VZCZCXRO1819
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHMD #0370/01 0971627
ZNR UUUUU ZZH
P 071627Z APR 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 0494
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3940

UNCLAS SECTION 01 OF 04 MADRID 000370 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE, H PLEASE PASS TO 
DAN FISK, OFFICE OF SENATOR MEL MARTINEZ 
 
E.O. 12958: N/A 
TAGS: PREL PGOV SP OREP MOPS ECON
SUBJECT: SCENESETTER FOR CODEL MARTINEZ, APRIL 14-16, 2009 
 
MADRID 00000370  001.2 OF 004 
 
 
¶1. (SBU) Embassy Madrid warmly welcomes your visit to Spain. 
When you arrive, the country will be emerging from the Semana 
Santa holidays as well as a major cabinet reorganization. 
This April 7 cabinet shuffle was prompted in part by 
criticism of the GOS' inability to solve the economic crisis, 
which has seen unemployment rise above 15 percent. 
U.S.-Spanish relations continue to be 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. 
President Zapatero's meetings April 5 in Prague with 
President Obama and a week earlier in Chile with Vice 
President Biden were followed closely in the press.  A strong 
atmosphere of goodwill and optimism has emerged for 
increasingly closer bilateral relations and cooperation 
despite differences over Spain,s withdrawal from Kosovo. 
The Spaniards you meet will be eager to seek your take on 
Spanish-U.S relations and cooperation in Latin America. 
 
//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 Kosovo's independence, 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, operates a PRT, and is planning additional troop 
and financial support for the August Afghan elections. 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 wind and solar power and biofuels. 
 
//POLITICAL BACKGROUND// 
 
¶4. (SBU) Zapatero won reelection in March 2008, but his 
center-left Spanish Socialist Workers Party (PSOE) is seven 
seats shy of a majority in the 350 seat Congress.  The 
opposition Popular Party (PP) gained seats in the March 2008 
general elections and retained losing presidential candidate 
Mariano Rajoy as its leader.  Over a year of 
worse-than-expected economic news has led to widespread 
criticism of Zapatero and his economic policymakers for 
having downplayed the economic difficulties.  Perhaps as a 
manifestation of this, Zapatero suffered his first serious 
political reverse since winning reelection when his party 
lost power in the March, 1 2009, regional elections in 
Galicia.  Although popularity ratings for Zapatero and the 
Socialists are low, the scandal-mired PP has not managed to 
capitalize on this.  The PP has suffered internal divisions 
and more recently has been dogged by numerous corruption 
accusations followed obsessively by the Spanish media.  The 
PSOE and PP will face off again in the June European 
Parliament elections. 
 
¶5. (SBU) Following the 2008 election, Zapatero kept most of 
his key cabinet members in their posts. Miguel Angel 
Moratinos remained Minister of Foreign Affairs, but Carme 
Chacon, the former Minister of Housing, became Spain's 
first-ever female Minister of Defense; she is described in 
the press as a possible eventual successor to Zapatero. 
Zapatero announced major cabinet changes April 7 as a 
response to criticism of the GOS' inability to resolve the 
economic crisis and the need to regroup before the June 
elections.  The most prominent change is the departure of 
Second Vice President and Minister of Economy Pedro Solbes. 
Word of the impending changes was leaked on April 5, 
overshadowing Zapatero's meeting with President Obama in 
 
MADRID 00000370  002.2 OF 004 
 
 
Prague, which the GOS has envisioned as a major domestic 
political triumph after Zapatero's failure to obtain a 
meeting with President Bush. 
 
//LATIN AMERICA// 
 
¶6. (SBU) Spanish officials have expressed hope that the USG 
will increase engagement with Latin America in the coming 
years, sometimes alleging that the United States abandoned 
the region after 9/11.  As you know, Spain wields significant 
influence in Latin America, where its businesses have 
invested heavily.  Like the U.S., Spain wants strong 
democratic and free market institutions in the region.  Spain 
shares our concerns and generally acts with the European 
Union on democracy and good governance in places like Bolivia 
and Nicaragua. 
 
¶7. (SBU) Problems in Latin America receive prominent press 
coverage here, with a particular emphasis on endangered 
Spanish business interests.  Spanish-Venezuelan relations are 
now "normalized" following the highly publicized November 
2007 IberoAmerican Summit during which King Juan Carlos 
famously told Venezuelan President Chavez to "shut up." 
Chavez visited Spain and made public amends with the King in 
July 2008.  However, President Chavez' reiteration on March 
20 that the GOV would nationalize Banco de Venezuela (BdV) 
(which is owned by Spain's largest bank, Banco Santander) has 
stirred up possible tensions.  Spanish companies have had 
major problems with Argentina's government, including the 
nationalizations of Aerolineas Argentinas from the Spanish 
Marsans Group and of private pension funds, one of which is 
owned by the BBVA bank.  In Ecuador, Spanish oil and gas 
giant Repsol reached agreement in February to a new contract, 
and will drop its complaint against the GOE with the World 
Bank.  Immigration matters and the EU's tougher regulations 
continue to complicate Spain's bilateral relations with 
immigrant source countries. 
 
//CUBA// 
 
¶8. (SBU) The Zapatero government believes it can encourage 
democratic change via engagement with the Castro regime. 
Spain played a leading role in lifting EU sanctions and in 
re-starting the EU-Cuba dialogue on human rights in 2008, and 
subsequently claimed credit for what the GOS assessed to be 
successful talks and improved conditions in Cuba.  Many 
Spanish officials and media speculate U.S. Cuba policy will 
change radically with the new U.S. Administration and have 
closely watched Cuba language in the Omnibus Appropriations 
bill as well as talk of easing travel restrictions.  Former 
Cuban FM Perez Roque visited Spain in October 2008, and 
President Zapatero has said he may visit Cuba (no date has 
been announced).  The Spanish seem to have been caught off 
guard by Raul Castro's removal of Perez Roque and Carlos 
Lage.  Aside from the Omnibus bill provisions, the Spanish 
press has been covering the various U.S. Congressional 
visits, statements and proposals regarding prospective 
changes in the U.S. Cuba policy (e.g. "The Freedom to Travel 
to Cuba Act"-S428).  Spain is home to the second largest 
Cuban expatriate population after the United States, with an 
estimated 82,000 Cuban nationals.  The "Historic Memory Law" 
granting citizenship to the grandchildren of Spaniards who 
left Spain as a result of the civil war went into effect 
December 29, 2008, and could result in as many as 120,000 
Cubans receiving Spanish citizenship. 
 
//ECONOMIC CONTEXT// 
 
¶9. (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 to 15.5 percent in February -- the highest 
rate in the EU -- and thrust the country into a recession 
that started last summer.  The Bank of Spain projects that 
unemployment will reach almost 20 percent by the end of 2010, 
and growth is expected to be negative for all of 2009 and 
possibly into 2010.  Spanish banks had little exposure to 
U.S. mortgages and were not caught up in the initial wave of 
European bank turmoil last year.  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.  However, many banks, especially the "caja" savings 
banks, are overly exposed to troubled domestic construction 
and real estate companies, and loan delinquency rates are 
rising rapidly.  The Bank of Spain took over a caja on March 
29, 2009.  While the authorities hope to address the problem 
 
MADRID 00000370  003.2 OF 004 
 
 
by mergers among cajas where possible, the expectation is 
that they will need to intervene in additional institutions. 
 
¶10. (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 and the April 2 London 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 has spoken often 
of the importance of coordinated European and U.S. action in 
facing the crisis. 
 
//MILITARY AND SECURITY COOPERATION// 
 
¶11. (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), and 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 has pledged to do more in support of 
the elections, in providing financial support for the 
expansion of the Afghan National Army, and in the area of 
police training.  At the NATO summit April 4, President 
Zapatero announced that Spain would be sending a battalion to 
reinforce security for the August 20 Afghan election plus 
Civil Guard trainers and additional soldiers to train a 
battalion of the future Afghan army.  In addition Zapatero 
pledged 5 million euros towards the Afghan National Army 
Expansion Trust Fund and 4 million euros in election support. 
 
¶12. (SBU) GOS officials have stressed that the solution in 
Afghanistan cannot be purely military and that a new, 
regional strategy is needed.  Statements going into the March 
31 strategy conferences and April 3-4 NATO Summit indicates 
the GOS welcomes 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. 
 
¶13. (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 660 Spanish troops in KFOR by 
the end of this summer, and the government suffered severe 
public and private criticism for the failure to coordinate 
adequately with Allies, even from Spanish commentators who 
favored the withdrawal.  After Zapatero's March 28 meeting 
with the Vice President in Chile, the GOS believes we have 
put this issue behind us. 
 
¶14. (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 
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 2008 sparked GOS interest in addressing piracy. 
 
¶15. (SBU) 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 
 
MADRID 00000370  004.2 OF 004 
 
 
decisions to buy U.S.-made combat systems for its S-80 
submarines and F-100 frigates (Spain uses the AEGIS system). 
 
//COUNTERTERRORISM COOPERATION// 
 
¶16. (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. 
 
¶17. (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// 
 
¶18. (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