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C O N F I D E N T I A L MADRID 000518

SIPDIS

E.O. 12958: DECL: 05/05/2018
TAGS: PREL KSUM AR BL CO CU PE SP
SUBJECT: WHA ASSISTANT SECRETARY SHANNON'S VISIT TO MADRID,
APRIL 30-MAY 1, 2008

Classified By: CHARGE D'AFFAIRES HUGO LLORENS, REASONS 1.4(B) AND (D).

¶1. (C) WHA Assistant Secretary Tom Shannon visited Madrid
April 30-May 1, 2008. He met with Secretary General of the
Presidency Bernardino Leon and former President Jose Maria
Aznar. He also attended a lunch in his honor hosted by
Charge d' Affaires Hugo Llorens with Spanish private sector,
media, and government experts on Latin America and gave
interviews to daily El Pais and with Antena 3 TV. Leon
stressed the need for the U.S. and Spain to work together in
Latin America. Aznar emphasized the importance of Colombia
and Mexico and urged the U.S. to maintain strong support for
both. Both Leon and Aznar expressed concerns about Argentina.

Leon Stresses Desire to Work with U.S. in Latin America
--------------------------------------------- ----------

¶2. (C) A/S Shannon and CDA Llorens met April 30 with newly
installed Secretary General of the Presidency (and former MFA
number two) Bernardino Leon. A/S Shannon told Leon the U.S.
wanted to maintain continuity in policy towards Latin America
through the next Administration. He emphasized the
importance of strategic partners such as Spain, and thanked
Leon for the effort he and MFA Secretary of State Trinidad
Jimenez had made to work with the U.S. Leon said President
Zapatero would need to make Latin America a foreign policy
priority and work it intensively. He suggested this was an
area where Spain and the U.S. should coordinate closely and
at the most senior levels. He said the strategic effort
should be to work closely with countries such as Brazil,
Chile, Colombia, and Mexico. Looking ahead to the new
Zapatero administration, Leon predicted the opposition
Popular Party (PP) might be more conciliatory than in the
past. He said Zapatero would put more emphasis on foreign
policy, and he stressed that good relations with the U.S.
would be a priority. Leon mentioned he had met recently with
foreign policy advisors to all three U.S. Presidential
candidates. He suggested both governments should begin
thinking about a meeting between Presidents Bush and Zapatero
in September at the UNGA. Leon noted that this meeting with
A/S Shannon was the first he had held with anyone outside the
Spanish Government since assuming his new post.

¶3. (C) A/S Shannon explained the U.S. was looking forward to
two key events: the OAS General Assembly (OASGA) in Medellin
in June 2008 where the Deputy Secretary would lead the U.S.
delegation and the Summit of the Americas in Trinidad and
Tobago in April 2009. He noted Mexico and others were
working to reduce tensions between Colombia and Ecuador in
advance of the OASGA as well as to avoid disruptions by
Venezuelan President Chavez. A/S Shannon said the Summit of
the Americas would be the new U.S. President's first
multilateral event with Latin America, and a major goal would
be to put the summit process back on a positive track after
the Mar de Plata experience. He indicated the Administration
would continue to push its free trade agenda.

¶4. (C) Leon said Argentina was very worrisome. Spanish
companies in Argentina were concerned by the populist tone of
the government, political polarization, and the level of
corruption. There were "complicated" people and movements
around the presidency. He suggested some lived by the old
adage that "a politician who is poor is a poor politician."
He said there was much work for Spain and the U.S. to do with
respect to Argentina and complemented President Bush for
setting a positive tone with President Cristina Fernandez
Kirchner. A/S Shannon mentioned that he had recently visited
Argentina and that in June a USG team would visit Buenos
Aires to reinitiate the lapsed high-level dialogue. The goal
was to define the bilateral relationship by shared interests
rather than by differences. He predicted strife between
various Argentine sectors was just beginning; the
agricultural strike was merely the first round. He said the
Peronist tendency once a crisis was past was to look for
wealth and figure out how to spend it. Ironically, the more
complicated internal situation might lead the government to
seek to mend fences internationally. He said the costs of
too close association with Chavez were now clear to the GOA,
as evidenced by Chavez's recent decision to nationalize the
Argentine firm SIDOR.


¶5. (C) Leon said Spain hoped to use the EU-Latin America and
the Caribbean summit in Lima in May to seek a trade pact
where those Latin American countries who wanted in could be
in and those who wanted out could stay out. The goal was to
keep a country like Bolivia or Ecuador from dragging down the
others. A/S Shannon noted this might help with the U.S.
Congress on the free trade issue.

¶6. (C) Leon said a post-Uribe Colombia raised concerns,
although there were sensible people on the left (e.g., Polo
Democratico leader Gaviria). He noted that post-Uribe,
especially if the situation in Peru deteriorated, the Andean
region would be even more problematic. He said Peru was a
very key country.

¶7. (C) Leon said he was worried about Bolivia and the threat
to Spanish business interests there. He predicted Morales
would lose the May 4 referendum. A/S Shannon said the U.S.
was looking past May 4 and talking to the group of friends
(Argentina, Brazil, and Colombia) as well as the Vatican. He
predicted the referendum results would provide greater
legitimacy to the state governors and blunt the GOB's
criticism of the opposition and the U.S. (he noted wryly that
the GOB had blasted the U.S. Ambassador at the same time the
Bolivian FM was in the U.S. seeking USG assistance). A/S
Shannon said the governors needed to exercise caution and not
be overly aggressive. The U.S. message was that we supported
dialogue but not secession. He doubted secession would come
to pass. He said the U.S. was also talking to the armed
forces and urging them to work within the constitution. He
noted the military understood the risk to it as an
institution. Leon asked if the GOB was arming civilians.
A/S Shannon replied that some such activity was possible, but
he doubted it was on a large scale. He said some Morales
advisors might be pushing confrontation in order to paint the
provinces as rebellious, but the U.S. message was that the
provinces had to work within the confines of the law. He
noted the Bolivian FM was in Washington recently and tried
without success to interest the OAS Permanent Council in a
resolution condemning the provinces. Leon said Spain's
message was complimentary: territorial integrity but respect
for the provinces as political units.

¶8. (C) A/S Shannon noted New Mexico Governor Richardson had
recently visited Caracas in connection with the three
Americans in the hands of the FARC. Chavez told him the U.S.
should help Morales and work with the governors to make sure
Morales was not backed into a corner. This was unusual given
Venezuela had in the past urged on Morales. It appeared
Chavez might be genuinely worried about the turn matters
could take in Bolivia. Leon said he too was nervous about
the situation. He noted Spain would regard a deployment of
troops or police to the oil installations as a very bad sign.


¶9. (C) Leon said it was essential that the next Iberoamerican
summit (El Salvador in November 2008) move beyond the famous
incident in Chile between King Juan Carlos and Chavez. He
mentioned Zapatero would see Chavez in Lima to try and set
the stage for a more positive summit. Regardless, there were
no guarantees someone would not seek confrontation in El
Salvador.

Aznar Looks to Colombia and Mexico
----------------------------------

¶10. (C) A/S Shannon and CDA Llorens also met April 30 with
former President Jose Maria Aznar. Aznar said he was worried
about Latin America. He described what he called an
anti-NAFTA, anti-Colombia FTA theme in the U.S. Presidential
primaries. At the same time, he criticized an excessive
emphasis on free trade and open markets in dealing with Latin
America. Both were fundamental, but the U.S. also needed to
focus on how it could isolate Chavez and also should keep a
wary eye on Chinese and Muslim influence in Venezuela. He
argued the U.S. and the EU needed to articulate a policy more
understandable to the common people and more comprehensive.
A/S Shannon agreed on the need to support civil society and
NGOs in Latin America. He said many people in the U.S. had a

view of Latin America frozen in the 1990s, but the region was
changing rapidly. The U.S. and Spain should be looking for
catalytic ways of supporting democratic governance, civil
society, and economic development. He noted that in the past
the U.S. had sometimes ignored Latin America until a crisis
arose; in contrast, President Bush had a record of solid
engagement in the region.

¶11. (C) Aznar mentioned he had spoken with Mexican President
Calderon before the New Orleans summit and Calderon had
expressed concern about waning Congressional support for
NAFTA and the Merida initiative. Aznar said failure of the
Colombia FTA would be catastrophic. He said Uribe was the
best friend the U.S. had in Latin America, and the end of the
FARC was in sight. He noted both Chavez and Ecuadorian
President Correa were implicated by information obtained as a
result of the GOC operation against Raul Reyes. It was more
important now than ever for the U.S. to support Colombia.
Aznar said Colombia and Mexico were the key countries in the
region. Aznar said the U.S. and Spain should be working
together to get Mexico to be more active regionally.
Although Brazilian regional engagement was positive, it
needed to be complemented by more Mexican engagement. He
urged the U.S. to continue supporting both Colombia and
Mexico, saying that if Calderon and Uribe were successful, it
would shift the entire region in a positive direction. A/S
Shannon briefed Aznar on the Administration's continuing
efforts to win approval for the FTA with Colombia as well as
the Merida initiative, which represented a very constructive
U.S. response to the concerns of Mexico and Central America
regarding security and law enforcement. He also briefed
Aznar on the New Orleans meetings and the emphasis Presidents
Bush and Calderon and PM Harper put on a common vision for
trade, security, and border management.

¶12. (C) Despite his worries for the region, Aznar noted many
countries were doing well. He cited Chile, Panama, and Peru.
Aznar said the electoral results in Paraguay were a good
step; the ideological leanings of the new government would
not make much of a difference. Aznar said Brazil appeared to
have put populism firmly behind it. He described Lula as a
mainstream figure, albeit one who presented a friendlier face
to the disadvantaged. He urged that the U.S. and Spain
support good governance regardless of whether it came from
the left or the right.

¶13. (C) Aznar said the situation in Argentina was very
complicated. They appeared to be reverting to the vicious
cycles of Peronism in which sectors with money were shaken
down by the government. One interesting sign was the
emergence of a more critical middle class, but Cristina
Fernandez Kirchner was a disappointment. He had once hoped
she would conduct a more sophisticated foreign policy, but
she appeared now to be a puppet of her husband. A/S Shannon
said Argentina was underperforming in terms of attracting
foreign investment and was conducting an erroneous foreign
policy. The last six years had seen economic improvement,
but the Peronists again seemed to be looking for the money.
Aznar agreed the growth had been notable, sustained in large
part by favorable international commodity prices, but he said
the recovery remained fragile. The GOA lacked credibility
with the international business community, and the Argentine
banking sector was weak. A/S Shannon hoped Argentina had
learned a lesson from Venezuela's nationalization of the
steel company SIDOR. Playing with Chavez was a good way to
get burned. Nevertheless, he noted the GOA, for all its
faults, was not in the same camp as Chavez. A/S Shannon and
Aznar agreed it was important for the U.S. and Spain to
remain actively engaged with the GOA and maintain a dialogue
with it. A/S Shannon noted his recent visit there and the
resumption of a regular, formal dialogue between the USG and
GOA. Aznar applauded the initiative.

¶14. (C) Aznar praised President Bush's strong stance in
support of a democratic transition in Cuba and his most
recent speech on the subject. He said we needed to monitor
carefully the steps Raul Castro was taking, some of which
were in the right direction. Nevertheless, both the U.S. and
the EU needed to stay on the record as promoting democratic
transition and openly supporting civil society and the

dissidents. A/S Shannon noted the GOC was attempting to
isolate the U.S. Aznar said anything the U.S., EU, and Spain
could do to publicize the truth on Cuba would help. He cited
the recent crackdown on the Damas de Blanco, noting the news
in Cuba was more than just cell phones and computers. The
public needed to know what was really happening. He said
that was the way to keep the pressure on Raul Castro, whom he
said should not be allowed to consolidate power. Fidel would
continue to be an immobilizing element as long as he lived,
but when he died, it might set in motion events Raul could
not control.

Experts' Lunch
--------------

¶15. (C) Lunch at the CDA's residence brought together a
variety of Latin America experts: Roman Escolano of BBVA;
Jaime Malet of the Amcham; Alberto Carnero of FAES; Asis
Martin de Cabiedes of Europa Press, Juan Luis Cebrian of
Grupo Prisa, and Eduardo San Martin of ABC; and Javier
Sandomingo, MFA Director General for Iberoamerica. The
discussion was off the record and vigorous. Topics included
Cuba, Venezuela, Mexico, the Colombia FTA, and Argentina.
Sandomingo made a point of saying during the lunch and again
afterwards in private that Spain would strongly prefer the
U.S. did not try to split EU opinion on Cuba. A/S Shannon
emphasized the need for the international community to work
together for meaningful democratic change and to continue to
reach out to civil society and the dissidents. Several of
the guests unconsciously echoed Leon's and Aznar's concerns
about Argentina. Views on Venezuela were negative,
especially on the economic situation. A/S Shannon used the
opportunity to describe the Merida initiative, and he heard
strong expressions of support for a U.S. FTA with Colombia.

Comment
-------

¶16. (C) We were especially struck by the emphasis Bernardino
Leon laid on cooperation with the U.S. in Latin America. His
move from MFA to the Presidency is rumored to have been
prompted by Zapatero's dissatisfaction with the functioning
of his first-term foreign policy apparatus. Reportedly his
"odd man out" experience at the NATO Summit in Bucharest was
the last straw. Leon is a credible player on foreign affairs
and well-disposed towards the U.S. Having him in a key
position at the Presidency bodes well as does the resonance
of Spanish views with our own on most things Latin American.
Cuba will continue to be the exception, at least when it
comes to tactics, but on a great many other important issues
in the Western Hemisphere we believe Spain is genuinely
interested in working with the U.S. and highly values A/S
Shannon's continuing attention. Aznar remains well-briefed
on Latin America, knows the players, and frequently travels
to the region, all good reasons for U.S. officials to stay in
touch with him.
Llorens

.