VZCZCXYZ0000
RR RUEHWEB

DE RUEHMD #0004/01 0051219
ZNR UUUUU ZZH
R 051219Z JAN 10
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1636
INFO RUEHRL/AMEMBASSY BERLIN 0674
RUEHLO/AMEMBASSY LONDON 1096
RUEHFR/AMEMBASSY PARIS 1556
RUEHRO/AMEMBASSY ROME 2545

UNCLAS MADRID 000004 
 
SENSITIVE 
SIPDIS 
 
STATE/H PASS HCFA FOR KESSLER 
STATE ALSO FOR EUR/WE 
POSTS' KESSLER CONTROL OFFICERS PLASE PASS TO DELEGATION 
 
E.O. 12958: N/A 
TAGS: ETTC KTFN KNNC PREL SP IR
SUBJECT: SCENESETTER FOR STAFFDEL KESSLER'S VISIT TO SPAIN 
 
REF: A. 09 STATE 131483 
     ¶B. 09 STATE 130513 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
Summary 
------- 
 
¶1. (SBU) Embassy Madrid welcomes your visit, which comes at 
an auspicious moment as Spain assumes the European Council 
Presidency for a six-month period.  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 the GOS is optimistic about the prospect for 
closer bilateral relations and enhanced engagement.  Spain 
enforces existing Iran sanctions and would likely be willing 
to implement additional measures if they were consensus 
actions after other options had been exhausted; however, 
there is division within the government on whether stronger 
sanctions would be constructive. 
 
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 withdrawal from Iraq in 2004 and its 
poorly coordinated withdrawal in 2009 from the NATO force in 
Kosovo.  Spain operates a Provincial Reconstruction Team in 
Afghanistan with about 1,000 troops participating in ISAF, 
and President Zapatero has announced his intention to support 
President Obama's call for more NATO ally participation by 
sending more Spanish troops.  Specifically, Spain has 
proposed to increase its contribution by 50 percent in 2010. 
Spain also allows us the use of two military bases that are 
crucial transit points between the U.S. and Afghanistan and 
Iraq.  Counter-terrorism and law enforcement cooperation is 
strong, as are business ties. 
 
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 has suffered because of the long 
recession and what are viewed as the government's ineffective 
efforts to address it.  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.  Zapatero has sought to show that he is 
taking a leading international role in the response to the 
economic crisis, and the EU Presidency gives the GOS an 
opportunity to play up its international role. 
 
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.  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 
curb spending in the next few years to get back within 
eurozone-mandated parameters by 2013.  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 renewables, banking, road 
construction,food, and others.  The U.S. is also a major 
investor in Spain. 
 
EU Presidency 
------------- 
 
¶5. (SBU) The GOS has named a wide range of issues as 
priorities for its presidency.  Its most frequently mentioned 
priorities are coordinating economic recovery and reform 
measures, coordinating implementation of the Lisbon Treaty 
(including adjusting to the new roles of President Van Rompuy 
and High Representative Ashton), and promoting gender 
equality.  President Zapatero and other GOS officials often 
cite strengthening transatlantic relations as another top 
priority.  Foreign Ministry officials have acknowledged that 
during Spain's presidency, the EU will face important 
decisions on Iran sanctions. 
 
Iran Sanctions 
-------------- 
 
¶6. (SBU) While the GOS agrees with the objective of 
preventing Iran from building a nuclear weapon, it generally 
prefers to focus on the carrot and engagement side of the 
relationship with Iran.  GOS officials state that they fully 
implement existing sanctions, but they also stress the 
importance of exhausting other options before imposing more 
restrictive sanctions and have expressed some skepticism 
about the efficacy of additional pressure on the Iranian 
government.  At times other EU countries' officials identify 
Spain as one of the member states resisting increasing 
sanctions.  Nonetheless, Spain implements UN Security Council 
Resolutions fully, and if additional sanctions are approved 
by the UN and/or the EU, Spain will implement them.  Spanish 
officials have told us in the past, however, that they do not 
favor restrictions on investment in the oil and gas sector. 
In 2008, Repsol and the Dutch firm Shell, after U.S. 
pressure, decided not to pursue a joint venture to develop an 
Iranian gas field.  That project remains very much on hold. 
Repsol is fully aware of the Iran Sanctions Act, pending 
legislation, and the strongly held U.S. view that now is not 
the time to do anything that would suggest business as usual 
with Iran.  However, the company maintains frequent contact 
with the Iranian government and retains a long-term interest 
in developing the country's resources. 
 
¶7. (SBU) The Embassy and visiting U.S. officials have urged 
Spanish banks to be very careful about business with Iran. We 
believe Spanish banks are, in fact, monitoring their 
activities carefully, and that the Bank of Spain is providing 
vigilant oversight.  The Ministry of Industry, Tourism, and 
Trade (MITYC) heads an inter-ministerial committee that 
carefully looks into possible dual-use exports to Iran. 
 
Non-Proliferation 
----------------- 
 
¶8. (SBU) Spain was a founding member of the Proliferation 
Security Initiative (PSI), is on the IAEA Board of Governors 
during 2008-2010, and will hold the EU Presidency during the 
first half of 2010, during which time President Obama's 
Nuclear Security Summit and the 2010 NPT RevCon will convene. 
 Spain participates in the Container Security Initiative (CSI 
- in the ports of Algeciras, Barcelona, and Valencia), and 
the Megaports Initiative to detect radioactive cargo (in the 
port of Algeciras, with expansion to Valencia and Barcelona 
to begin later this year). Spain has also been very active in 
hosting a number of events related to the Global Initiative 
to Combat Nuclear Terrorism (GICNT). 
 
Personal Security 
----------------- 
 
¶9. (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). 
DUNCAN