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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 05 MADRID 001021

SIPDIS

SIPDIS

TO THE SECRETARY FROM AMBASSADOR EDUARDO AGUIRRE; ALSO FOR
EUR DAN FRIED, E-ES, KEN MERTEN, EUR/WE

E.O. 12958: DECL: 06/30/2016
TAGS: OTRA PREL SP
SUBJECT: SCENESETTER FOR SECRETARY RICE'S JUNE 1 VISIT TO
MADRID

Classified By: Ambassador Eduardo Aguirre for reasons 1.4 b & d.

Summary

¶1. (C) Dear Secretary Rice: I welcome you to Spain on behalf
of our 367 American and Spanish colleagues serving the United
States at Mission Spain. Your visit is a milestone in our
work, together with you, to overcome the differences over
Iraq with the Spanish government and convince them that
further strengthening cooperation coincides with Spain,s
national interest. At the same time, your visit can serve as
a catalyst to encourage Spain to become an even more active
)- but responsible -- member of a Transatlantic partnership,
marked by cooperative efforts on our shared values, including
counter-terrorism and promoting democracy, freedom and human
rights throughout the world. This means that you will need
to speak frankly to the Spanish government about Cuba,
despite their desire to avoid the issue. The issue need not
be the central one in a rich agenda on a wide variety of
fronts in which we work closely with Spain; however, Cuba
must be an element of your discussions on democracy, and
Spain,s own special responsibility as a democracy leader
that has successfully undergone the transition from
dictatorship to thriving democracy. Your discussions will
also include Kosovo, Afghanistan, Spain,s OSCE Chairmanship,
Russia, Iran, Iraq, Latin America and the Middle East.
Moratinos will raise a thorny child-custody case involving a
Spanish woman currently jailed for contempt of court in New
Jersey. Your interview with the Spanish press will provide
an opportunity to reach out to the Spanish people and
underscore the significant value of our alliance and convey
our views on issues on which we differ. We see this visit as
a great opportunity to advance our relations with Spain, and
the Spanish government shares this view. END SUMMARY

¶2. (C) The Spanish government has long awaited your first
visit as Secretary of State and views it as a sign of the
importance of strong U.S.-Spain relations. They will use your
visit to counter criticism that the Zapatero government has
shattered the transatlantic relationship. Per the Spain
strategy you approved two years ago, we have sought to move
this government away from visceral and reflexive anti-U.S.
policies and sentiments, carving out areas in which
Zapatero,s government can offer support for the President,s
broad global agenda. We have made clear to the Zapatero
government that the price of our willingness to publicly
promote good bilateral relations is real contributions on
world issues. While we have made some positive headway, the
Zapatero government has not hesitated on occasion to pursue
an agenda counter to our own when deemed in the Socialist
party,s domestic political interest. Your visit should
encourage Spain to be an even more active member of a
transatlantic partnership that works cooperatively in pursuit
of shared values on freedom, democracy, human rights and
development.

What is Working

¶3. (C) On the positive side over the past two years, Spain
contributed $22 million to the Basrah Children,s Hospital
and offered a further $28 million in new money at the recent
Iraq Compact meeting. The Zapatero government established a
robust presence in Afghanistan that includes allowing the
Spanish military to lead a PRT and co-lead a Forward Support
Base in Western Afghanistan. Spain has contributed some 150
million Euros in Afghan reconstruction funds. Spain also has
1100 troops deployed along the Lebanon-Syria-Israel border as
part of UNIFIL. The government allowed a sale of military
aircraft to Venezuela to die. They support Turkey,s
membership in the EU and have said that they will not pose
problems on Missile Defense. We have superb two-way
cooperation on counter-terrorism, counternarcotics,
non-proliferation and military issues. This includes the use
of two vital bases in southern Spain near the Straits of
Gibraltar, where we maintain over 2000 personnel that serve
as major logistical hubs for the flow of troops and materiel
into the Iraq and Afghanistan theaters. The GOS also very
much appreciates US coordination with Spain on Western
Sahara, since Spain sees near-by North Africa as vital to its
national security interests.

¶4. (C) In addition, our economic relationship with Spain is
strong and mutually beneficial. The Spanish economy has
boomed in the last decade as a result of structural reforms,
EU aid, and membership in the Euro zone. The commercial
relationship is dominated by a very strong U.S. direct
investment presence, although two-way trade remains a
relatively minor percentage of each country,s exports and
imports. Many of the U.S. Fortune 100 firms are present and

MADRID 00001021 002 OF 005


doing well. The American Chamber of Commerce estimates that
about five percent of Spain,s annual GDP comes from U.S.
investment. In recent years, U.S. portfolio investors have
bought significant shares in major Spanish firms. Spanish
firms have rediscovered America and are now investing in the
United States, especially in the banking and renewable energy
sectors, and Spanish construction companies have also won
important contracts in the U.S.

¶5. (C) Spain cooperates closely with the United States in the
fight against terrorism finance, co-chairing the Financial
Action Task Force with us. Following intensive intervention
by the USG and private industry, the Spanish government is
giving increased attention to intellectual property rights
issues. Other areas where we work closely with the Spanish
include NASA,s Deep Space Network, and close partnerships in
port security programs such as Megaports and the Container
Security Initiative.

What Still Needs Work

¶6. (C) However, our challenge has been to channel the efforts
of a unpredictable Spanish Foreign Minister who portrays
himself as a self-styled &bridge8 between the U.S. and
difficult world players--such as Syria, Cuba, Iran and some
Palestinian elements. Additionally, President Zapatero plays
to a largely leftist, pacifist support base, and uses foreign
policy to win domestic political points rather than giving
attention to core foreign policy priorities or embracing
broader strategic goals.

¶7. (C) This has lent an erratic &zig-zag8 quality to the
bilateral relationship. Moratinos, recent visit to Cuba
highlighted the difficulty of maintaining a smooth and stable
pattern as did his earlier outreach to Syria and Iran.
Zapatero,s reversal of his Defense Minister,s commitment to
deploy 150 troops to staff the ISAF XI headquarters reflects
PSOE,s increasing sensitivity to Spanish public concerns
about growing dangers in Afghanistan during this highly
charged political season here ) with local/regional
elections May 27 and national elections by March 2008.
Kosovo independence is a sensitive issue for the GOS, which
maintains troops in KFOR, because of concern about the impact
of such an evolution on Spain,s own complex federal vs.
regional struggle. For this reason, a UNSC Resolution
explicitly authorizing independence will be essential for
Spain to maintain its troops there.

Proposed policy agenda

¶8. (C) We want to challenge the Zapatero government to do
better in the U.S.-Spain relationship as a result of your
visit. In your meetings with King Juan Carlos, Zapatero and
Moratinos, we suggest you frame our goals with Spain over the
following months along several interrelated themes that make
clear the need to act responsibly in NATO, Latin America and
the Middle East in order to be seen as a reliable partner.
We suggest the following themes:

--Spain should work more closely in coordination with us in
Europe and around the world on the freedom or democracy
agenda. Spain has achieved a remarkable transformation since
the end of dictatorship 30 years ago. It is one of the
leading democracies in Europe and has the 8th largest economy
in the world. Spain is now an active player in Europe, Latin
America and the Middle East, including Iran. But Spain needs
to act in concert with the EU, NATO and the U.S. on key
issues. There is too much at stake for Spanish freelancing,
as in the Middle East, Cuba and Russia. The transatlantic
community needs Spain,s support on Kosovo, Missile Defense,
NATO transformation, and Iran. The price of leadership and
respect, which Spain seems to desire, is the willingness to
devote the resources, assume responsibility, share burdens
and act jointly with other powers. We welcome Spain,s
commitment to stay the course in the pivotal struggle in
Afghanistan. We know it is a delicate political issue in
this electoral season but it is the right thing to do and a
responsible policy. Spain,s OSCE chairmanship is important
on all of these issues and we want to ensure close
consultations so that Russian attempts to weaken key OSCE
functions are curtailed.

--Spain needs to help in countering anti-Americanism by
publicly emphasizing cooperation. The U.S. and Spain
cooperate on a myriad of issues that matter to the Spanish
people, including the fight against terrorism and
international organized crime, Middle East, North Africa,
human rights and support for democracy. We urge the Spanish
government to work with us to allay anti-American sentiments

MADRID 00001021 003 OF 005


in Spain, not just cooperate with us behind the scenes.
Spain,s changing population and proximity to North Africa
make it a prime target of Islamic extremism regardless of its
relationship with the U.S. It is essential that we emphasize
our shared values of democracy, human rights, freedom and
opportunity for immigrants. Furthermore, during this
difficult election period, we do not want our bilateral
relations to become a casualty of the political crossfire. We
understand electoral politics, but not at our expense.

--Spain should capitalize on its role as a democratic leader.
The U.S. welcomes Spain,s contributions on Afghanistan and
Iraq, defense ties and counter-terrorism; these form the
basis of our good bilateral relations. Spain,s success in
the transition from dictatorship to thriving democracy makes
it a worldwide leader in the areas of democracy-building and
institution-building. Spain should deploy that expertise
more actively in concert with our shared goals. Our respect
for Spain,s exemplary democratic transition makes it all the
more perplexing and disconcerting that Spain has embarked
upon a policy of outreach to the Raul Castro regime,
validating his succession with no clear message about the
need for democratic transition. Nevertheless, we want to
continue working with Spain in support of human rights and
market-based economic policies in Latin America, including
Cuba, and we urge Spain,s leadership to act in more positive
ways and to demonstrate publicly Spain,s own values.

¶9. (C) We believe that folding our concerns about recent
Spanish foreign policy moves into a broader, positive agenda
can help advance our goals as we navigate the waters of a
very difficult and volatile political season in Spain.

The Political Environment

¶10. (C) You arrive just after the May 27 regional and local
elections. Current polls show that the results will likely
provide momentum for both Zapatero,s Socialist Party and
Mariano Rajoy,s Popular Party going into national elections
by March 2008. In the regional elections, the Socialists
could gain seats and join in coalition governments in three
current PP regions. With Socialist victories in several
regions last year, Zapatero could have a strong base of
support going into the national elections. However, the PP
is expected to strengthen its support in its traditional
regional strongholds. On the national level, while support
for Zapatero has diminished since its peak after the March
2004 elections, Rajoy has not been able to capitalize and his
ratings remain low and are falling.

Assessment of Zapatero

¶11. (C) Though polls show Zapatero,s support down from the
high just following the March 2004 elections and considerable
concern about his ETA policies, he stands a good chance of
surviving national elections in early 2008, albeit with some
of his support drifting to smaller, leftist parties in the
Parliament.

¶12. (C) Zapatero focuses almost exclusively on domestic
policy; his foreign policy instincts are governed by the
exigencies of their domestic political impact. With a largely
left of center, pacifist public which is strongly opposed to
the Iraq war, the Aznar government and Bush Administration
policies, Zapatero loses nothing by taking the U.S. to task
on key issues. However, Zapatero now recognizes that the
Spanish public believes that Spain,s leaders must maintain
good relations with the U.S. After his first volatile year
in office, he has sought to improve the tenor and substance
of U.S.-Spain relations while still maintaining the
politically acceptable policy of offering criticism of U.S.
policies as part of the role of what he calls a &loyal
ally.8 We suggest you encourage Zapatero to continue to view
a positive agenda with the U.S. as a necessary element of his
political strategy and emphasize that the U.S. will not keep
silent when his government pursues policies that run counter
to our shared values and interests.

Rajoy as PP leader

¶13. (C) Your meeting with PP leader Mariano Rajoy will be
interpreted in Spain as a symbol of continued U.S. ties with
a partner that supports U.S. foreign policy goals. However,
we need to make clear to Rajoy that the U.S. will continue to
work with the current government as long as it is in power
because of our major long-term interests in Spain, including
in the war on terrorism and in Afghanistan. The Spanish
media will scrutinize the length of your meeting with Rajoy
in comparison with your session with Zapatero for signs of

MADRID 00001021 004 OF 005


any political signals we are trying to send.

¶14. (C) Recent polls indicate that Rajoy thus far has not
been able to galvanize support for his candidacy for Spain,s
Presidency, despite some very meaty issues that could be
developed to the PP,s advantage. One of the most crucial of
these controversial issues is Zapatero,s policy toward the
Basque terrorist group ETA, which the PP viscerally opposes
and which has driven hundreds of thousands of protesters into
the streets. The PP points to the December 30 attack at the
Madrid airport which killed two Ecuadorian citizens as proof
that ETA will not renounce violence. The PP remains strong in
its traditional strongholds, however, and the ETA issue has
become increasingly worrisome to a number of Spaniards.
However, recent polls show that Rajoy himself has not
galvanized support for his candidacy for Spain,s Presidency.
If PP turns out a large number of voters for the regional
and local elections, Rajoy nonetheless will come to your
meeting buoyed with the hope of a strong challenge to
Zapatero in the national elections. Bitterness over the March
11 terrorist attacks and the Aznar government,s handling of
the issue, however, remains a liability for Rajoy, and
Spanish politics at the national level are bitter and
divided.

Role of the King

¶15. (C) Your meeting with King Juan Carlos will demonstrate
U.S. respect for the Spanish state and its people. Though
prohibited from playing a direct role in foreign policy, Juan
Carlos has helped behind the scenes. For example, he helped
smooth relations with the U.S. after tensions in the months
following the 2004 Spanish elections. In November of that
year, President and Mrs. Bush invited the King and Queen for
a pre-Thanksgiving lunch at Crawford, which was widely
interpreted here as a sign of respect for the Spanish state.
Juan Carlos is well versed on foreign policy issues and will
welcome your review of the key issues you plan to discuss
with Zapatero and Moratinos. He should also hear our strong
concerns on issues like Cuba and Syria. On a personal note,
you might congratulate the King on the birth of Crown Prince
Felipe,s second daughter, Sofia, born on April 29, 2007.

Dealing with Moratinos

¶16. (C) We no longer hear last year,s rumors of Moratinos,
imminent departure from his post as Foreign Minister and he
seems entrenched in his position. He seeks a role on the
world stage andtries to capitalize on his old ties in the
Middle East, as well as Spain,s presence in Lebanon and
Afghanistan, to play a role on Israel-Palestinian issues,
Lebanon, Syria and Iran. We have sought to find ways to keep
Moratinos in contact with senior USG officials on a range of
issues as a means to help channel his efforts. Spain,s
chairmanship of the OSCE puts Moratinos in the unusual
position of having a voice and interest in core transatlantic
issues related to Central and Eastern Europe, Russia and the
Caucasus. Moratinos, penchant for trying to &mediate8
needs to be tamed as Russia issues come to the fore; we have
already seen evidence of Spain,s willingness to try to
excuse or mitigate Russia,s recent threats to cut off CFE.
Moratinos has denied that his comments that he supports
Missile Defense discussion in the OSCE, but Russian Embassy
contacts have told us that Moratinos supports the idea.

¶17. (C) Moratinos' recent trip to Cuba is one of the most
prominent of Moratinos, miscalculations with the U.S. In
addition to private protestations, I published an op-ed in
Spain,s leftist daily newspaper El Pais, laying out U.S.
goals for democracy in Cuba. He has pushed the Human Rights
dialogue promised during his visit so that it could take
place just before your visit to Madrid. Moratinos will argue
this justifies his Cuba policy. However, your visit should
make clear to Moratinos the harm his trip has done to this
effort, an objective he and Zapatero continually claim they
share with us. Moratinos wants your brief bilateral before
the working luncheon to be kept to a small group, where he
wants to corral the issues of Cuba, Kosovo and Afghanistan
(his proposal for an international neighbors conference).
These are the three issues he deems most sensitive from the
Spanish side. In your working luncheon, issues will including
US-Spain bilateral relations (including excellent
counter-terrorism, defense, non-proliferation cooperation);
Transatlantic issues, including Spain,s Chairmanship of the
OSCE, Russia and Moscow,s proposals for OSCE to discuss
Missile Defense, to Russia (Missile Defense); and finally,
Latin America, Iran, Iraq, Lebanon and the Middle East peace
process. Iran will be in the Spanish news during your visit;
while you are here, Larijani may be meeting with Solana at a

MADRID 00001021 005 OF 005


location organized by the Spanish. Moratinos will also want
to discuss the way forward on Western Sahara, and he is
pleased at our cooperation in security the latest MINURSO
resolution calling for direct talks between Morocco and the
Polisario.

¶18. (C) Two important bilateral issues fall in the judicial
area. Moratinos has said he will raise with you the child
custody involving Spanish citizen Maria Jos Carrascosa who
is currently jailed for contempt of court in Bergen County,
New Jersey for failure to return her child to the US as
required by a New Jersey court decision. During this
political season in Madrid, the case has become a cause
celebre, with pictures of Carrascosa ) viewed as a mother
separated from her child - in handcuffs entering the New
Jersey prison. The GOS agrees that this is a case for the
courts and both governments agree that mediation of the
dispute is the appropriate response. However, Moratinos for
political reasons has to show the government is doing
something about the case. On our side, you should note
continued USG concern about the court case against the three
US servicemen charged with alleged &war crimes8 in the case
of the death of Spanish TV camerman Jose Couse in the
Palestine Hotel in Baghdad in 2003. The GOS has been helpful
behind the scenes in getting the case appealed by the Spanish
Prosecutor. The case now moves to the appeals tribunal of
the National Court, which will rule on the substance of the
charges. We want continued vigilance and cooperation by the
GOS until the case is dropped.

¶19. (C) Moratinos holds you in very high regard and values
the contacts that he has had with you. Your efforts and
those of other senior USG officials, along with mine, to help
guide Moratinos on key issues such as handling Russia in the
OSCE and on the full range of Middle East issues, can prove
effective. The more outreach the better, as we try to play
to his desire to have a role on major issues while helping to
direct some of these efforts toward policies that work to
support US global objectives.

¶20. (U) You may want to congratulate Moratinos on the
upcoming celebration of the 50th anniversary of the
Commission for Cultural, Educational and Scientific Exchange
between the United States and Spain (the Fulbright
Commission) and express how you look forward to hearing more
about the events planned to take place in Washington to
commemorate this major milestone. The Spanish Fulbright
Commission, the second largest in Europe, is a truly
binational organization with the majority of funding provided
by the Spanish central government, as well as regional
autonomous communities and private sector entities.

¶21. (C) In all, you will find a rich agenda with Spain, which
your visit can advance substantially. Again, welcome to
Madrid. We are looking forward to your visit on June 1.
AGUIRRE