US embassy cable - 07VIENNA1231 (original version)

C O N F I D E N T I A L SECTION 01 OF 06 VIENNA 001231 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/AGS -- SAINT-ANDRE 
 
E.O. 12958: DECL: 05/14/2017 
TAGS: PREL, PGOV, AU 
SUBJECT: SCENE SETTER FOR THE SECRETARY'S VISIT TO VIENNA, 
MAY 31, 2007 -- BILATERAL ISSUES 
 
Classified By: Ambassador Susan R. McCaw.  Reasons:  1.4 (b) and (d). 
 
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Introduction and Summary 
------------------------ 
 
1.  (C) Chancellor Alfred Gusenbauer and Foreign Minister 
Ursula Plassnik look forward eagerly to Secretary Rice's May 
31 visit for the MFA's Conference on "Women Leaders -- 
Networking for Peace and Stability in the Middle East."  In 
addition to furthering your women's empowerment initiative 
launched at the UN General Assembly last Fall, the conference 
fits well with Austria's outreach to the Middle East and to 
the Islamic world.  Over the past three years, Austria has 
hosted two conferences of European Imams and a conference on 
"Islam in a Pluralistic World." 
 
2.  (C) Nevertheless, following a professional and successful 
EU Presidency during the first half of 2006, your visit comes 
at a time of increasing friction between the U.S. and the 
Austrian governments.  This has involved conservative Foreign 
Minister Plassnik as much as social democratic Chancellor 
Gusenbauer.  In fact, Austrian politicians from across the 
political spectrum have cast a series of issues -- a major 
Austrian energy investment in Iran, the decision by a 
soon-to-be U.S.-owned bank to close the accounts of Cuban 
nationals, the funneling of payments for bids on Iran's 
nuclear reactors through an Austrian bank, among others -- in 
terms of a self-righteous European defense against 
"extra-territorial" application of U.S. law. 
 
3.  (C) On Afghanistan, ISAF's UN mandate has still not 
overcome Austrian resistance to anything more than a symbolic 
presence or prevented some politicians from characterizing 
the fight as an "American war."  Internal Austrian wrangling 
over fulfillment of a contract to purchase EADS Eurofighter 
aircraft has also taken on an anti-American coloring, as the 
current government has sought to blame the U.S. for delays in 
providing releases for a secure communications package.  On 
missile defense, Plassnik has pointed to Austrian "concerns" 
in making comparisons to a Cold War-like nuclear standoff. 
On key counter-terrorism cases, recent court decisions have 
constrained generally positive working-level cooperation. 
 
4.  (C) The picture is fortunately not all negative.  Austria 
continues to play a strong, constructive role in the Balkans, 
especially in Kosovo.  Austrian engagement on Iraq has been 
small, but effective, from police training to the beginnings 
of commercial engagement.  We have had a quiet, constructive 
discussion on the issue of Guantanamo detainees. 
 
5.  (C) In recent years, our leverage over Austrian policy 
has been extremely limited by the reality that there were 
very few things Vienna wanted from Washington.  That 
situation, however, is now changing, as Austria has made 
securing a UN Security Council seat in 2009-2010 a top 
foreign policy priority.  While we must handle the issue very 
deftly, Austrian officials should receive the message that 
odds of their obtaining our support will increase if the 
government begins to show more concern over issues of top 
priority for the United States. 
 
6.   (C) Suggested themes for the Secretary's bilateral 
meeting with Chancellor Gusenbauer, and conference side-bar 
conversations with FM Plassnik are contained in paras 30 and 
31. 
 
 
 End Summary. 
 
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Neutrality as Engagement 
------------------------ 
 
7.  (C) The United States and Austria share a strategic 
interest in a world of peace, democracy, prosperity and 
stability.  A prime beneficiary of the successful conclusion 
of the Cold War, Austria has dedicated its foreign policy to 
the further construction of a European identity, the 
expansion of the zone of peace and stability to Southeast 
Europe, and the development of a more effective UN system. 
 
8.  (C) Austria's size and its post-war history, however, 
give the country a perspective that is different from that of 
the U.S., even on issues where we share ultimate objectives. 
Austrian neutrality, which the country adopted as a pragmatic 
response to obtain Soviet agreement to end the post-war 
occupation, has assumed almost mythical status as a part of 
Austria's national character.  In the 1990s, Grand Coalition 
governments under Social Democratic (SPO) leadership took 
 
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tentative steps to modernize Austrian security policy by 
moving toward European and trans-Atlantic security 
structures.  Since 2000, however, that rapprochement has 
stalled.  The Spring 2004 election for the ceremonial office 
of President, in which moderate SPO leader Heinz Fischer 
defeated Benita Ferrero-Waldner, effectively represented a 
popular rejection of security links with NATO and even with 
key aspects of the EU's Common Foreign and Security Policy. 
Rather, the outcome signaled a resurgence of a strict 
definition of neutrality, under which a UN or EU "mandate" is 
a necessary -- but by no means sufficient -- condition for 
Austrian military engagement. 
 
9.  (C) The Grand Coalition that took office in January 2007 
under Chancellor Alfred Gusenbauer reflects a stable 
consensus among all Austrian political parties that 
neutrality is the cornerstone of the country's security 
policy.  An important element of this consensus is a 
skepticism of the value of active military operations. 
Austrians of all political stripes are unapologetic about 
their lack of support for military engagement in the world's 
crisis areas.  Instead, they believe that Austrian 
participation in classic UN peacekeeping operations, together 
with a relatively robust engagement in the Balkans, 
constitute an active contribution LAthe world's security. 
 
-------------------------------- 
Relations with the United States 
-------------------------------- 
 
10.  (C) On June 5, 2007, the U.S. and Austria will mark the 
60th anniversary of Secretary George C. Marshall's Harvard 
speech that led to the European Recovery Program, or Marshall 
Plan.  A commemorative event at the Belvedere Palace, 
currently being organized by the Embassy and the Ministry of 
Economics, will be more than an academic exercise.  The 
government of Austria owns and manages over 3.5 billion 
dollars in ERP counterpart funds.  Bilateral agreements give 
the U.S. a continuing role in overseeing the funds. 
Businesses that benefit from ERP Fund financing are aware of 
the on-going nature of this relationship.  Average Austrians, 
however, are less and less aware of the existence of the 
funds, or even of the historical importance of the Marshall 
Plan to Austria's post-war recovery.  The June 5 
Commemoration represents an important initiative, not only to 
keep the memory of the Marshall Plan alive, but to 
demonstrate its continued relevance in Austria.  At the 
event, we plan to jointly announce the funding of 1,000 new 
transatlantic student exchange scholarships over the next 10 
years (funded by Austria through ERP). 
 
11.  (C) In January, Austria inaugurated a new Grand 
Coalition government, led by social democratic Chancellor 
Alfred Gusenbauer.  One of Chancellor Gusenbauer's first 
official statements included a call for close relations with 
the United States.  This was significant.  Gusenbauer's rise 
in the Social Democratic party coincided with a focus among 
leftist European youth on the Vietnam War and  debates over 
military stationing, rather than on U.S. support for Europe's 
post-war recovery.  Gusenbauer's extensive international 
experience, including in leading positions in the Socialist 
International, has helped to broaden his perspective. 
Gusenbauer has told us that he very much hopes to visit 
Washington in the Fall of 2007. 
 
12.  (C) So far, since assuming office, Gusenbauer has not 
been particularly vocal on the U.S.-Austrian relationship. 
We would not be surprised, however, to see him indulge in 
confrontational rhetoric when it suits his needs.  Already, 
on missile defense, for example, Gusenbauer said (alongside 
criticism of Russia) that "the U.S. has to understand that 
they are not the only ones that are going to determine what 
is happening in the world."  In separate comments to the 
European Social Democrats, he was reportedly much more 
critical of the U.S. position. 
 
13.  (C) Some of Gusenbauer's key ministers have adopted an 
even sharper tone toward the U.S. in public.  Defense 
Minister Norbert Darabos, who was SPO party manager under 
Gusenbauer, responded rather heatedly to continuing Embassy 
efforts to encourage a greater Austrian military role in 
Afghanistan.  Darabos also seems to have encouraged the 
Austrian press to blame the U.S. for potential delays in 
Austria's receipt of secure communications packages for new 
Eurofighter aircraft.  (In fact, the Austrian Defense 
Ministry, under Darabos's OVP predecessor, was responsible 
for delaying their application for the releases.  When 
Darabos realized this, he shifted his focus to blaming his 
predecessor, who is now the Interior Minister.) 
 
 
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14.  (C) It is not just the SPO members of the government who 
have adopted a confrontational tone.  Foreign Minister Ursula 
Plassnik, Schuessel's protegee, has adopted increasingly 
populist rhetoric, complaining publicly about U.S. 
"extraterritoriality" on several issues.  When an Austrian 
bank (BAWAG), being purchased by the U.S. Cerberus group, 
moved to implement OFAC restrictions against Cuba by 
canceling the accounts of some 100 Cuban nationals citizens, 
Plassnik not only initiated legal action against the bank, 
but proclaimed loudly in Parliament that "Austria is not the 
51st state of the U.S." 
 
15.  (C) Likewise, when the Austrian energy giant OMV 
recently announced a major gas deal with Iran, Plassnik 
joined in a chorus from across the political spectrum in 
attacking U.S. opposition to the move.  The U.S. reaction had 
in fact consisted of responses to press inquires, and had 
focused on the political argument that this is not the time 
for business as usual with Iran.  Plassnik, however, chose to 
attack the U.S. for "extraterritorial" application of law in 
connection with the Iran Sanctions Act, even though no such 
action had been taken.  Plassnik, we would note, has also 
declined numerous Embassy requests to discuss bilateral 
issues.  Once a moderating voice, Plassnik appears to be 
burnishing her political profile by "defending Austria" and 
Europe against American "unilateralism." 
 
16.  (C) Several other issues have reinforced this trend 
toward populism on the part of Austrian politicians.  On May 
3, parliamentarians from all political parties supported an 
initiative calling on the government to support European 
Parliament decisions to block the exchange of flight 
passenger data and to oppose U.S. use of SWIFT financial data 
in the fight against terrorism.  Parliamentarians termed the 
latter a case of "industrial espionage" on the part of the 
U.S. 
 
17.  (C) Other issues on which Austria and the U.S. have had 
disagreements include agriculture and nuclear 
non-proliferation.  OVP Agriculture Minister Josef Proell has 
made Austria a leader in the EU in opposing the use of 
genetically modified organisms (GMO) in agriculture.  On WTO 
issues, Proell has won the internal policy debate against his 
Economics Ministry colleague, making Austria a firm opponent 
of EU moves to meet U.S. initiatives to reduce agricultural 
supports.  On non-proliferation, Austria is one of the 
members of the Nuclear Suppliers Group (NSG) most critical of 
the U.S.-India civil nuclear energy deal.  Foreign Minister 
Plassnik has spoken out negatively as well. 
 
18.  (C) Such bilateral differences between the US and 
Austria are not new, but there has been a shift in tone since 
the beginning of the year.  Former Chancellor Schuessel's OVP 
government was never in a position to deliver robust support 
to the effort in Afghanistan, much less Iraq, for example, 
but they rarely went out of their way to poke the U.S. in the 
eye.  To the contrary, if there was no domestic political 
price, Schuessel tended to seek ways to support the U.S., 
such as at the U.S.-EU Summit in June 2006, when the 
Chancellor defended the President against mindless criticism 
of U.S. policy concerning terrorist renditions and detentions. 
 
19.  (C) Counter-terrorism cooperation with Austria has been 
good at the professional level.  Washington agencies will 
cover specific cases separately.  In addition, Austrian views 
on relocating Guantanamo detainees is an important issue that 
we will address septel. 
 
------------------------- 
Foreign Policy Priorities 
------------------------- 
 
20.  (C) Despite a good deal of grumbling about "Brussels" in 
the popular press and among the public generally, in fact 
European integration and policy coordination remain at the 
center of Austria's world view.  The new government's 
decision to change the name of the foreign ministry to the 
"Ministry for European and International Affairs" reflects 
the EU lens that colors Austria's view of the world. 
 
21.  (C) Beyond the EU, Austria has extensive commercial 
engagement in the entire eastern European and Balkan region, 
as well as in Russia.  Austrian companies own almost one 
fourth of all the banking and insurance business in Eastern 
Europe (exclusive of Russia).  However, this commercial 
engagement translates into broadly agreed vital foreign 
policy interests only in the Balkans.  Beyond the profit 
motive driving trade and investment, Austria's concern for 
Balkan stability arises out of fears over refugee inflows and 
potential military conflicts if the region were to return to 
 
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the uncertainties of the 1990s. 
 
22.  (C) Austria has used all means available to it to 
enhance Balkan stability.  Austrian military forces have been 
part of stability forces in Bosnia and Kosovo since the late 
1990s.  Its current deployment of over 300 troops in Bosnia 
and almost 600 troops in Kosovo is large in historical 
context.  The Austrians have also put considerable resources 
into facilitating diplomatic efforts to bring stability to 
the region.  The Foreign Ministry was a quiet but substantial 
source of support for Martti Ahtisaari's negotiating team. 
Austria also hosted conferences in 2004 and 2005 that brought 
together Kosovo Albanians, Serbs, and a range of 
representatives of regional governments, multilateral 
organizations, and non-government organizations.  Austrian 
commercial penetration of the Balkan area, especially in 
Slovenia and Croatia, have helped to create conditions for 
growth and stability. 
 
23.  (C) The region of the former Soviet Union, and 
especially the countries that the EU's New Neighborhood 
Policy comprises, is next on the Austrians' list of 
priorities.  Austria maintains a close eye on the development 
of democracy in Ukraine, Belarus and Moldova, and the future 
of Russia is a matter of keen interest to Vienna.  Austrians 
doubt, however, that they can have much impact on political 
developments outside of their role in EU policy formulation. 
In the energy sector, the Austrian energy company OMV and 
Austrian banks have long worked with Russian energy 
suppliers.  The Russian action of January 1, 2006 that 
resulted in a drop in gas deliveries to Western Europe came 
as a surprise to the Austrians.  It has reintensified 
Austrian efforts to seek alternative supplies of gas and 
other energy sources. 
 
24.  (C) The Middle East -- especially the Levant and North 
Africa -- forms the outer reach of Austrian strategic efforts 
to secure stability.  Plassnik has developed close working 
relations with a range of figures from the region, including 
Israeli Foreign Minister Livni and Palestinian Foreign 
Minister Abu Amr. 
 
25.  (C) In the areas of highest priority to the U.S. -- Iraq 
and Afghanistan -- Austria's engagement has been modest and 
episodic, but there have been some real contributions. 
Austrians were the first non-U.S./UK trainers to arrive at 
the Iraqi police academy in Jordan.  Gusenbauer supports the 
continuation of their presence until the mission ends. 
Gusenbauer and Darabos have also made a commitment to 
maintain the presence of Austrian staff officers as part of 
ISAF, even if they have refused to increase the number of 
Austrians in Afghanistan.  Austria fulfilled its 10 million 
dollars in financial pledges to Afghan reconstruction.  In 
Iraq, Austrian firms have led the way, with Austrian Airlines 
becoming the first western carrier to offer scheduled 
commercial service to Iraq with a Vienna-Erbil connection. 
There is increasing interest among Austrian companies in 
finding opportunities in northern Iraq.  However, Austria 
will not participate in deployments to Iraq. 
 
26.  (C) Austria considers itself a committed supporter of 
the UN system.  Austrians have been part of UN peacekeeping 
operations for almost five decades, and it has long 
maintained a force of almost 300 troops in the Golan Heights. 
 A key policy priority for the current Austrian government is 
winning a seat on the UN Security Council for the 2009-2010 
session.  Austrian officials raise this point with us at 
every opportunity, and we can expect them to continue to do 
so. 
 
27.  (C) A key element of Austria's global strategy is the 
encouragement of international dialogue.  It is a tenet of 
Austria's national mythology that the country's ability to 
maintain ties throughout the world constitutes a real 
contribution to peace and stability.  This has been a primary 
motivation behind a series of conferences Vienna has hosted 
aiming to build bridges between Islamic societies and the 
West.  Austria hosted two conferences of European Imams in 
2004 and 2006.  In November 2005, a major conference on 
"Islam in a Pluralistic World" attracted Afghan President 
Karzai, Iraqi President Talibani, and former Iranian 
President Khatami.  The Austrian initiative to host the May 
31 conference on "Women Leaders -- Networking for Peace and 
Security in the Middle East" is a part of this strategy. 
 
28. (C) More than most countries, Austria places great 
importance on conferences and ceremonials.  Events like the 
May 2005 commemoration of the State Treaty signing, the 
November 2005 Islam conference, and the June 2006 U.S.-EU 
Summit serve as chapter headings in the scroll of modern 
 
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Austrian history.  Beyond the substance of such events, the 
role they play in validating Austria's image of itself is 
important enough that the Austrians will go to great lengths 
to make them work. 
 
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Secretary Rice's Meeting with Chancellor Gusenbauer 
 
SIPDIS 
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29.  (C) In order to occupy the Chancellor's office, 
Gusenbauer traded away key ministries to the OVP, including 
Foreign Affairs, Economics, Finance and Interior.  He also 
compromised on key campaign promises.  At the government's 
January 11 swearing-in, many Social Democrats complained that 
Gusenbauer was "an SPO Chancellor in an OVP government." 
Perhaps in response, Gusenbauer has dug in his heels.  In 
public, at least, the SPO and OVP have engaged in more or 
less constant back-biting.  Nevertheless, the government has 
already lasted longer, and accomplished more, than many 
pundits predicted.  The negotiation and passage of a two-year 
budget has helped to shore up the government's credibility. 
 
30.  (C) This will be the USG's first cabinet-level meeting 
with Gusenbauer as chancellor.  It will be important to 
convey the message that we consider Austria a responsible and 
capable partner, with which the U.S. shares both values and 
broad interests in the world.  In addition, however, 
Gusenbauer needs to hear the message that, when we disagree, 
what is necessary is bilateral dialogue and not inflammatory 
populism.  Key objectives include the following: 
 
--  Afghanistan:  We need Austrian support to achieve 
stability, which benefits Austria along with all its European 
partners.  ISAF is a UN-mandated mission, and countries from 
throughout Europe, including neutrals, are engaged.  (In 
contrast to Austria's four staff officers with ISAF, Finland 
has committed 88 soldiers in Afghanistan, while Sweden has 
339.  Gusenbauer and the members of his government should 
continue to assess what Austria can do. 
 
--  Missile Defense:  We understand the fact that the 
Austrian government has to address its citizens' concerns. 
However, a great part of those concerns have arisen because 
of a lack of information about what missile defense means. 
We have been working with Gusenbauer's government to explain 
factually what is under discussion.  We need especially to 
ensure that the public understands that comparisons to the 
Cold War are both inaccurate and inappropriate.  The 
Secretary should reinforce these messages. 
 
SIPDIS 
 
-- Iraq:  Stability in Iraq is important for all of us. 
Austria can and should play as large a role as possible in 
helping to develop the capacity of Iraqis to ensure their own 
security.  Austrian commercial engagement in Iraq, especially 
in the north, can help to create the conditions for positive 
development.  In so far as the Austrian government can 
encourage this engagement -- for example, by providing 
guidance to the country's export credit facility (the 
Kontrollbank) -- it should work actively to do so. 
 
--  Balkans:  The U.S. greatly appreciates Austria's 
constructive engagement over the long term.  Military, police 
and diplomatic engagement remains crucial, and Austria should 
continue to expand its role. 
 
--  Iran:  Gusenbauer and his government must understand the 
importance of the international community's remaining united 
to block Iran's nuclear weapons aspirations.  Commercial 
engagement that does not take account of political 
considerations disrupts our efforts.  This is not the time 
for business as usual.  The decision by Austrian energy 
company OMV (31% owned by the Austrian government) to sign a 
preliminary agreement to exploit the South Pars gas fields as 
a source of Liquefied Natural Gas (LNG) runs directly counter 
to the world's interests in moving the Iranian regime away 
from its current course.  To cast the issue as Austria 
defending its companies against "extraterritorial" 
applications of American law is a tremendous mistake. 
Corporate decisions about strategic planning cannot drive 
international policy on this key issue.  Arguments about 
energy security miss the point:  there is no security in 
creating a dependency on one of the world's most misguided 
regimes.  Neither does the existence of other international 
oil companies (Shell, Repsol, etc.) make the huge OMV deal 
any more palatable -- especially at this time. 
 
--  Guantanamo:  Embassy views on how to approach the 
question of Guantanamo detainees will be provided septel. 
 
--  Visit to Washington:  Gusenbauer wants to visit in Fall 
 
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2007, before or after his participation in the UNGA.  He 
should have a realistic understanding of the prospects of a 
meeting with the President during this timeframe. 
 
------------------------------------- 
Side-Bar Discussions with FM Plassnik 
------------------------------------- 
 
31.  (C) The Secretary will have little time to engage 
privately with Foreign Minister Plassnik.  However, it will 
be crucial to our future interaction with this government 
that she hear three clear messages:  First, it is time to 
cool the rhetoric and discuss differences seriously, rather 
than through tabloid sensationalism.  Second, we wish to 
continue our quiet and constructive work on Guantanamo 
(septel).  Third, Afghanistan represents a critical challenge 
for the Euro-Atlantic security community, even neutrals. 
Kilner