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UNCLAS SECTION 01 OF 04 MADRID 000006

SIPDIS

SIPDIS

FOR H - PLEASE PASS TO CODEL LIEBERMAN

E.O. 12958: N/A
TAGS: OREP PREL SP
SUBJECT: SPAIN SCENESETTER FOR CODEL LIEBERMAN - CORRECTED
CABLE PARAGRAPH 13

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¶1. (SBU) Summary: I warmly welcome Senator and Mrs.
Lieberman to Madrid. When you arrive, Spain will be emerging
from the Holidays and starting to focus on what is likely to
be a very competitive March 9 general election. Although the
media here prefers to focus on differences in the U.S.-Spain
relationship resulting from Spain's 2004 withdrawal from
Iraq, cooperation is excellent in areas of common interests -
fighting terrorism and organized crime, strengthening NATO
and the Transatlantic security relationship, and in promoting
the spread of democracy in many areas of the world. As the
Hispanic population of the United States continues to grow,
and as Spanish increasingly becomes our second national
language, Spain has the potential to be an even closer U.S.
partner. End summary.

Counter-Terrorism and Law Enforcement
-------------------------------------

¶2. (SBU) U.S.-Spain relations were seriously damaged by
President Zapateros's decision soon after his reelection in
2004 to precipitously withdraw Spanish forces from Iraq.
However, over the last several years both countries have made
a concerted and successful effort to rebuild the relationship
based on strong mutual interests in counter-terrorism,
fighting narcotics trafficking and organized crime, and
rapidly expanding economic ties. The real bilateral story is
found in novel initiatives such as the HSPD-6 agreement we
signed in September to facilitate the sharing of information
between our national counter-terrorism authorities. Spain is
home to a large and growing Muslim population. The March 11,
2004, train bombings were a shock to Spain (21 of the
suspects were convicted here in October). Spain remains a
target of Islamic extremists; al-Qaeda has called for attacks
to recapture the medieval "Al Andalus". The Spanish are
actively pursuing Islamic extremist terrorism-related
investigations and have scores of suspects in jail. Neither
has the threat of ETA terror gone away: two Spanish Civil
Guard officers were murdered in France in early December by
the Basque terrorist group.

¶3. (SBU) Narcotics trafficking is another area of common
concern. Andean cocaine is a serious problem here, and
Colombian trafficking organizations are active in Spain.
Money laundering is another serious issue. We are eager to
find ways to increase bilateral cooperation and to encourage
Spain to engage more aggressively with law enforcement
authorities in key Latin American countries.

Security and Diplomatic Cooperation
-----------------------------------

¶4. (SBU) Spanish military cooperation matters. The bases of
Rota and Moron are strategic hubs, midway between the U.S.
and Afghanistan and Iraq. U.S. planes and ships account for
around 5,000 flights and 250 port calls a year in Spain. The
Spanish military is pro-U.S. and pro-NATO. The navy employs
the AEGIS system in its frigates and has been working for
five years to acquire the Tomahawk missile system. Spain is
also interested in the Joint Strike Fighter. We need to keep
this military-to-military relationship strong.

¶5. (SBU) Spain has 750 troops with ISAF in Afghanistan and a
provincial reconstruction team in Badghis province. They
have contributed some 150 million Euros in Afghan
reconstruction funds. Planning is underway to allow the
Spanish to train and equip an Afghan Army company, which we
hope will be a prelude to the training and equipping of a
full battalion. On Iraq, Spain has contributed $22 million
to the Basrah Children's Hospital and a further $28 million
in development funding for Iraq. Spain has nearly 1,100
troops with UNIFIL in Lebanon and about 700 in Kosovo.

¶6. (SBU) 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 Kosovo, Iran, and
missile defense. It is more forward-leaning on the Middle
East peace process, undoubtedly driven by FM Moratinos' long
personal involvement in the issue. Moratinos was an eager
participant in the Annapolis Conference and helped ensure
Spain made a robust pledge of support for the Palestinian
Authority during the recent Paris donors' conference. Driven
by the twin threats of terrorism and illegal immigration,
Spain is also increasing its engagement with the countries of
North and Western Africa.

¶7. (SBU) Spain is second only to the U.S. in terms of
economic and political influence in Latin America. Spain

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wants strong democratic and free market institutions in the
region. Nevertheless, we have sharp differences over Cuba.
Spain's socialist government has opted for engagement,
claiming it can encourage regime elements who want change.
We take every opportunity to remind the Spanish that the
Cuban regime is only interested in survival and that the
Cuban dissidents need and deserve the active and visible
support of democracies everywhere. On Venezuela, the
socialists' early efforts at constructive engagement with
Chavez have gone sour. At the most recent Iberoamerican
Summit, King Juan Carlos publicly interrupted a Chavez tirade
about former Spanish President Aznar, telling the Venezuelan
President to "shut up." The government is uncomfortably
situated between Spanish companies who fear Chavez will move
against their Venezuela interests and the strong public
support for the King.

Economy
-------

¶8. (SBU) Spain has one of the fastest growing economies in
Europe. In fact, the economy has grown in each of the last
15 years, and per capita GDP passed Italy's in 2006. In the
last several years, a housing boom has contributed greatly to
growth, but as elections approach, housing prices are
stagnating, construction is slowing, and unemployment and
inflation are staring to creep up. U.S. investment has long
been important to the economy (more so than bilateral trade),
but the tables have turned. This year, Spain has been the
fourth largest foreign investor in the U.S., with particular
emphasis in banking, construction, and renewable energy. In
the latter sector, Spain has the world's largest and third
largest wind power firms, and Spanish firms also are active
in U.S. solar and biofuels projects.

Elections
---------

¶9. (SBU) Spain will hold a general election March 9, and the
campaign will just be heating up as you arrive. The ruling
Spanish Socialist Workers' Party (PSOE) candidate is
President Jose Luis Rodriguez Zapatero. Despite a strong
economy, a budget surplus, and a variety of social spending
initiatives, the early polls indicate a close race.
Nevertheless, the polls also suggest Partido Popular (PP)
candidate Mariano Rajoy has had limited success getting his
message out. The PSOE will run on the economy and its social
programs. The PP will argue the economy is softening and
that the PSOE has made too many concessions to Basque and
Catalan regional governments, is weak on ETA, and soft on
illegal immigration. Foreign affairs is unlikely to be a key
issue, but the PSOE will remind voters it got Spain out of
Iraq while the PP will say Spain's international prestige has
slipped.

Jewish Community in Spain
-------------------------

¶10. (SBU) Full religious freedom only returned to Spain in
1978 with the establishment of a democratic constitution. In
practice, Spain is still an overwhelmingly Catholic country,
although Protestant and Islamic believers are increasingly
important demographically. Estimates of the size of the
Jewish community in Spain vary from 50,000 to 100,000
faithful, primarily concentrated in urban areas including
Madrid and Barcelona. The Spanish Federation of Jewish
Communities (FCJE) signed an agreement with the Spanish
government in 1992 establishing Judaism as one of the "deeply
rooted faiths" of Spain. Certain local and regional
governments, among them Toledo, Segovia, and Sevilla, have
sought to capitalize on Jewish tourism by publicizing the
romantic aspects of the Sephardic community in
pre-Inquisition Spain while downplaying the expulsion.
Nevertheless, anti-Semitism remains an undercurrent in Spain;
swastikas and other graffiti appear periodically on buildings
and in neighborhoods associated with Judaism or the
pre-expulsion Sephardic presence. Neo-Nazi propagandists and
ultra-rightists remain present in Spain, most significantly
along the Mediterranean coast in Valencia and Barcelona, but
also in all major cities. In Madrid, skinheads, Falangists
and Franco supporters make their presence known through
infrequent demonstrations and marches, as well as by
harassing the growing immigrant population.

¶11. (SBU) The USG is currently engaging with the GOS over the
2007 exhumation of three pre-expulsion Sephardic cemeteries
in Andalucia and Catalunya. In each case the cemeteries were

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uncovered by accident during excavation for construction or
road projects, and in each instance the local authorities did
not handle the graves in keeping with strict Jewish dictates,
more likely out of ignorance than malice. Based on interest
from concerned Americans, among them Representative Edolphus
Towns, Chairman Warren Miller of the U.S. Commission for the
Preservation of America's Heritage Abroad, and Rabbi David
Niederman of the United Jewish Organization, I, my DCM and
our Consul General in Barcelona have expressed our concern to
the Spanish government that these culturally and religiously
sensitive sites need to be protected and handled in a manner
in keeping with the wishes of the Jewish community in Spain.
Because each municipal government has jurisdiction in affairs
dealing with cemeteries, the government has sought to place
the responsibility on each local jurisdiction. The FCJE and
local Jewish organizations have lobbied the national and
local governments to enact a national protocol for addressing
any future excavations and are hoping to secure funding to
research the location and condition of other cemeteries that
have been lost for centuries. The exhumed remains have since
been re-interred in other Jewish cemeteries with religious
authorities present.

¶12. (SBU) Critics have accused the Spanish government of
taking anti-Israel stances with respect to both the Middle
East Peace Process and the 2006 Israel-Lebanon conflict,
while the government has strongly refuted allegations of
anti-Semitism and Israel bashing. Spain's Foreign Minister
Moratinos is a frequent visitor to the region, and he made a
controversial visit to Damascus and Beirut in 2007 in which
he was photographed with the number two of Hizballah.
Nevertheless, he claims to enjoy a good relationship with
Israeli FM Livni and is planning a fence-mending trip to
Israel in the coming months.

Pisarro Painting Claim
----------------------

¶13. (SBU) During your conversation with Ambassador Ana
Salomon, you may wish to mention the claim of Claude
Cassirer, an elderly American citizen, for a Camille Pissarro
painting ("Rue Saint Honore") now at the Thyssen Bornemisza
Museum in Madrid, Spain's appeal of a U.S. district court
ruling that U.S. courts have jurisdiction is now before the
9th Circuit. The Nazis forced Mr. Cassirer's grandmother to
sell the painting in 1939. Baron Hans Heinrich
Thyssen-Bornemisza acquired it in 1976. In the early 1990's,
the Spanish Government purchased the collection and built the
current museum. In 1958, Mrs. Cassirer received a DM 120,000
restitution payment for the disappearance and provisional
dispossession of the painting, but retained full right to the
painting. Were Mr. Cassirer to win his claim, he would be
obliged to reimburse this amount to the German authorities.
Pursuant to the 1998 Washington Conference Principles on Nazi
Confiscated Art, Cassirer's attorneys offered to discuss the
claim with the Government of Spain in 2002 but the government
refused. Spain also refused to engage in a mediation process
that was part of the district court proceedings. The
Washington Conference accepted the Principles by consensus,
in which the Spanish representative joined. Dealers,
claimants and holders of artworks generally heed the
principles. Spain correctly points out that the principles
provide for states to "act within the context of their own
laws", and notes that claimant has not filed a claim in
Spain. But the Principles also call on parties to achieve
just and fair solutions on an expeditious basis and to
develop and use alternative dispute resolution mechanisms.
In December 2007, Ambassador Salomon told Ambassador J.
Christian Kennedy, the Special Envoy for Holocaust Issues,
that the new Spanish Minister of Culture might take a more
constructive view of this claim. In June 2005, the then
Special Envoy raised the issue in Madrid with museum and
government officials, to no avail. Earlier correspondence
between the Envoy and the Spanish Ambassador in Washington
was also without result. We recommend you urge Ambassador
Salomon and others as appropriate to engage with Cassirer to
find a mutually acceptable solution.

Conclusion
----------

¶14. (SBU) Again, I am looking forward to your visit. While
we want to avoid being an issue in the Spanish elections, we
do need to remind Spain that the bilateral relationship is
founded on strong mutual interests such as counter-terrorism
and law enforcement. Regardless of who wins in March,
terrorists, drug traffickers, and alien smugglers will

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continue to see both our countries as targets. We have much
work to do together.
AGUIRRE