US embassy cable - 04MADRID826

UNCLAS SECTION 01 OF 02 MADRID 000826 
 
SIPDIS 
 
DEPARTMENT FOR M, DS, DS/OFM, EUR/EX, EUR/WE 
 
E.O. 12958:DECL: N/A 
TAGS: AMGT, KREC, SP 
SUBJECT:  OFM AND EMBASSY MADRID DISCUSS 
TAX AND VEHICLE ISSUES WITH SPANISH MFA 
 
1.  Summary:  DS/OFM DAS lead a negotiating team 
consisting of Embassy Management Counselor, HRO Senior 
FSN, and an OFM Program Officer in discussions with 
Spanish representatives of the Ministries of Foreign Affairs 
and Finance.  This meeting focused on two issues: (1) the 
continued practice of the GoS to not grant the A&T staff the 
same tax relief benefits extended to diplomats and consular 
personnel and (2) the lengthy period it takes for official and 
personal vehicles to be properly registered and plated in 
Spain, including the issuance of cover plates.  End Summary. 
 
2.  DAS began the meeting by explaining the role of OFM 
and its interest in the tax and vehicle privileges extended to 
US Mission personnel worldwide.  OFM's authority to 
employ reciprocity without further approval from Congress 
was also detailed.  With this point as background, it was 
stressed to the Spanish side that improvements in their 
treatment of Post and its personnel, especially in the area of 
tax relief, could allow for an immediate and positive 
response from OFM. 
 
3.  Given that during past negotiations the Spanish 
Government has made clear that their interpretations of the 
tax relief obligations detailed in the VCDR and VCCR are 
inconsistent with those of the USG, a decision was made not 
to readdress this line of argument, but rather to seek a 
practical solution to this real problem for A&T staff.  DAS 
expressed the personal interest of Secretary Powell in 
securing the equitable treatment for all accredited members 
of US Missions abroad.  The Spanish were further informed 
that their policy of disallowing tax privileges for members of 
the A&T staff is practiced by only three other nations: the 
Bahamas, Barbados, and Morocco.  The US side advised 
that, according to OFM records, Spanish A&T personnel 
make up 53% of the nation's Mission to the US.  To provide 
a possible roadmap for achieving a mutually beneficial 
solution to this issue, information on recent agreements that 
resulted in the reciprocal extension of tax benefits to A&T 
personnel at the US Mission in Austria and Slovenia were 
discussed. 
 
4.  The Spanish delegation, led by the MFA's Director 
General of Protocol, began by expressing envy for the 
unique authority granted to OFM for dealing with matters of 
this nature.  He advised that under current regulations, the 
GoS had little leeway to quickly address or remedy the A&T 
tax situation.  Currently, such an action would require a 
change of law, which can be a lengthy and uncertain process. 
Diplomatic privileges in Spain are not extended by virtue of 
reciprocity and are uniform by decree.  Therefore, bilateral 
agreements on such issues do not appear viable.  However, 
the Spanish side agreed to study this issue and explore 
possible solutions with the best of intentions. 
 
5.  Secondly, DAS discussed Post's concerns with the current 
lengthy period (as long as two months) required for the GoS 
to properly register and plate Post's official and personal 
vehicles.  The OFM practice of registering vehicles within 
one day was described.  The Spanish seemed genuinely 
surprised by the news that there has been such a long delay 
in the processing of vehicle registrations.  They quickly 
agreed that even a one month delay is unacceptable, and they 
assured the US side that this issue would be promptly 
addressed.  Post will provide a list of the outstanding 
registrations so that action can be taken immediately.  The 
Spanish side expressed regret that, given the bureaucratic 
limitation of the Spanish system, the efficiency of OFM 
could not be matched, but agreed that improvements can be 
achieved.  The Spanish explained a new initiative underway 
to make the registration process web-based.  In theory, this 
will allow for a more efficient and smoother process. 
 
6.  In addition to the registration issue, the issuance of cover 
license plates for security purposes was addressed. 
Currently, the GoS will provide only one cover plate for each 
US Mission family.  This action forces family members to 
decide which vehicle and passengers remain a soft-target for 
terrorist actions. DAS made a strong appeal for the issuance 
of cover plates to all members of Post without limitation. 
The Director General of Protocol agreed that providing only 
one cover plate per family provided little benefit of security 
for a diplomatic family.  He recounted his personal 
experience as a terrorist target while he was serving outside 
Spain and how the lack of cover plates negatively affected 
him and his family.   He promised that action would be taken 
to address both the registration and licensing of vehicles. 
 
7.  As a final note, DAS requested an update on the situation 
concerning the seizure of Post's official VAT 
reimbursements due to judicial action.  The Spanish 
expressed their concern over several court decisions to seize 
USG's VAT refunds.  They noted that in some cases the 
Spanish State Attorneys had been denied participation to 
appeal and defend the non-attachability of the USG's VAT 
refunds.  They also pointed out that there is no law in Spain 
that addresses the immunity of a Foreign Sovereigns assets 
and that some Spanish judges tend to uphold the basic 
fundamental rights of citizens when these conflict with 
diplomatic immunity.  They reiterated that the MFA shared 
the USG's position and arguments on this issue and, as 
explained above, Spanish law does not clearly define the 
extent of diplomatic immunity, which leaves such matters 
open to judicial interpretation.  The MFA representative 
from its Legal Department expressed some optimism that a 
possible pending U.N. resolution may provide assistance in 
this matter, however others on the panel expressed privately 
that this position may be overly optimistic. 
 
ARGYROS