU. He mentioned that Latin America was a priority area and that having Czech firms join with U.S. firms to enter third country markets was a goal. Secretary Gutierrez talked about the success of the U.S.-Chile FTA and how this had created an integrated supply chain that allowed for third country cooperation. He observed that the U.S. competes heavily with Asia but that it has a more complimentary trade relationship with Latin America. He told the Deputy Minister that his approach to expanding trade in Latin America through countries like Chile was a smart strategy. Secretary Gutierrez asked about the role of SMEs in the Czech economy and was told that Czech Trade (the government trade promotion agency) was working hard to support SMEs to export. Deputy Minister Hovorka mentioned that he would be traveling to the U.S. soon and that he would report to Minister Riman on the rich agenda of this bilateral discussion. Secretary Gutierrez thanked the Deputy Minister for making him feel at home and encouraged him to visit Washington. -------------- Czech NGOs and Think-tanks on Cuba -------------- ¶13. (SBU) Over lunch Secretary Gutierrez met with representatives of Czech NGOs and think tanks as well as Czechs who have gone to Cuba as couriers to meet and assist Cuban dissidents. On practical matters, Igor Blazevic of People in Need (PIN) highlighted that while our two nations have not recognized Raul Castro's reforms as anything other than a measure for publicity, there has been fairly widespread international recognition of these steps, meager as they might be, and Blazevic believes this acknowledgment has had a fairly disheartening effect on the Cuban public. The NGOs also noted that the surveillance of the dissidents and foreigners complicates their work, but this is nothing new. While discussing access to political prisoners, it was clear that while PIN is in regular contact with the families of the political prisoners arrested in March 2003, the NGOs would like to see the international community press the regime to allow Red Cross access to the prisoners. ¶14. (SBU) In response to the Secretary's inquiry as to how PRAGUE 00000339 004 OF 004 he could help support their work, the NGOs highlighted two areas. They noted that of the EU member states, very few, other than the Czech Republic, provide funds for NGOs to initiate projects related to Cuba. This has a dampening effect on what can be done on the island and by default it also means that for NGOs interested in this issue, the main source of funding is the U.S., but this also serves to undercut the credibility of these NGOs, which are then simply seen as American proxies. The NGOs encouraged the Secretary and other USG high-level officials to press EU member state government to make funding available to NGOs interested in initiating projects related to Cuba. As a second suggestion, they noted that USAID restrictions on providing cash to recipients often hampers their effectiveness in Cuba. They commented that while it is relatively easy to provide cash, which would then allow people to purchase items on the island, it is not so easy to discreetly provide objects (cameras, communication equipment, computers, etc.) given the Cuban regime's tracking of NGO movements. ThompsonJones