SCENESETTER FOR CZECH PRIME MINISTER'S VISIT TO

C O N F I D E N T I A L SECTION 01 OF 03 PRAGUE 000668

SIPDIS

STATE FOR T, EUR/FO, EUR/CE

E.O. 12958: DECL: 10/19/2018
TAGS: PREL PGOV EZ
SUBJECT: SCENESETTER FOR CZECH PRIME MINISTER'S VISIT TO
WASHINGTON

Classified By: AMBASSADOR RICHARD GRABER FOR REASONS 1.4 (B) AND (D).


1. (C) SUMMARY: Czech Prime Minister Topolanek's October 29
White House meeting will come a day after his visit to
Afghanistan, where he plans to celebrate with Czech troops
the 90th anniversary of his country's founding. This will be
Topolanek's second Washington trip this year, and it promises
to be a key event for the Czech leader, who is facing a
serious domestic political crisis. Having been dealt a
sweeping electoral defeat in the October 17-18 regional and
senate elections, PM Topolanek is coming to Washington with
the goal of demonstrating -- especially to his domestic
audiences -- that he is a respected leader on the
international scene and a valued partner of the United
States. To that end, he will especially seek to highlight
during the White House meeting the Czech Republic's
achievement of visa-free status, a key goal of successive
Czech governments over the past decade. High on Topolanek's
agenda will also be missile defense, Russia, energy security,
and Czech contributions to global democracy and the war on
terror. END SUMMARY.

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Domestic Context
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2. (C) Nineteen years after the 1989 Velvet Revolution, the
Czech Republic today is a prosperous market economy, a stable
democracy, and a committed American ally. Accession to the
European Union in 2004, like accession to NATO in 1999, has
solidified and accelerated the transition away from the
country's communist past. The economy today remains
relatively strong, with significant investment flows, modern
manufacturing base, conservative banks, low unemployment, and
moderate but declining inflation. The country has so far
escaped the worst of the global financial crisis, although
the Prague stock exchange has suffered heavy losses. The
crisis has also contributed to a slow down of Czech economic
growth, largely by depressing demand within Western Europe
for Czech exports. Analysts are now forecasting that Czech
real GDP will increase about four percent in 2008 and between
two-and-half and three percent in 2009, after three years of
over six percent growth.


3. (C) Topolanek arrives in Washington having just suffered a
sweeping defeat in the country's regional and senate
elections. The poor electoral results have seriously
undermined PM Topolanek's chances at reelection as chairman
of the ruling Civic Democratic Party (ODS) during the
upcoming ODS party congress in December. If he loses the
December contest, Topolanek is unlikely to survive as prime
minister. At the same time that Topolanek is struggling to
shore up his position within his party, he has to keep on
track his government's key priorities, among them Missile
Defense and preparations for the Czech EU Presidency, which
the Czechs assume in January 2009.

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U.S.-Czech Relations
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4. (C) Our two countries enjoy excellent relations. The
Czechs are active in the war on terror, with troops in Iraq,
Afghanistan, and the Balkans. The country is active within
NATO and the EU, and generally supportive of U.S. policy
goals. This is particularly the case regarding democracy
promotion. The Czechs are our strongest partners in Europe
on Cuba, and active supporters of the democratic opposition
in Cuba. Likewise in Georgia, Belarus, Burma, Iraq and other
countries in transition, the Czech government and NGOs work
to support peaceful transformation and pass along the lessons
learned from the Czechs' own history. Prague has been home
to the U.S.-funded Radio Free Europe/Radio Liberty since
1995, and has actively supported broadcasts to countries in
Eastern Europe, Central Asia and the Middle East. It was no
coincidence that Prague hosted the conference on "Democracy
and Security," which President Bush addressed in June 2007.

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Visa Waiver
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5. (C) PM Topolanek fully appreciates the President's
personal commitment to the Visa Waiver Program's expansion.
The President's October 17 announcement of the Czech
Republic's entry into the Visa Waiver Program was widely
covered in the Czech Republic. The choice of November 17, if

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confirmed as the entry date into the Program, would add
further symbolism to this moment, since the vast majority of
Czechs continue to look with pride on what they achieved
during and since the Velvet Revolution on November 17, 1989.
During his visit to the United States, PM Topolanek will seek
to play up this much-anticipated milestone, which eliminates
the one major irritant in our otherwise positive bilateral
relationship. While not formally linked, the Czech public
has always connected the Visa Waiver Program and Missile
Defense, given that these initiatives have advanced roughly
in the same time frame.

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Missile Defense
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6. (C) For PM Topolanek, Missile Defense (MD) is about more
than preventing a ballistic missile attack on Europe. He
believes that, in addition to the Czech Republic's membership
in the EU and NATO, the Czech Republic must forge a robust
trans-Atlantic relationship, which includes a partnership
with the United States and Poland on European MD. Topolanek,
who fully appreciates the importance of U.S. engagement in
Europe, views MD as the natural next step in the U.S.-Czech
relationship. In the wake of the Russia-Georgia conflict, PM
Topolanek also views MD as critical in the context of
Russia's assertive policies toward Central Europe and former
Soviet republics. However, with up to 65 percent of Czech
public opposing MD and his own coalition divided on the
issue, Topolanek has taken a great political risk with his
forceful pro-MD stance.


7. (C) Much progress has been achieved on MD since the
President's last meeting with PM Topolanek on February 28.
Both the Ballistic Missile Defense Agreement and the Status
of Forces Agreement have been signed and are ready for
ratification by the Czech parliament. However, PM
Topolanek's current tenuous political position, as well as
his less than stable coalition with the smaller Christian
Democrats and the Czech Greens, raises new questions about
his ability to push through the ratification of the two
agreements and of the resolution on stationing U.S. troops on
Czech territory, which is required by the Czech constitution.
A strong message of partnership from his meeting with the
President will help PM Topolanek. Also important to PM
Topolanek will be a strong signal that the United States
remains fully committed to European MD and its link with
NATO. There is strong support for NATO across the Czech
political spectrum, with the exception of the Communists.
Helping PM Topolanek couch MD in the context of the overall
trans-Atlantic cooperative security relationship, as well as
in the context of the country's responsibilities as an ally,
would boost ratification chances.

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Czech EU Presidency, Russia and Energy Issues
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8. (C) The Czechs are increasingly focused on their upcoming
EU Presidency during the first half of 2009. The Czech
agenda has an overarching theme "Europe Without Borders" and
focuses on three priority areas: EU Competitiveness, Energy
Security and Sustainability, and External Relations. Within
External Relations, the Czechs plan to focus on the Western
Balkans, transatlantic relations, and the EU's Eastern
Neighborhood Policy. We share the same broad goals with the
Czechs; the challenge will be finding a way to help the
Czechs forge an EU consensus close to our shared goals. To
reaffirm the United States and the EU's strong relations, the
Czechs have begun to press for an early visit to Prague by
the next U.S. President during their six months at the EU's
helm.


9. (C) A key challenge for the Czech Presidency will
undoubtedly be the EU's policy toward Russia. Overall, the
Czechs are and will continue to be a valuable ally on Russia
within the EU. However, they are keenly aware that as the
incoming EU President, they must temper their government's
views on Russia to achieve an EU consensus. The Czechs have
been especially frustrated by the fact that bilateral
economic relations, particularly in the area of energy
security, continue to undermine efforts within the EU to
develop a strong united front vis-a-vis Russia. For example,
the Czechs support delaying negotiations on the new EU-Russia
Partnership and Cooperation Accord (PCA) until Russia
fulfills its cease-fire obligations in Georgia. In contrast,
the French are moving forward to restart the negotiations.

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10. (C) Energy security is also a key focus for PM Topolanek.
The Czechs are especially concerned about the reliability of
Russian supplies and Russian efforts to buy up Central
European energy infrastructure and assets. The Czech
Republic is dependent on Russia for 70 percent of its gas, 65
percent of its oil, and 100 percent of its nuclear fuel. The
level of Russian crude oil deliveries to the Czech Republic
has declined -- ostensibly for technical reasons -- since the
U.S. and Czech Republic signed the Ballistic Missile Defense
Agreement in early July. Russian oil deliveries were
completely cut off for one week this month. While the Czechs
continue to publicly downplay the significance of the ongoing
supply disruptions, they are becoming increasingly concerned.
Czech energy security goals include progress on a more
united and coherent EU energy strategy, support for Nabucco
and greater outreach to Caspian energy producers. To this
end, the Czechs are planning an EU-Trans-Caspian Summit,
tentatively scheduled for May 2009. Despite their support
for greater interconnectivity of the EU's gas and electricity
markets, the Czech government opposes the European
Commission's proposal to unbundle vertically-integrated
energy firms. The Czechs have suggested that we can play a
useful role by timely support of Czech energy
security-related initiatives during their presidency.

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Reliable Allies in Missions Abroad
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11. (C) PM Topolanek and his government strongly believe that
successfully completing NATO's mission in Afghanistan, along
with granting Membership Action Plan (MAP) to Georgia and
Ukraine at December's NATO Ministerial, are key to the
Alliance's future. The Czechs remain actively engaged in
U.S. and NATO-led coalitions in Iraq and Afghanistan. In
March 2008, the Czechs established the first provincial
reconstruction team (PRT) in Logar province south-east of
Kabul. Along with the approximately 500 troops in
Afghanistan, the Czechs have an infantry battalion of around
450 troops permanently deployed in Kosovo. PM Topolanek's
government has proposed to increase the total number of Czech
troops deployed abroad from approximately 900 this year to
just over 1380 in 2009, but the proposal has met with stiff
resistance from the country's political opposition. Some of
their objections are political in nature, but some are due to
recent Czech casualties suffered in Afghanistan. Again, a
strong message of appreciation for Czech contributions will
be helpful, as will an emphasis on the international
community's goals in Afghanistan and on the importance of the
mission's success to all members of NATO.

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A Strong and Valued Partnership
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12. (C) Despite its small size and at times unsettled
political scene, the Czech Republic has consistently proven
to be a reliable and active ally of the United States. The
Czechs are appreciative of the positive role the United
States has played at key moments of their history. PM
Topolanek will undoubtedly highlight the country's 90th
anniversary and point to President Woodrow Wilson's support
and efforts, which helped bring the Czechoslovak Republic
into being on October 28, 1918. The Czechs, in turn, are
proud of their contributions to security, democracy, and
freedom around the globe since 1989. For PM Topolanek, the
entry into the Visa Waiver Program and the planned MD radar
in the Czech Republic are a testament to his country's
progress and to the strong ties between our countries. The
key themes for the President's and other meetings with
Topolanek should be: highlighting the country's Visa Waiver
Program entry; recognizing Czech contributions and
partnership in promoting global democracy, freedom and
security; expressing appreciation for Czech willingness to
enhance common defense through participation in the MD
shield; and setting the stage for close U.S.-EU cooperation
under the Czech EU Presidency.
Graber