VZCZCXYZ0002
RR RUEHWEB

DE RUEHMD #2302/01 3621204
ZNR UUUUU ZZH
R 281204Z DEC 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 4008
INFO RUEHAK/AMEMBASSY ANKARA 0411
RUEHPG/AMEMBASSY PRAGUE 1047
RUEHRB/AMEMBASSY RABAT 6075

UNCLAS MADRID 002302 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR H - PLEASE PASS TO CODEL MARTINEZ 
 
E.O. 12958: N/A 
TAGS: OREP PREL SP
SUBJECT: SPAIN SCENESETTER FOR CODEL MARTINEZ 
 
¶1. (SBU) Summary:  I warmly welcome Codel Martinez to Madrid. 
 When you arrive, Spain will be emerging from the Holidays 
and starting to focus on what is likely to be a very 
competitive March 9 general election.  Although the media 
here prefers to focus on the allegedly frosty U.S.-Spain 
relationship that followed Spain's 2004 withdrawal from Iraq, 
your visit is an important opportunity to emphasize that our 
two countries have overriding common interests in fighting 
terrorism and organized crime, strengthening NATO and the 
Transatlantic security relationship, and in promoting the 
spread of democracy.  End summary. 
 
Counter-Terrorism and Law Enforcement 
------------------------------------- 
 
¶2. (SBU) U.S.-Spain relations were seriously damaged by 
President Zapateros's decision soon after his reelection in 
2004 to precipitously withdraw Spanish forces from Iraq. 
However, over the last several years both countries have made 
a concerted and successful effort to rebuild the relationship 
based on strong mutual interests in counter-terrorism, 
fighting narcotics trafficking and organized crime, and 
rapidly expanding economic ties.  The real bilateral story is 
found in novel initiatives such as the HSPD-6 agreement we 
signed in September to facilitate the sharing of information 
between our national counter-terrorism authorities.  Spain is 
home to a large and growing Muslim population.  The March 11, 
2004, train bombings were a shock to Spain (21 of the 
suspects were convicted here in October).  Spain remains a 
target of Islamic extremists; al-Qaeda has called for attacks 
to recapture the medieval "Al Andalus".  The Spanish are 
actively pursuing Islamic extremism terrorism-related 
investigations and have scores of suspects in jail.  Neither 
has the threat of ETA terror gone away:   two Spanish Civil 
Guard officers were murdered in France in early December by 
the Basque terrorist group. 
 
¶3. (SBU) Narcotics trafficking is another area of common 
concern.  Andean cocaine is a serious problem here, and 
Colombian trafficking organizations are active in Spain. 
Money laundering is another serious issue.  We are eager to 
find ways to increase bilateral cooperation and to encourage 
Spain to engage more aggressively with law enforcement 
authorities in key Latin American countries. 
 
Security and Diplomatic Cooperation 
----------------------------------- 
 
¶4. (SBU) Spanish military cooperation matters.  The bases of 
Rota and Moron are key hubs, midway between the U.S. and 
Afghanistan and Iraq.  U.S. planes and ships account for 
around 5,000 flights and 250 port calls a year in Spain.  The 
Spanish military is pro-U.S. and pro-NATO.  The navy employs 
the AEGIS system in its frigates and has been working for 
five years to acquire the Tomahawk missile system.  Spain is 
also interested in the Joint Strike Fighter.  We need to keep 
this military-to-military relationship strong. 
 
¶5. (SBU) Spain has 750 troops with ISAF in Afghanistan and a 
provincial reconstruction team in Badghis province.  They 
have contributed some 150 million Euros in Afghan 
reconstruction funds.  Planning is underway to allow the 
Spanish to train and equip an Afghan Army company, which we 
hope will be a prelude to the training and equipping of a 
full battalion.  On Iraq, Spain has contributed $22 million 
to the Basrah Children's Hospital and a further $28 million 
in development funding for Iraq.  Spain has nearly 1,100 
troops with UNIFIL in Lebanon and about 700 in Kosovo. 
 
¶6. (SBU) On the diplomatic front, Spain in recent years has 
more often been a follower than a leader, looking to stay 
within EU consensus on issues such as Kosovo, Iran, and 
missile defense.  It is more forward-leaning on the Middle 
East peace process, undoubtedly driven by FM Moratinos' long 
personal involvement in the issue.  Moratinos was an eager 
participant in the Annapolis Conference and helped ensure 
Spain made a robust pledge of support for the Palestinian 
Authority during the recent Paris donors' conference.  Driven 
by the twin threats of terrorism and illegal immigration, 
Spain is also increasing its engagement with the countries of 
North and Western Africa. 
 
¶7. (SBU) Spain is the second largest investor in Latin 
America (after Brazil) and wields significant influence 
there.  Spain wants strong democratic and free market 
institutions in the region.  Nevertheless, we have sharp 
differences over Cuba.  Spain's socialist government has 
opted for engagement, claiming it can encourage regime 
elements who want change.  We take every opportunity to 
remind the Spanish that the Cuban regime is only interested 
in survival and that the Cuban dissidents need and deserve 
the active and visible support of democracies everywhere.  On 
Venezuela, the socialists' early efforts at constructive 
engagement with Chavez have gone sour.  At the most recent 
Iberoamerican Summit, King Juan Carlos publicly interrupted a 
Chavez tirade about former Spanish President Aznar, telling 
the Venezuelan President to "shut up." The government is 
uncomfortably situated between Spanish companies who fear 
Chavez will move against their Venezuela interests and the 
strong public support for the King. 
 
Economy 
------- 
 
¶8. (SBU) Spain has one of the fastest growing economies in 
Europe.  In fact, the economy has grown in each of the last 
15 years, and per capita GDP passed Italy's in 2006.  In the 
last several years, a housing boom has contributed greatly to 
growth, but as elections approach, housing prices are 
stagnating, construction is slowing, and unemployment and 
inflation are staring to creep up.  U.S. investment has long 
been important to the economy (more so than bilateral trade), 
but the tables have turned.  This year, Spain has been the 
fourth largest foreign investor in the U.S., with particular 
emphasis in banking, construction, and renewable energy.  In 
the latter sector, Spain has the world's largest and third 
largest wind power firms, and Spanish firms also are active 
in U.S. solar and biofuels projects. 
 
Elections 
--------- 
 
¶9. (SBU) Spain will hold a general election March 9, and the 
campaign will just be heating up as you arrive.  The ruling 
Spanish Socialist Workers' Party (PSOE) candidate is 
President Jose Luis Rodriguez Zapatero.  Despite a strong 
economy, a budget surplus, and a variety of social spending 
initiatives, the early polls indicate a close race. 
Nevertheless, the polls also suggest Partido Popular (PP) 
candidate Mariano Rajoy has had limited success getting his 
message out.  The PSOE will run on the economy and its social 
programs.  The PP will argue the economy is softening and 
that the PSOE has made too many concessions to Basque and 
Catalan regional governments, is weak on ETA, and soft on 
illegal immigration.  Foreign affairs is unlikely to be a key 
issue, but the PSOE will remind voters it got Spain out of 
Iraq while the PP will say Spain's international prestige has 
slipped. 
 
Conclusion 
---------- 
 
¶10. (SBU) Again, I am looking forward to your visit.  While 
we want to avoid being an issue in the Spanish elections, we 
do need to remind Spain that the bilateral relationship is 
founded on strong mutual interests such as counter-terrorism 
and law enforcement.  Regardless of who wins in March, 
terrorists, drug traffickers, and alien smugglers will 
continue to see both our countries as targets.  We have much 
work to do together. 
AGUIRRE