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REFERENCE CLASSIFICATION CREATED LEAKED ORIGIN
10ATHENS61 CONFIDENTIAL 2/1/2010 20:41 09ATHENS1657 Embassy Athens
 
     
  Scenesetter for Alt/FM Droutsas' visit to Washington  
     
  C O N F I D E N T I A L SECTION 01 OF 03 ATHENS 000061

SIPDIS
AMEMBASSY ANKARA PASS TO AMCONSUL ADANA
AMEMBASSY ASTANA PASS TO AMCONSUL ALMATY
AMEMBASSY BERLIN PASS TO AMCONSUL DUSSELDORF
AMEMBASSY BERLIN PASS TO AMCONSUL LEIPZIG
AMEMBASSY BELGRADE PASS TO AMEMBASSY PODGORICA
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AMEMBASSY ATHENS PASS TO AMCONSUL THESSALONIKI
AMEMBASSY MOSCOW PASS TO AMCONSUL VLADIVOSTOK
AMEMBASSY MOSCOW PASS TO AMCONSUL YEKATERINBURG

E.O. 12958: DECL: 2020/01/29
TAGS: PREL, PGOV, PTER, ECON, EFIN, GR
SUBJECT: Scenesetter for Alt/FM Droutsas' visit to Washington

REF: 09 ATHENS 1657

CLASSIFIED BY: Daniel V. Speckhard, Ambassador, State, EXEC; REASON:
1.4(B), (D)

1. (C) Alternate Foreign Minister Dimitris Droutsas travels
February 2 to the much anticipated first meeting of the new GoG
with senior USG officials in Washington. We have had signals from
within the MFA that PM Papandreou will soon step aside as foreign
minister, permitting Droutsas to take over so the PM can focus on
Greece's economic straits. Papandreou's center-left PASOK
government inherited an economy in dire condition because of a GoG
failure over decades to adopt needed reforms, a bloated public
sector, and chronic mismanagement -- a situation exacerbated by the
global financial crisis. The steps needed to remedy the situation
will be politically difficult and could restrict Papandreou's
ability to make bold foreign policy moves on controversial issues,
including the Macedonia name dispute, Cyprus, and increasing
Greece's contributions in Afghanistan. Having said that, we need
Greece to make courageous moves now -- with a tight timeline for
Cyprus and a window now open for progress on Macedonia's
Euro-Atlantic aspirations and progress on Greece-Turkey relations
in the Aegean.

Economic Context/Constraints
----------------------------

2. (SBU) The GoG estimates that the economy shrank almost 1.5
percent in 2009 and analysts predict that it will shrink again 0.5
to 1.5 percent in 2010. Greece is under immediate pressure from EU
partners (who are holding Greece's feet to the fire, threatening
sanctions and firmly stating there will be no bail-out), capital
markets (who are driving up Greece's borrowing costs), and ratings
agencies (all of which have cut Greece's ratings to the lowest in
the EMU and are threatening additional downgrades) to implement
reforms. The PASOK government has developed a new three-year plan
(an updated Stability and Growth Plan) to take very unpopular
actions, including liberalizing highly protected labor and product
markets, restructuring an almost-bankrupt social security system,
improving tax collection, and cutting spending.

3. (SBU) The GoG will need to stand firm against opposition --
from within the center-left GoG and from those affected most by the
measures to be successful on the economic front. Opposition New
Democracy leader Antonis Samaras has pledged to support tough
reforms. The GoG will need to make the case to the Greek
electorate that there is no other choice for the future of the
country in order to keep the lid on fomenting civil disorder.
Although we do not foresee a near-term electoral challenge from the
still-rebuilding New Democracy Party, these economic and budget
realities have raised the pressure on the four month-old GoG and
offer great temptations for the opposition to raise the heat,
despite their promises, in a way that hinders the government's
ability to push through reforms.

Key Bilateral Issues
------------------------

4. (C) On Macedonia's name, after launching an intermittent
direct dialogue, and publicly promoting its "Agenda 2014" to bring
all the Western Balkans into the EU with a target date of 2014, we
have perceived a more cautious public line. PM Papandreou
reportedly said at the Council of Europe January 26 that "now is
the time to move forward" on the issue, while implying that the
Greek red line of "erga omnes" use of a compound name meant using
it even internally in Macedonia, echoing a theme we have heard from
Droutsas himself. Privately, Papandreou has referred to "erga
omnes internationally" and we should use the meetings in Washington
to reconfirm that this flexibility remains. We also consistently
hear skepticism from the GoG of Skopje's interest in moving forward
quickly, even as we see reports from north of the border about
Macedonian concern that Greece is not interested in moving.
Droutsas' Washington meetings will be a good opportunity to press
him directly on the need to build momentum towards a solution, as
conditions do not appear to be improving. Whatever he says
publicly, he should hear the clear message from us that the USG's
core interest is in completing the Euro-Atlantic integration of the
former Yugoslav states, end ensure that there is no backsliding in
the PM's position in the face of troubles on the domestic front.

5. (C) Turkey: PM Papandreou sent his reply on January 25 to
Erdogan's October note, which reportedly looked forward to

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improving relations. Droutsas met FM Davutoglu on the margins of
the London Conference, and PM Papandreou and PM Erdogan may
interact on the margins of Davos. We should gauge Droutsas' views
on the way ahead with Turkey in the Aegean, and encourage him to
continue the momentum.



6. (C) Cyprus: Droutsas is well informed on Cyprus developments,
having had the lead on the issue for Papandreou in the latter's
1999-2004 Foreign Ministry. Notwithstanding progress in the
bilateral leaders' talks, we continue to hear in Athens that Turkey
is the key to unblocking progress. Our MFA counterparts downplay
the likely setbacks presented by Talat losing in the "TRNC"
elections. Droutsas should be pressed, as Greece remains an
interested party, to play a positive, and public, role in
supporting the two leaders.


7. (C) ISAF: Greece has resisted calls to provide more forces
to ISAF than their current engineering battalion in Kabul, proposed
staffing of Kabul airport, monetary support for Allied PRTs, 3
million euro pledge to the ANA trust fund, and cumulative 60
million euro funding of development aid. They are presently
looking at ways to enable their existing engineering battalion in
Kabul to engage in NTM-A training, and whether they can send 3
trainers to EUPOL. High-level encouragement to stay engaged on
Afghanistan, and to look at ways to enhance Afghan army and police
training will help keep them focused on doing more, in a manner
that can leverage their resource and political limitations, and
help enhance Afghan ownership. Droutsas may ask for further
support to find and release Athanasios Lerounis, a Greek NGO
employee who was kidnapped in Western Pakistan in early September
last year and presumably moved into Afghanistan.

Counter-Terrorism
---------------------

8. (C) Droutsas is certain to ask when Visa Waiver will become a
reality. The new Greek government has placed a priority on
defeating domestic terrorist groups such as Revolutionary Struggle
and Sect of Revolutionaries, which have sharply increased the
frequency and scale of their attacks on Greek police, financial
institutions, and other targets in the year following the December
2008 riots. The groups remain a threat to the U.S. as well, as
evidenced by Revolutionary Struggle's RPG attack on the U.S.
Embassy in January 2007. At the same time, Greece is the primary
entry point into the EU for illegal aliens, many of whom originate
in conflict zones in the Middle East and enter Greece after
transiting Turkey and include SIAs. There is a danger of
international terrorists entering Greece and using it as a planning
base. We have a relatively good record of counterterrorism
cooperation with a succession of Greek governments, although we
have had to keep this cooperation low-key because of the domestic
political environment. You will recall signing two agreements on
criminal and counterterrorism data sharing with then-Foreign
Minister Bakoyannis in Corfu in June 2009, to meet the requirements
for Greece to enter the Visa Waiver Program. Both major parties
approved ratification in the subsequent Parliament vote, despite
criticism from smaller parties.

Human Rights/Migration:
-----------------------------

9. (C) Greece faces significant challenges from the huge influx of
illegal migrants (140,000 detained in 2008, 120,000 in 2009). While
most of these immigrants are Albanian, a large number come from
South Asia, Africa and the Middle East, entering Greece from
Turkish waters. This has become a major sticking point in
Greece-Turkey relations. The GoG, facing limited resources, has
sought to "Europeanize" the issue. It has raised the profile of
migration at the European Council and has support from the Spanish
Presidency to open a regional office of FRONTEX. Domestically, the
GoG has reorganized its security agencies, creating a new Ministry
of Citizens' Protection which looks something like our Department
of Homeland Security. Its challenge will be to bring about better
interagency cooperation..

10. (U) Chania Synagogue Attacks. The only synagogue in Crete

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suffered two arson attacks in January and was severely damaged, the
latest in a series of anti-Semitic incidents. You will want to
express appreciation for the government's condemnation of the
attacks and urge them to continue to do all they can to combat
anti-Semitism. Four suspects were arrested, including one
American.
Speckhard
 
     
 
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