VZCZCXRO0504
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHLA #0032/01 0751144
ZNR UUUUU ZZH
P 161144Z MAR 09
FM AMCONSUL BARCELONA
TO RUEHC/SECSTATE WASHDC PRIORITY 1106
INFO RUEHMD/AMEMBASSY MADRID PRIORITY 1065
RUEHFR/AMEMBASSY PARIS PRIORITY 0006
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEANQT/FINCEN VIENNA VA
RUEHLA/AMCONSUL BARCELONA 1285

UNCLAS SECTION 01 OF 02 BARCELONA 000032 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE (SAMSON/ZERDECKI); STATE ALSO FOR EB 
 
E.O. 12958: N/A 
TAGS: EFIN ETRD OECD PGOV PREL SP AN
SUBJECT: ANDORRA: FRENCH PRESSURE LEADS ANDORRA TO REDUCE BANK 
SECRECY, PM TO ABANDON RE-ELECTION RACE 
 
BARCELONA 00000032  001.2 OF 002 
 
 
¶1. (SBU) SUMMARY:   Andorran Cap de Govern (Prime 
Minister-equivalent) Albert Pintat announced he was stepping 
down as the leader of his party amid accusations by French 
President Nicolas Sarkozy that the Andorran Government had 
failed to sufficiently modify the country's bank laws on 
transparency and get it off the OECD's tax haven blacklist. 
Sarkozy accused the Andorrans of preventing him from being able 
to effectively participate at the upcoming London economic 
summit because his position as co-head of state of Andorra was 
harming his credibility.  Pintat, the clear frontrunner for head 
of government in upcoming national elections, announced March 12 
that Andorra was negotiating with the OECD to draft new bank 
secrecy legislation that he pledged would be passed by November 
¶2009.  He simultaneously said he would step down as party leader 
and devote his time to full implementation of the law.  The spat 
seriously compromised the position of Pintat's Liberal Party 
(PLA), which narrowly won power in the last election.  PLA is on 
the defensive, and will be scrambling to find a new leader ahead 
of the upcoming April 26 general elections.  The opposition 
Social Democratic party is now poised to win control of the next 
government for the first time ever.  End Summary. 
Sarkozy Accusation Against Andorra 
 
¶2. (SBU) Harsh words and cries of betrayal flew between Andorra 
and France last week when French President Nicolas Sarkozy went 
on TF1, French national television, and accused Andorra of 
stalling on legislation that would get the country off the 
OECD's tax haven blacklist.  The issue of bank transparency and 
secrecy is expected to be one of several topics of discussion by 
world leaders at the upcoming London economic summit and was 
discussed at this weekend's preparatory meeting of finance 
ministers.  (Note:  Through a series of accords dating back to 
the 13th century, the French President along with the Spanish 
Bishop of Seu de Urgell are the co-Princes - nominal heads of 
State - of Andorra.  End Note.)  Sarkozy implied that his 
credibility would be on the line as the head of state of a 
country whose banking laws contravened international norms.  As 
the London summit approaches, Spanish President Zapatero also 
has called for the end of tax havens, but press reports do not 
suggest that he played a role in the Andorran decision. 
 
¶3. (SBU) Sarkozy reportedly gave the Andorran Government a 
deadline to remove itself from the list of tax havens.  He 
suggested Andorra implement a temporary law that would assure 
the exchange of information in accordance with the standards set 
forth by the OECD. The French President warned Andorra of very 
serious actions that could be taken against the tiny mountainous 
country if it did not change its ways. 
 
GOA Reduces Bank Secrecy 
 
¶4. (SBU)   Sarkozy's accusations quickly spurred a normally slow 
moving Andorran government to respond immediately.  On March 12, 
Andorran Cap de Govern (Prime Minster-equivalent) Albert Pintat 
committed the next Andorran government to passing legislation 
that would remove the country from the OECD's list.  According 
to a press report that post was unable to confirm, Andorra's 
government posted a statement on its Web site declaring that 
Pintat had signed an accord with OECD officials in Paris in 
which the country pledged to abandon its bank secrecy law.  In a 
separate statement, Pintat assured the OECD he would personally 
see to it that the new legislation was approved by September 1 
and passed by November 15, 2009. Under the new law, Andorra 
would divulge information to other governments about companies 
that operate within its borders that are suspected of financial 
fraud.  Andorra also pledged to sign its first bilateral 
agreements on financial information exchange with France, Spain, 
Portugal and Luxembourg.  Nearly 80% of the deposits in Andorran 
banks are foreign, mostly French and Spanish. 
 
Accusations Roil Parliamentary Elections 
 
¶5. (SBU) Sarkozy's allegations had a chilling effect on 
Andorra's scheduled April 26 parliamentary elections.   Liberal 
Party of Andorra (PLA) leader Albert Pintat, who was expected to 
seek another four-year parliamentary term, and continue as Cap 
de Govern, declined to seek re-election, leaving the field 
unexpectedly wide open.  His announcement leaves the ruling 
party scrambling to find a replacement, and re-energizes the 
Social Democratic Party (PS), which came ever so close to 
winning control of the government in the last general election. 
Pintat, for his part, will reportedly step down to devote time 
to getting Andorra off the OECD blacklist, something he claimed 
he could not do while campaigning for office.  He added that 
 
BARCELONA 00000032  002.2 OF 002 
 
 
Andorra was already well on its way to modifying its laws 
appropriately.  Behind the scenes, the PLA was stung by the 
public allegations from the French president. 
 
¶6. (SBU) COMMENT:  French President Sarkozy not only appears to 
have caught Andorran officials off guard, but has turned the 
usually quiet world of Andorran politics upside down.  The 
Andorran government, which is much more used to years of 
deliberation before approving often vital legislation, was 
forced into quick action to avoid becoming the next 
international poster child for tax and banking shenanigans.  The 
announcement of the accord with the OECD could go a long way 
towards satisfying the international community and allowing 
Sarkozy to continue pressing without embarrassment at the London 
summit for measures against tax havens. 
 
¶7. (SBU) Comment cont. Much less clear is what will happen 
politically in Andorra when the smoke clears.  Opposition Social 
Democratic (PS) party leaders joined smaller parties in circling 
the wagons around the Andorran government in a show of unity 
against a perceived slight by the French.  The scheduled April 
26 elections all but assure that show of unity will not last. 
The ruling PLA has suffered a serious blow to its image in this 
dustup, and the PS is now closer than ever to making history and 
winning control of the next government. End Comment. 
ROBINSON