VZCZCXRO4996
RR RUEHIK
DE RUEHMD #0021/01 0111754
ZNR UUUUU ZZH
R 111754Z JAN 10
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1657
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4296

UNCLAS SECTION 01 OF 02 MADRID 000021 
 
SENSITIVE 
SIPDIS 
 
FOR UNDER SECRETARY BURNS AND ASSISTANT SECRETARY GORDON 
FOR P STAFF AND EUR FRONT OFFICE 
 
E.O. 12958: N/A 
TAGS: PREL EU IR SP
SUBJECT: SCENESETTER FOR YOUR MEETINGS WITH EU POLITICAL 
DIRECTORS JAN. 15 
 
MADRID 00000021  001.3 OF 002 
 
 
Summary 
------- 
¶1. (SBU) Embassy Madrid welcomes your visit for the EU 
Political Directors meeting hosted by Spain.  The GOS seeks 
to strengthen EU (and GOS) ties with the USG during its 
presidency, and your interlocutors will be eager to meet with 
you.  U.S.-Spain relations are strong and based on shared 
global interests, including our association in NATO, the 
fight against terrorism, and growing economic ties. 
Spaniards are enthusiastic about President Obama, and 
President Zapatero's desire for closer bilateral relations 
and enhanced engagement is reflected in GOS stances on 
Afghanistan and Guantanamo.  On Iran, although Spain prefers 
dialogue to sanctions in almost any situation, it recognizes 
that action may be necessary if Iran continues its present 
course. 
 
Bilateral Relations 
------------------- 
¶2. (U) We value Spanish cooperation on security issues and in 
the fights against terrorism and narcotics.  Spain is a 
strong bilateral defense partner, despite differences in the 
past over its sudden pullout from Iraq in 2004 and its poorly 
coordinated 2009 withdrawal from KFOR.  Spain operates a 
Provincial Reconstruction Team in Afghanistan with about 
1,000 troops participating in ISAF.  Zapatero was criticized 
for his poor relations with the USG during the Bush 
Administration (a result of his Iraq pullout).  His 
enthusiasm for President Obama and his desire for closer 
bilateral relations have resulted in GOS willingness to send 
511 more troops to Afghanistan, pending legislative approval, 
and to take 5 Guantanamo detainees.  In both cases, he has 
faced public criticism that he has subordinated Spain's 
interest to President Obama's.  Spain also allows us the use 
of two military bases, Rota and Moron, that are crucial 
transit points between the U.S. and Afghanistan and Iraq. 
Counter-terrorism and law enforcement cooperation is strong, 
and business ties are increasing. 
 
Political Context 
----------------- 
¶3. (U) President Zapatero won re-election to a second term in 
¶2008.  His center-left Spanish Socialist Workers Party (PSOE) 
is seven seats shy of a Congressional majority and fared 
poorly in regional and European Parliament elections in 2009. 
 Zapatero's popularity and credibility have suffered because 
of the long recession and high unemployment, his initial 
unwillingness to acknowledge the seriousness of the economic 
situation, and his continued claims that things will get 
better soon.  The conservative opposition Popular Party (PP) 
has not capitalized on Zapatero's unpopularity, as it has 
suffered internal divisions and has been dogged by corruption 
accusations.  That said, recent polls suggest that the PP 
could win an election over the Socialists if the vote were 
held today. 
 
 
Economic Context 
---------------- 
¶4. (U) Spain grew much faster than the EU average over the 15 
years through 2007 and now has the world's 9th largest 
economy.  The rapid growth was driven by a housing boom that 
ended in 2007, after which the world economic crisis 
aggravated the economy's woes.  Spain has been in recession 
for almost two years.  The economy is expected to continue 
contracting until later in 2010, which would make it the last 
large economy to begin to recover, and the eventual recovery 
is expected to be sluggish.  Unemployment, now over 19%, is 
expected to pass 20% this year.  The GOS has responded with a 
major fiscal stimulus.  This has boosted the budget deficit 
to around 10% of GDP, and the GOS will have to limit spending 
significantly between now and 2013 to meet EU deficit 
requirements.  Zapatero's government is working to reorient 
Spain's economy towards more sustainable sectors, with 
renewable energy a key priority.  Spain, the 10th largest 
foreign investor in the U.S., is especially active in wind 
and solar power, banking, and road construction.  The U.S. is 
also a major investor in Spain. 
 
EU Presidency 
------------- 
¶5. (SBU) Spain,s presidency of the Council of the EU gives 
Zapatero an opportunity to emphasize an international role to 
counter the negative domestic economic situation.  He seeks 
to use the presidency to show that he is taking a leading 
international role in responding to the economic crisis; this 
ties in with his argument that the crisis is an international 
 
MADRID 00000021  002.3 OF 002 
 
 
problem for which his government should not be held 
responsible.  The GOS has been stung by foreign press 
criticism (in the Economist, Financial Times, and New York 
Times) of Spain's intentions for its presidency.  At his 
January 8 press conference with Van Rompuy and Barroso to 
mark the start of Spain's presidency, Zapatero had to argue 
that Spain's economic difficulties did not disqualify it from 
helping lead EU economic recovery efforts. 
 
¶6. (SBU) The need to adjust to the new roles of President Van 
Rompuy and High Representative Ashton will be both a major 
focus of the Spanish presidency and a factor that will reduce 
the prominence of Spain's role from what it might have been. 
Initial GOS aspirations to use the presidency to address a 
wide range of issues seem to be giving way to a greater focus 
on key issues.  For example, Zapatero now acknowledges that 
strengthening EU ties with Cuba will not be a major focus of 
Spain,s presidency, contradicting earlier GOS statements. 
However, the less-than-ideal coordination between the 
Presidency and the Foreign Ministry, and within the Ministry, 
may muddle the government,s message at times. 
 
¶7. (SBU) Zapatero and his officials have repeatedly cited 
strengthening transatlantic relations as a key aim of Spain's 
presidency.  For domestic political reasons, they intensely 
want a US-EU summit, and the lack of a Presidential visit 
would be seen as a major failure of Zapatero and a sign of 
USG disinterest.  This desire will give you an opportunity to 
press your interlocutors for specific Summit deliverables 
before we can commit, as well as for Spanish leadership 
during the presidency on issues such as Afghanistan, Iran, 
and Guantanamo. 
 
Iran 
---- 
¶8. (SBU) The GOS traditionally prefers dialogue and 
engagement to sanctions and criticism in almost any case, 
including Iran, Cuba, and Venezuela.  Many also are skeptical 
that additional sanctions will influence Iranian actions. 
However, Zapatero and senior officials increasingly 
acknowledge that international action will be necessary if 
Iran does not change course.  At times in the past, other EU 
countries' officials have identified Spain as one of the 
member states resisting increasing sanctions, but this 
position may be evolving.  Spain implements UNSC resolutions 
and EU sanctions conscientiously. 
 
¶9. (SBU) Even if it accepts the need for additional 
sanctions, it would be difficult for the GOS to support 
sanctions on investment in Iran,s oil and gas sector, 
because of the interests of the formerly state-owned firm 
Repsol.  In 2008, USG pressure led Repsol and the Dutch firm 
Shell to decide against moving forward for the time being 
with a joint venture to develop an Iranian gas field.  That 
project remains on hold, though the company maintains 
frequent contact with the GOI and remains interested in 
developing the country's resources when possible.  Repsol and 
Shell are currently negotiating to sell some of their stake 
in the project to a Chinese and/or an Indian company. 
 
Personal Security 
----------------- 
¶10. (U) In general, Spain is safe.  However, Madrid and other 
large cities attract a large number of criminals and 
pickpockets, and frequent crimes 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 issues 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, 
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). 
SOLOMONT