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C O N F I D E N T I A L SECTION 01 OF 05 PRAGUE 000153 
 
SIPDIS 
 
FOR THE PRESIDENT FROM CHARGE D'AFFAIRES MARY THOMPSON-JONES 
 
E.O. 12958: DECL: 03/19/2019 
TAGS: OVIP OBAMA PREL PGOV ECON ENRG EUN MARR SENV
EZ, RS, AF 
SUBJECT: SCENESETTER FOR THE PRESIDENT'S PRAGUE VISIT 
 
Classified By: Charge d' Affaires, a. i., Mary Thompson-Jones, for reas 
ons 1.4 (b) and (d). 
 
Mr. President: 
 
¶1. (C) Summary/overview:  We warmly welcome your visit to 
Prague. Twenty years after the Velvet Revolution, ten years 
after joining NATO, and five years after joining the European 
Union, your visit during the Czech Republic,s EU presidency 
symbolizes this country's remarkable journey from communism 
to flourishing democracy.  You will meet Czech leaders who 
remember firsthand, and are still grateful for, U.S. Cold War 
opposition to Soviet domination of Europe and our effort in 
World War II.  But you will also address a younger generation 
of Czechs born after the fall of communism.  The leadership 
here is aging.  The giants of the Velvet Revolution are 
nearing the end of their era.  Vaclav Havel, in fragile 
health at 72, has been out of power for six years.  Current 
President Vaclav Klaus is now 67, and Foreign Minister Karel 
Schwarzenberg, now 71, had heart surgery last year.  While 
these Czech stalwarts believe intrinsically in America,s 
role in Europe, the younger generation may well see 
transatlanticism as an abstract concept.  It is up to us to 
articulate and instill that enduring principle in future 
leaders.  Helping us is the fact that the societal memories 
transcend age differences and Czechs remain among our closest 
friends and strongest supporters in Europe.  Last year,s 
admission of the Czech Republic into the Visa Waiver Program, 
which opened the U.S. door wider, was seen here as a vote of 
confidence that their transition to a prosperous and 
democratic nation was complete. 
 
¶2.  (C) Across the spectrum, Czechs are delighted by your 
visit, optimistic about the new U.S. administration, eager 
for multilateralism, and hoping to be consulted and heard. 
They are open to U.S. leadership and a new vision for 
transatlantic bonds that work toward common goals. 
 
¶3. (C) Securing your presence in their capital for an 
extraordinary U.S.-EU summit is a signal achievement for the 
Czechs' first-ever EU presidency.  Czech views of U.S.-EU 
issues often mirror our own, and we can quietly seek ways to 
strengthen their hand.  While the Czechs, as EU president, 
must seek EU consensus ahead of advancing their national 
viewpoint, a successful Czech EU presidency could pave the 
way for a stronger Czech voice within the EU afterward, with 
long-term benefits for U.S. interests. 
 
¶4. (C) Prime Minister Mirek Topolanek's center-right 
government is a staunch U.S. ally which has expended 
considerable political capital to support the U.S. on missile 
defense and in Afghanistan.  The PM seeks a clear statement 
that, whatever the results of the ongoing policy review, the 
U.S. will not abandon missile defense and will continue to 
consult with the Czechs as the policy process moves forward. 
Pulling back on missile defense, if not managed carefully, 
would be a blow to pro-Americanism in the Czech Republic and 
would strengthen the perception that other U.S. goals 
elsewhere trump U.S. relations with the Czech Republic. 
Czech contributions in Afghanistan are notable, given the 
country's size.  Currently, public support for foreign 
involvement is waning and many Czechs see Afghanistan as a 
U.S. problem.  However, Czechs have historically been among 
Europe's most eloquent voices in defense of democracy and 
human rights, and remain receptive to the idea that their 
actions can make a difference on the world stage.  End 
summary/overview. 
 
--------------------------------- 
EU Agenda:  Gas, Gaza, Guantanamo 
--------------------------------- 
 
¶5. (C) The Czech Republic joined the EU in May 2004, and 
assumed its first-ever rotating six-month presidency on 
January 1, 2009.  The Czechs are especially proud that your 
visit comes during their leadership and they consider this a 
historic moment in transatlantic relations.  The Czech 
Republic shares our goals and approaches to key foreign 
policy issues.  From Cuba to Russia to the Balkans, we have 
worked with the Czech Republic closely in the past, and this 
close cooperation has continued during the Czech EU 
presidency. 
 
¶6. (C) The Czech presidency's theme is "Europe Without 
Borders" and its three priority areas, the "3 E's," are:  1) 
Economic Competitiveness (including addressing the challenges 
of the global financial crisis); 2) Energy Security and 
Sustainability; and 3) Europe in the World (external 
 
PRAGUE 00000153  002 OF 005 
 
 
relations).  Their first several weeks at the helm of the EU, 
however, quickly became consumed by the "2 G's":  gas and 
Gaza (with Guantanamo referred to as a third "G" in private 
conversations with Czech officials).  The Czechs' active 
shuttle diplomacy facilitated a solution to the 
Russia-Ukraine gas dispute, which won praise from their 
colleagues. 
 
¶7. (C) The bigger challenge, however, is to unite the EU 
behind an energy security strategy that rests on 
diversification of suppliers and routes, including support 
for the Nabucco and TGI (Turkey-Greece-Italy) pipelines, 
improved outreach to Caspian producers, and increased 
interconnectivity of the internal EU gas and electricity 
networks.  The Czechs are trying to use the gas crisis as a 
catalyst to prompt increased EU action and plan to host an 
EU-Southern Corridor Summit on May 8.  The Czechs are also 
using their EU presidency to promote nuclear power as an 
important CO2 emission-free option, and, despite Green party 
opposition, hope to release a tender for new units, for which 
Westinghouse will be one of the leading contenders.  The 
unpredictability of Russian energy supplies had already hit 
the Czech Republic in 2008, when Russian crude oil deliveries 
to the Czech Republic declined sharply -- ostensibly for 
technical reasons -- following the July 2008 signing of the 
U.S.-Czech Ballistic Missile Defense Agreement. 
 
-------------- 
Climate Change 
--------------- 
 
¶8. (C) The Czech EU presidency is pressing the U.S. for 
larger reductions in greenhouse gas emissions by 2020 than 
the current U.S. proposal calls for (a return to 1990 levels 
by 2020) and for strong U.S. investment in a low-carbon 
economy.  The EU also hopes to create a common cap-and-trade 
market with the U.S. rather than a country-by-country carbon 
tax system.  The Czechs oppose EU committing itself to any 
funding figure until the U.S. joins the debate.  The Czechs, 
and Europe in general, expect to settle climate change issues 
first with the U.S. and only then with the developing world, 
including China and India, and object to the U.S. 
conditioning its own commitments on China,s obligations. 
The Czech and other EU member states, respective Environment 
and Finance Ministries (as well as DG Environment and DG 
Finance) still need to resolve their internal differences, 
particularly on levels of financial commitments and financing 
mechanisms.  The Czechs, official position on climate change 
is often muddled by a vocal anti-climate change campaign of 
President Klaus, largely a ceremonial political figure who 
does not speak for the government but uses his position to 
disseminate his private views.  Domestically, the Czechs plan 
to use funds generated by selling unused Kyoto emission 
credit to Japan (about USD 0.5 billion) to fund domestic 
energy conservation programs. 
 
----------- 
Middle East 
------------- 
 
¶9. (C) PM Topolanek and FM Schwarzenberg traveled to the 
Middle East in January and March, in addition to hosting 
multiple separate events for EU Foreign Ministers in Brussels 
with key Middle East interlocutors.  The Czechs also 
participated in a recent EU humanitarian assessment mission 
to Gaza and discussed the provision of EU assistance (58M 
euros for Palestinians in Gaza, the West Bank and refugees in 
Lebanon) with Palestinian Authority President Mahmoud Abbas 
during his February 23 visit to Prague.  The Czech government 
is committed to working within the EU and with the United 
States to create the conditions for a more lasting solution. 
PM Topolanek is likely to emphasize the importance of close 
U.S.-EU coordination and reiterate that the Czechs, on behalf 
of the EU, stand ready to host future conferences or key 
meetings to advance peace in the region. 
 
---------- 
Guantanamo 
---------- 
 
¶10. (C) The Czech EU Presidency welcomed the U.S. 
administration's executive orders related to the closure of 
the Guantanamo detention facility.  The Czechs have 
facilitated internal EU discussions at the Foreign, Justice, 
and Interior Ministerial levels and European Commissioner 
Barrot and Czech Interior Minister Langer traveled to the US 
to meet with Attorney General Holder and other USG officials 
on March 16-17 to discuss EU questions about these detainees. 
 
PRAGUE 00000153  003 OF 005 
 
 
 Ambassador-at-large for War Crimes Issues Williamson plans 
to visit Prague as part of his return trip to key European 
capitals on March 25.  However, the EU member states consider 
this to be a decision for each individual member state, and 
while they have discussed establishing an EU framework to 
address collective Schengen travel security concerns, they 
have not yet taken collective action.  Czech officials have 
been clear that the Czech Republic, while willing to 
facilitate EU discussions on the resettlement of detainees, 
does not plan to accept any detainees due to domestic 
political reasons. 
 
--------------------------------------------- --------- 
Regional Issues:  Russia, Afghanistan, and the Balkans 
--------------------------------------------- --------- 
 
¶11. (C) A key challenge for the Czech Presidency will be to 
lead the EU toward a more united transatlantic approach to 
Russia.  Given their negative historical experience, the 
Czechs have been a valuable U.S. ally with regard to Russia, 
within the EU as well as NATO.  Events including the Georgia 
conflict, the gas crisis, and Russia's stance with regard to 
missile defense have reinforced Czech skepticism toward 
Russia.  They generally agree with the U.S. approach of 
cooperating wherever possible but resisting Russia's economic 
and military pressure against its neighbors.  Russia will 
host an EU-Russia Summit May 21-22. 
 
¶12. (SBU) In Afghanistan, in addition to being an active 
bilateral contributor (see below), the Czechs they also 
advocate greater EU coordination and contributions.  FM 
Schwarzenberg hosted the EU-Afghanistan Troika Ministerial in 
January, where the EU reaffirmed its longstanding commitment 
to reconstruction:  from 2002 to 2006, the EU contributed 
over 1.3B euros to this effort and for 2007 to 2010 has 
pledged 610M euros. 
 
¶13.  (SBU) We have a ready and attentive ally in the Czechs 
when it comes to advancing stability in the Balkans and EU 
enlargement.  FM Schwarzenberg and DPM Vondra frequently 
focus attention on developments in the region during the 
regular monthly meetings of the EU Foreign Ministers. 
Unfortunately, Czech efforts to advance EU enlargement with 
Balkan countries have met with resistance from some EU member 
states.  Name issues and ICTY compliance, but also 
enlargement fatigue, are behind this resistance.  We can 
anticipate that the Czechs will strive to keep the Balkan 
nations oriented to the West, but progress may be slow. 
 
-------------------------------------- 
A Valued Ally With Domestic Challenges 
-------------------------------------- 
 
¶14. (C) Our bilateral relations are excellent, with the Czech 
Republic's November 2008 entry into the Visa Waiver Program 
having removed the one long-standing irritant.  PM 
Topolanek's commitment to strong transatlantic ties undergird 
his government's support for the U.S.-proposed missile 
defense radar site.  The country has been a steady supporter 
of U.S. and NATO military operations and maintains 
approximately 1000 troops on foreign missions, despite the 
fact that public support for some deployments has slipped. 
In Afghanistan, the Czechs have about 500 military and 
civilian officials.  In 2008, they launched a provincial 
reconstruction team (PRT) and deployed a approximately 100 
Special Forces troops.  They also deployed a handful of 
experts to an Operational Mentoring and Liaison Team (OMLT) 
in Afghanistan.  Over the past several years, they have also 
maintained an infantry battalion of 450 troops in Kosovo. 
Domestic political constraints may make it difficult for the 
Czechs to maintain, let alone increase, their foreign troop 
deployment levels. 
 
¶15. (C)  Building on its own recent history, the Czech 
Republic is our strongest partner in Europe on Cuba and an 
active supporter of Cuba's democratic opposition. Likewise in 
Georgia, Belarus, Burma, Iraq and other countries in 
transition, the Czech government and NGOs work to support 
peaceful transformations.  Prague is home to the U.S.-funded 
Radio Free Europe/Radio Liberty, and has actively supported 
broadcasts to countries in Eastern Europe, Central Asia and 
the Middle East. 
 
¶16. (C) Since assuming office in January 2007, Prime Minister 
Topolanek's right-of-center coalition government has 
maintained the Czech Republic's traditional transatlantic 
orientation despite a tense domestic political situation. 
The ruling coalition's shaky majority in the parliament 
 
PRAGUE 00000153  004 OF 005 
 
 
depends on the assistance of a few deputies who have crossed 
party lines but whose support has been unreliable.  The 
government will likely face a vote of no-confidence on March 
24, a fifth attempt by the opposition to unseat PM Topolanek. 
 The resurgent parliamentary opposition has been pressing the 
government on all fronts, including in matters of foreign and 
security policy, the two areas where past governments and 
oppositions had worked well together.  Consequently, 
decisions on everything from foreign deployments to missile 
defense have been tainted by the country's domestic politics, 
at times to the detriment of the Czech Republic's 
international standing and national interest. 
 
¶17. (SBU) Following several years of strong economic 
performance, the small, open, export-oriented Czech economy 
is now struggling with the effects of the global economic 
downturn.   Nevertheless, the conservative, inward-looking 
Czech financial system has remained relatively healthy.  The 
Czech Republic is one of only four OECD countries not to have 
had to recapitalize its banks.  Both public and private debt 
is low, and Czech households have not borrowed in foreign 
currency.  All major banks, though, are owned by European 
banking groups, some of which have significant exposure to 
troubled Eastern European economies. 
 
¶18. (SBU) The Czech real economy, however, is suffering from 
a significant decline in external demand for Czech products. 
The Czech export to GDP ratio is 80 percent, while over 80 
percent of Czech manufacturing is exported, mainly to Western 
Europe (31 percent of exports go to Germany alone).  The key 
automobile sector, which accounts for 20 percent of Czech 
manufacturing, has been especially hard hit.  After three 
years of over six percent real GDP growth (2005-2007), the 
Czech economy slowed to 3.1 percent growth in 2008 and is 
expected to contract by as much as two to three percent in 
¶2009.  Unemployment, which had fallen to a record low of 5 
percent in July has risen sharply to 7.4 percent and is 
expected to continue to climb.  The government has put 
forward an economic recovery program, costing almost 2 
percent of GDP, and designed to maintain employment and 
exports.  Because most Czech goods are exported, while most 
household goods are imported, the government has done little 
to stimulate domestic demand. 
 
¶19. (SBU) In both the EU and G-20 context, the Czechs  have 
consistently warned against protectionism and 
beggar-thy-neighbor policies, called for evolutionary, rather 
than revolutionary, changes to regulation and stressed the 
importance of sustainable public finances.  While the Czechs 
support increased coordination among national regulators, 
they are likely to oppose any attempts to implement new 
pan-European financial regulations or efforts to erode their 
free and open trade and investment regime.  The Czech also 
oppose any efforts to treat the Central and Eastern European 
region as a whole, fearing the consequences to their economy 
should international investors put them in the same category 
as some of the more troubled economies in the region.  That 
said, the Czechs see the EU response to the global financial 
crisis as a key test of their EU presidency and understand 
that a united EU and G-20 is needed to reassure markets. 
Thus, they are willing to subsume their own interests in 
favor of a wider consensus. 
 
------------------------------------------ 
Missile Defense Dominates Bilateral Agenda 
------------------------------------------ 
 
¶20. (C) EU membership is one of two pillars of Czech foreign 
policy.  NATO and strong transatlantic ties form the second 
pillar.  Given the importance the Czechs assign to their 
relationship with the United States, PM Topolanek and his 
government have viewed missile defense (MD) as the natural 
next step in our growing security partnership.  Since the 
United States officially presented the MD proposal to the 
Czech Republic in January 2007, the Czech government has been 
unwavering in its support, despite significant public 
opposition driven largely by the Czech historical experience 
and concerns about foreign troop presence on the Czech 
territory.  Russian threats and intransigence with regard to 
MD in many ways reinforced the Czech government's 
determination to proceed with the project.  The Czechs moved 
quickly to negotiate and sign the Ballistic Missile Defense 
Agreement and the Status of Forces Agreement.  The Czech 
Senate ratified the agreements in November 2008. 
Ratification of the two agreements in the Lower Chamber has 
been suspended due to domestic political divisions. 
 
¶21. (C) The Czechs have been paying very close attention to 
 
PRAGUE 00000153  005 OF 005 
 
 
indications from Washington on our MD plans.  Given some of 
the skeptical statements from the Hill regarding the 
reliability and effectiveness of the proposed Polish 
interceptors, Deputy Prime Minister Alexandr Vondra, Deputy 
Foreign Minister Pojar, and other senior Czech officials have 
indicated that the Czech government would be interested in 
moving forward with the proposed radar site even if the 
United States decides to postpone its decision on the 
interceptors.  During your bilateral meetings in Prague, we 
expect that missile defense will be at the top of the agenda 
for Czech officials and the media.  In recent meetings, DPM 
Vondra and other Czech officials stressed that, no matter 
what the U.S. position will be, advance coordination will be 
key.  The long history of great powers deciding the country's 
fate "o nas bez nas" ("about us, without us") means Czechs 
are loathe to be taken by surprise.   Especially with regard 
to Russia, they fear missile defense could be offered as a 
bargaining chip, leaving them vulnerable to a triumphant 
Russia. 
Thompson-Jones