VZCZCXYZ0017
PP RUEHWEB

DE RUEHVI #2023/01 2121143
ZNR UUUUU ZZH
P 311143Z JUL 07
FM AMEMBASSY VIENNA
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UNCLAS VIENNA 002023 
 
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SIPDIS 
 
DEPT FOR EUR/AGS, INR/EU, AND EUR/PPD FOR YVETTE SAINT-ANDRE 
 
 
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E.O. 12958: N/A 
TAGS: OPRC KPAO AU
 
SUBJECT: AUSTRIAN MEDIA HIGHLIGHTS: July 31, 2007 
 
 
BAWAG Trial Continues 
 
¶1. The ninth day of the BAWAG trial focused on the events 
immediately before the first massive losses of the bank through 
speculation deals. As before, the two antagonists of the trial, 
former BAWAG boss Helmut Elsner and investment banker Wolfgang 
Flttl, contradicted each other with regard to how much Helmut 
Elsner really knew about the investment strategy of Flttl and how 
far individual board members were informed about the course of 
events in the speculation deals. While Flttl claimed that Elsner 
knew about the overall strategy, the latter denied this with 
reference to his lack of expert knowledge in the field. 
According to ORF online, BAWAG transferred 89 million dollars to the 
Fttl company "Narrow Investments" very shortly before the latter's 
total loss of 639 million dollars in fall1998. Only one month later, 
the all of the money was gone as a consequence of the Flttl deals. 
The money was allegedly invested in Japanese government bonds, which 
Elsner and another former BAWAG director claim not to have fully 
realized. "For BAWAG, the yen was a bit far away," as Christian 
B|ttner, former director of the board of BAWAG, expressed it. ORF 
online reports that Elsner decidedly contradicted Flttl's account 
of the proceedings - maintaining instead that he had always assumed 
Flttl would diversify his investments with BAWAG money. According 
to Flttl, the heavy losses were attributable to the yen, which rose 
in fall 1998 instead of falling, as had been the general 
expectation. 
 
US Criticizes Austria after Escape of PKK Member 
 
 
¶2. The US supports Turkey against Austria in the diplomatic 
controversy about the escape of PKK co-founder Riza Altun. In an 
OSCE meeting, Turkish Representative Yusuf Buluc severely criticized 
Austria for undermining the fight against terror. The US delegation 
agreed and demanded support in the fight against the PKK. Altun 
succeeded in escaping from France to Iraq via Austria. Although he 
was detained in Korneuburg for nine days on account of a Turkish 
arrest warrant, he was set free after the Ministry of Justice 
apparently decided that the arrest warrant was politically 
motivated. [Der Standard, p. 5] 
 
Ambassador in Salzburg 
 
¶3. US Ambassador Susan McCaw attended an opera performance at the 
"Salzburger Festpiele. 
Mass circulation daily "Neue Kronenzeitung" reports that US 
Ambassador Susan McCaw and her husband Craig attended the premiere 
of "Eugen Onegin" at the Salzburger Festspiele. Tchaikovsky's 
four-hour long opera attracted many prominent fans. 
 
US Wants to Contain Iran's Influence 
 
¶4.  In view of the growing tensions with Tehran, the US is planning 
to give massive military assistance to the Arab neighbor states of 
Iran. The US strategy behind this move is to contain Iran's 
influence in the region by supporting pro-Western regimes. While 
Israel's Prime Minister Ehud Olmert showed understanding for the 
planned weapons deliveries, Iran predictably protested - claiming 
that the US wants to spread terror and fright in the Middle East. 
However, criticism also came from Germany, where leading Social and 
Christian Democrats said it was dangerous to further strain the 
already unstable situation in the region - like pouring dynamite 
into a tinderbox. 
Semi-official daily "Wiener Zeitung" reports on the new US strategy 
to surround Iran with highly-armed, pro-American states - a 
long-term strategy that will bring Saudi Arabia and the other five 
members of the Gulf Cooperation Council (GCC) a military assistance 
package worth about 20 billion dollars. Israel will also receive 
thirty billion dollars to balance out the assistance given to the 
Arab states and alleviate possible Israeli security concerns. The 
daily referred to "Washington Post" reports, according to which the 
weapons systems, which will be delivered to the Arab states, are not 
all defensive in nature. Details with regard to the weapons 
deliveries will be announced in the wake of the Middle East visit of 
US Secretary of State Rice and Secretary of Defense Gates. The 
weapons assistance package will be presented to Congress in the 
fall. In the meantime, Austrian commentators are in doubt about the 
wisdom of the US plans. Foreign affairs editor for mass circulation 
daily "Kurier" Livia Klingl has particularly strong reservations 
with regard to Saudi Arabia:  "After all, Saudi Arabia is an 
uncertain partner. If polls among Saudi Arabians are even half-way 
correct, 80 percent of its citizens, who despise their regime on 
moral grounds, would vote for the Osama bin Laden party - if free 
elections were held, which is unimaginable. The Saudi leadership is 
torn between the necessity for reforms and the fact that the vast 
majority of Saudis are extremely backward-oriented. ... Pakistan is 
the best example for the ease with which weapons can be turned 
against a US-supported government. But who ever wanted to learn from 
history?" 
 
US-Russian Talks about Missile Defense 
 
¶5. Representatives from the US and Russia met in Washington on 
Monday in order to discuss the controversial American missile 
defense plans in Central Europe. The two-day talks are headed by 
Assistant Secretary of State for European Affairs Dan Fried on the 
US side and Deputy Foreign Minister Sergej Kislijak for the 
Russians. Russian President Vladimir Putin has offered the US the 
use of radar facilities in Azerbaijan and the US has agreed to look 
into this proposal, but has also already made clear that these 
facilities cannot replace the planned deployment in Central Europe, 
but would just be an additional option. [ORF online; Der Standard, 
p. 4] 
 
 
G.B. and G.B. Demonstrate Unity 
 
¶6. Although US President George W. Bush and British Prime Minister 
Gordon Brown do not have as much in common as did the US President 
and Brown's predecessor Blair, they demonstrated unity at their 
first meeting at Bush's country resort Camp David. The main focus of 
their talks was the future of the British Iraq mission. Brown 
assured Bush that Britain would fulfill its obligations, but wanted 
to gradually transfer the responsibility for the security of the 
country to the Iraqis. 
Brown was quoted by centrist daily "Die Presse" as stating that he, 
"like Tony Blair, will work closely with the American 
administration." Brown and Bush agreed on a further tightening of 
sanctions against Iran. The two countries would push for a 
respective resolution in the Security Council in order to make the 
country abandon its nuclear program, Brown and Bush announced. The 
Briton also brought up the issue of Darfur, where more had to be 
done to end the "biggest humanitarian catastrophe of our time." 
Brown advocated sending UN troops to step up pressure for an 
armistice. Summing up the meeting between the British Prime Minister 
and the US President, "Die Presse" concludes that it is not to be 
expected that Brown will forge as close a friendship with Bush as 
his predecessor had done. The daily refers in this context to the 
strong public pressure Brown is under with regard to the Iraq issue 
with even conservative editors demanding a British withdrawal. If 
Brown wants to profit from a total withdrawal, it has to come soon, 
"Die Press" sums up. 
 
Millions of Iraqis Live in Extreme Poverty 
 
¶7. Aid organizations have warned of a humanitarian catastrophe in 
Iraq - more than eight million people are in urgent need of food, 
housing, water and medication. The main sufferers are the children, 
almost one third of whom are malnourished, according to an NGO 
report. 
According to independent daily "Der Standard," the report on the 
situation of the Iraqi population, which was compiled by Oxfam, 80 
international NGOs and 200 Iraqi assistance groups, demanded that 
donor countries and the Iraqi government to do more to support the 
"daily struggle for survival" of the people in Iraq. There is also 
criticism from US Special Envoy Stuart Bowen that reconstruction 
efforts in Iraq are too slow and the government in Baghdad was not 
sufficiently forthcoming in assuming responsibility for respective 
projects. The Envoy, who was appointed by the US Congress, looked 
into various ways in which US financial assistance, worth 44 billion 
dollars, has been used in Iraq since 2003. In his report, he 
concluded that there was corruption and the transfer of 
responsibility for reconstruction projects to the Iraqis does not 
work. 
Kilner