VZCZCXRO4167
RR RUEHLA
DE RUEHMD #0335/01 0891630
ZNR UUUUU ZZH
R 301630Z MAR 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 0448
INFO RUEHLA/AMCONSUL BARCELONA 3918

UNCLAS SECTION 01 OF 03 MADRID 000335 
 
SIPDIS 
SENSITIVE 
 
STATE FOR EUR/WE AND LMO PAUL RADEMACHER, H PLEASE PASS TO 
PAUL GROVES, OFFICE OF SENATOR JUDD GREGG 
 
E.O. 12958: N/A 
TAGS: PGOV PREL SP
SUBJECT: SCENESETTER FOR CODEL GREGG, APRIL 10-13, 2009 
 
¶1. (SBU) Embassy Madrid warmly welcomes your visit to Spain. 
U.S.-Spanish relations are strong and based on shared global 
interests, including the fight against terrorism, the 
bilateral military relationship, our association in NATO, and 
rapidly expanding economic ties.  The Spaniards you meet will 
be eager to share their assessment of bilateral relations and 
the difficult economic situation.  Most of all, they will 
seek your prognosis for Spanish-U.S. and U.S.-EU cooperation 
to ensure democracy and prosperity.  Our elections were 
closely followed here, and a strong atmosphere of goodwill 
and optimism has emerged for increasingly closer bilateral 
relations and cooperation. Spanish President Zapatero met 
March 28 with VP Biden in Chile, and it has been announced he 
will meet April 5 with President Obama in Prague. 
 
BILATERAL RELATIONS 
 
¶2. (SBU) Spain is an important friend and ally of the U.S., 
and we value its cooperation.  The fights against terrorism, 
narcotics, and human trafficking are cornerstones of our 
bilateral relationship.  Spanish troops are carrying out 
important missions in countries such as Afghanistan and 
Lebanon.  Spain has long fought a domestic terrorist threat 
from the Basque terrorist group ETA and suffered tragically 
from Islamic extremist terrorism in the 2004 Madrid train 
bombings.  We need to be innovative in finding new and 
improved avenues for bilateral and multilateral cooperation 
against the threats we both face.  Since winning a second 
term in March 2008, President Zapatero has publicly and 
privately stressed his desire to further improve bilateral 
relations.  The relationship will be of increasing importance 
when Spain takes over the EU presidency in January 2010. 
 
¶3. (SBU) Despite differences over Iraq in 2004 and more 
recently over support for an independent Kosovo, Spain values 
its relations with the U.S. and is a strong bilateral defense 
partner.  Even after withdrawing its military forces, Spain 
remained a donor to Iraq reconstruction and maintained its 
diplomatic presence there.  Spain has nearly 800 troops in 
Afghanistan and operates a PRT. Spain also allows us the use 
of two military bases that are critical transit points 
between the U.S. and Iraq and Afghanistan.  Counter-terrorism 
and law-enforcement cooperation is good.  Commercial and 
cultural relations (e.g. tourism) are also strong.  Finally, 
Spain is a leader in renewable energy technologies and has 
important investments in the U.S. in this field (e.g. wind 
and solar). There are important opportunities for cooperation 
on climate change and energy security. 
 
POLITICAL BACKGROUND 
 
¶4. (SBU) President Zapatero's center-left Spanish Socialist 
Workers Party (PSOE) is seven seats shy of a majority in the 
350 seat Congress.  Until the March 1, 2009, Basque 
elections, Zapatero could rely on gaining enough votes for a 
majority from the Basque Nationalist Party (PNV).  Now, with 
PSOE winning a majority in the Basque regional parliament, 
Zapatero must decide if he will call upon the support of the 
Partido Popular (PP) in order to elect his candidate (Paxti 
Lopez) as lehendekari or governor-equivalent.  If he does, 
however, he will likely lose the support of the PNV in the 
national parliament - just as there are increasing calls on 
the GOS to fix the worsening economic crisis.  This could 
leave the PSOE and Zapatero increasingly isolated in 
Congress.  The opposition Popular Party (PP) gained seats in 
the March 2008 general elections and retained losing 
presidential candidate Mariano Rajoy as its leader.  The PP 
has suffered internal divisions and more recently has been 
dogged by numerous corruption accusations followed 
obsessively by the Spanish media. 
 
¶5. (SBU) Following the 2008 election, Zapatero kept most of 
his key cabinet members in their posts.  Recently, however, 
there have been consistent rumors of a cabinet shakeup 
allegedly to occur within the next few months.  Miguel Angel 
Moratinos remained Minister of Foreign Affairs.  The most 
prominent change was that Carme Chacon became Spain's 
first-ever female Minister of Defense; she is described in 
the press as a possible eventual successor to Zapatero.  The 
PSOE and PP will face off again in the June European 
Parliament elections. 
 
ECONOMIC CONTEXT 
 
¶6. (SBU) Since Zapatero was re-elected a year ago, the GOS 
has faced a deepening economic slump.  After 15 years of 
rapid economic growth, the end in 2007 of a long construction 
boom and the global financial crisis have boosted 
unemployment over 14% -- the highest rate in the EU -- and 
 
MADRID 00000335  002 OF 003 
 
 
thrust the country into a recession that started last summer. 
 As of February 2009, just under 3.5 million people were 
unemployed, the highest number in many years.  The GOS 
projects that the unemployment rate will approach 16% by the 
end of 2009, while independent analysts suggest that the rate 
will be much higher.  Growth is expected to be negative for 
all of 2009 and possibly into 2010. 
 
¶7. (SBU) Over a year of worse-than-expected economic news has 
led to widespread criticism of Zapatero and his economic 
policymakers for their upbeat predictions during the 2008 
campaign and for having downplayed the economic difficulties 
long after many others were saying Spain was in a crisis. 
Spanish banks had little exposure to U.S. mortgages and were 
not caught up in the initial wave of European bank turmoil 
last year.  However, many are overly exposed to troubled 
domestic construction and real estate companies.  The Bank of 
Spain took over a savings bank on March 29, 2009, and other 
savings banks may need to merge.  The GOS claims the relative 
financial stability is a result of the central bank,s 
conservative regulation, including requiring higher loss 
provisions in good times and discouraging off-balance sheet 
holdings. 
 
¶8. (SBU) Spain has become a leading investor in the U.S. in 
recent years, with significant investment in banking, wind 
and solar power, ethanol, road construction, foods, and 
insurance.  President Zapatero made it a matter of national 
pride to participate in the November 2008 G-20 financial 
summit even though Spain is not a G-20 member.  He and other 
Spaniards argue that the size of its economy, the lessons of 
its regulations, and the importance of its banking sector in 
Latin America and elsewhere justify Spanish participation. 
He succeeded in participating as a result of the intervention 
of French President Sarkozy, and UK Prime Minister Brown has 
invited him to the April 2 London Summit.  He has spoken 
often of the importance of coordinated European and U.S. 
action in facing the crisis.  However, Spanish officials say 
they have done as much as they dare in the way of fiscal 
stimulus (the budget surplus of 2% of GDP in 2007 will be a 
deficit of around 6% this year), and Zapatero,s main focus 
for London appears to be financial regulatory measures. 
 
MILITARY AND SECURITY COOPERATION 
 
¶9. (SBU) Spanish military cooperation is important to the 
U.S. The southern Spanish bases of Rota and Moron are 
strategic hubs, midway between the U.S. and theaters of 
operation in Afghanistan and Iraq. Spain has troops in 
Lebanon (roughly 1,100), Afghanistan (780), Bosnia (260), and 
a smattering of others in various UN & EU observer missions. 
Although the ISAF mission is not popular with the Spanish 
public, Spain could do more, particularly in support of the 
elections, in providing financial support for the expansion 
of the Afghan National Army, and in the area of police 
training.  GOS officials have stressed that the solution in 
Afghanistan cannot be purely military and that a new, 
regional strategy is needed, and we hope they will welcome 
the new U.S. approach. Spain is not only a military presence 
in Afghanistan.  The Spanish PRT in Qala i Naw has undertaken 
a variety of development projects, involving potable water, 
electricity, sanitation, security, culture and education. 
According to the Spanish Development Agency (AECID), Spanish 
projects have created about 7,500 jobs for Afghans. 
 
¶10. (SBU) Spain is one of only five EU countries that have 
not recognized Kosovo's independence.  President Zapatero 
continues to deny recognition of an independent Kosovo state 
"out of political conviction" and in accordance with his 
interpretation of international law.  Spanish officials often 
point to the example they fear Kosovo's unilateral 
declaration of independence may set for Spanish separatist 
elements.  Most recently, on March 19 the government 
announced the withdrawal of the 600 Spanish troops in KFOR by 
the end of this summer, and the government suffered severe 
public and private criticism for the failure to coordinate, 
even from Spanish commentators who favored the withdrawal. 
 
¶11. (SBU) Elsewhere 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 Iran and 
missile defense. Zapatero hopes the Spanish EU Presidency, 
beginning in January 2010, will be a centerpiece of his 
second-term foreign policy efforts.  He has also promised to 
raise Spain's foreign assistance budget to 0.7 percent of GDP 
by 2012 and has stressed Spain's commitment to the 
international food security effort.  Zapatero was also a 
founder of the Alliance of Civilizations movement (now under 
UN stewardship) and had hoped President Obama would attend 
 
MADRID 00000335  003 OF 003 
 
 
the second forum of that organization during his April visit 
to Turkey.  Spain is supportive of U.S. efforts towards 
Middle East peace. Driven by the twin threats of terrorism 
and illegal immigration, Spain is also increasing its 
engagement with the countries of North and Western Africa. 
The seizure by Somali pirates of a Spanish fishing ship in 
April led to a ransom payment and sparked GOS interest in 
addressing piracy. Spain is a good customer for U.S. defense 
items and one of the largest Foreign Military Sales (FMS) 
customers in Europe, with more than $2.58 billion in 
purchases from 1997 to 2007. The Spanish military often 
favors U.S. equipment, and in recent years, Spain has made 
politically difficult decisions to buy U.S.-made combat 
systems for its S-80 submarines and F-100 frigates (Spain 
uses the AEGIS system). 
 
COUNTERTERRORISM COOPERATION 
 
¶12. (SBU) Spain is an al-Qaeda target and a critical player 
in U.S.-EU counterterrorism efforts due to its proximity to 
the Maghreb and a population that includes more than one 
million Muslims, mostly immigrants. Senior Al-Qaeda leaders 
often call for attacks to recapture the medieval "Al 
Andalus," and the Spanish enclaves of Ceuta and Melilla in 
North Africa are a fixation for Al-Qaeda in the Maghreb and 
other extremists. The March 11, 2004, train bombings killed 
191 persons and injured nearly 2,000 more, making it the 
second-deadliest terror attack in European history. The 
Spanish government considers the threat from Islamic 
terrorism to be one of its top national security priorities 
and has identified numerous Islamic extremist groups 
operating within its borders. The Spanish are actively 
pursuing Islamic extremism terrorism-related investigations 
and have scores of suspects in jail. Public opinion polling 
shows nearly three-quarters of Spaniards are worried about 
the threat of Islamic fundamentalism, more than in the U.S. 
or Europe as a whole. 
 
¶13. (SBU) Bilateral CT cooperation is strong. Spain pursues 
an aggressive agenda in law enforcement, judicial, and 
information-sharing efforts, at least with us. One example is 
the HSPD-6 agreement we signed in 2007 to facilitate the 
sharing of information between our national counterterrorism 
authorities. Spain also is a founding member of the 
Proliferation Security Initiative. Spain has hosted a number 
of Global Initiative to Combat Nuclear Terrorism (GI) events 
in 2008 and has been at the forefront of efforts to expand 
membership. Spanish officials recently have given indications 
that Madrid wants to deepen bilateral cooperation -- 
especially emergency preparedness exercises -- to combat 
nuclear terrorism. Our Consulate General in Barcelona is 
increasing its staff size as part of an inter-agency 
initiative to host a jointly-coordinated counterterrorism, 
anti-crime, and intelligence center to combat the target-rich 
environment of terrorist and criminal activities in the 
region, which has been the site of more than a dozen raids on 
suspected radical Islamists since 9/11, including the 
dismantlement in January 2008 of a cell with ties to Al-Qaeda 
that reportedly intended to attack Barcelona's subway system. 
 
PERSONAL SECURITY 
 
¶14. (U) In general, Spain is safe. However, Madrid and other 
large cities attract a large number of criminals and 
pickpockets and frequent incidents of crime of opportunity 
against the unwary do occur. It is best to carry only 
essential items, including a photocopy of your passport's 
photo page. Visitors can protect themselves against crime by 
being street-smart, alert and aware of their surroundings. 
Travelers are encouraged to review the most recent Worldwide 
Caution issued by the Department of State. As the Department 
of State continues to develop information on any potential 
security threats to Americans overseas, it shares credible 
threat information through its Consular Information Program 
documents, available on the Internet at 
http://travel/state.gov. Additional information regarding 
safety and security in Spain is available on the U.S. 
Department of State's website (www.embusa.es). 
CHACON