US embassy cable - 04MADRID4550

C O N F I D E N T I A L SECTION 01 OF 02 MADRID 004550 
 
SIPDIS 
 
WHA/CCA FOR WHITAKER AND ZUNIGA BROWN 
 
E.O. 12958: DECL: 12/01/2014 
TAGS: ETTC, PREL, CU, SP 
SUBJECT: SPAIN/CUBA:  REVIEW REGARDING SUSPENSION OF TITLE 
III OF THE LIBERTAD ACT 
 
REF: SECSTATE 248337 
 
Classified By: Political Counselor Kathy Fitzpatrick; reasons 1.5 (B) a 
nd (D) 
 
1. (C) Summary.  Spain is among the most important foreign 
investors in Cuba and the ruling Socialist party has 
continued the Popular Party's policy of encouraging further 
investment and trade with Cuba.  On human rights issues, the 
GOS has broken with the Aznar administration's emphasis on 
support for democracy activists in favor of seeking greater 
dialogue with the Castro regime.  Within the EU, Spain has 
led the effort to end the EU policy of inviting dissidents to 
EU national day events, calling the invitations a major 
impediment to normal contact with the Cuban authorities. 
Despite our displeasure over the direction of Spanish policy 
towards Cuba, we should consider whether it is in our 
interest to deepen our divisions with the EU over Cuba by 
authorizing Title III actions against Spanish entities, given 
EU countries' tendency to defer to Spain on Cuba issues. 
Madrid considers itself a bridge between Cuba and the EU and 
has emphasized this purported role to overcome the objections 
of countries that insist on a strong, principled EU position 
on Cuba.  Even EU countries that have resisted Spanish 
efforts to weaken EU positions on Cuba may feel compelled to 
support an EU partner faced with U.S. legal action.  End 
Summary. 
 
//SPAIN SEEKS TO EASE EU "RESTRICTIVE MEASURES" ON CUBA// 
 
2. (C) As a member of the EU, Spain is a party to the EU 
Common Position on Cuba, which guides EU diplomatic relations 
with Cuba and links improved bilateral relations to an 
improvement in Cuba's human rights record.  Spanish officials 
have repeatedly stated their commitment to the Common 
Position.  However, over the last six months, and in 
particular since September, the GOS officials have emphasized 
their rejection of Aznar's activism on behalf of Cuban 
opposition figures and have advocated the "modification" of 
the EU's "Restrictive Measures" against Cuba.  Madrid's 
primary objective is to end the policy of inviting Cuban 
opposition figures to EU national day celebrations, which the 
GOS cites as the main obstacle to normal diplomatic ties. 
The GOS asserts that normal diplomatic relations would enable 
the GOS to positively influence Cuban officials and would not 
preclude robust relations with dissidents. 
 
3. (C) We strongly disagree with GOS efforts to weaken the EU 
Restrictive Measures and believe we should do whatever 
possible to block Madrid's initiative within the EU.  Spanish 
officials have responded to our criticism of their actions on 
the Restrictive Measures by stating their intention to 
promote continued, and even increased contacts with Cuban 
opposition figures.  In public statements on Cuba, both 
President Zapatero and FM Moratinos have stressed the need 
for the GOC to institute democratic reforms as a precondition 
for greater support for Cuba by the EU.  Spain's latitude on 
Cuba is hemmed in by EU partners, such as the Czech Republic, 
that reject weakening EU measures and instead support a 
strong, principled stand in support of pro-democracy 
activists.  This political landscape would probably shift to 
our disadvantage in the event of legal action against a 
Spanish company under Title III. 
 
4. (C) Regardless of the government in power, Spain plays a 
leading role on Cuba issues within the EU.  Under Aznar, 
Spain was a key player in solidifying EU support for a 
strong, principled defense of human rights issues (even as 
his government pursued continued Spanish investment in Cuba 
and opposed the U.S. embargo).  With the shift in Spain's 
Cuba policy under Zapatero, we still see EU countries 
deferring to Spain on Cuba policy, though this time in a 
negative direction.  The GOS understands its leverage on Cuba 
within the EU and, if Title III action were taken against a 
Spanish company, it would seek to rally its EU partners to 
its defense, and perhaps even undermine broader EU support 
for the Common Position.  Countries that have resisted 
Madrid's attempts to water down EU policy towards Cuba could 
feel undermined by a USG decision to permit legal action 
against Spanish companies. 
 
//MAJOR SPANISH INVESTMENTS IN CUBA// 
 
5. (U) Spanish businesses are well aware of the potential of 
U.S. legal action against them under the Libertad Act and 
take care to obscure precise invormation regarding their 
investments in Cuba.  However, we have obtained the following 
general information regarding the major Spanish investors in 
Cuba: 
 
-- Grupo Sol Melia: Hotel/Tourism industry.  Locations in 
Cuba include Havana, Varadero, Cayo Largo, Cayo Santa Maria, 
Ciego de Avila, Cayo Largo del Sur, Cayo Guillermo, Playa 
Esmeralda, and Santiago de Cuba.  The total investment amount 
is unknown, but press reports indicate Sol Melia will invest 
USD 50 million in two hotels in 2004-2005. 
 
-- Inversiones Ibersuizas: Commercial investment firm. 
Investments in Cienfuegos and Santiago de Cuba.  According to 
press reports, Inversiones Ibersuizas has invested a total of 
USD 150 million in various Cuban projects. 
 
-- Occidental Hotels and Resorts: Hotel/Tourism.  Investments 
in Havana and Play Yuraguanal.  Investment amount unknown. 
 
-- Grupo Pinero: Hotel/Tourism.  Investment in Varadero. 
Investment of at least USD 2 million, according to press 
reports. 
 
-- Iberostar: Hotel/Tourism.  Investments in Varadero, Cayo 
Coco, and Trinidad.  Investment amount unknown. 
 
-- Barcelo: Hotel/Tourism.  Investments in Varadero and Cayo 
Largo del Sur.  Investment amount unknown. 
 
-- NH Hoteles: Hotel/Tourism.  Investment in Havana. 
Investment amount unknown. 
 
-- Grupo Riu: Hotel/Tourism.  Investment in Varadero. 
Investment amount unknown. 
 
-- Hotetur: Hotel/Tourism.  Investment in Varadero and 
Havana.  Investment amount unknown. 
 
-- Aguas de Barcelona: Utility.  Investment in Havana in 
joint venture with Aguas de La Habana.  Investment of at 
least EUROS 5 million in 2002.  Subsequent investment amounts 
unknown. 
 
-- Grupo Altadis: Tobacco.  Unspecified location. Investment 
amount unknown 
 
-- Grupo Freixenet: Wine/Alcoholic Beverages. Unspecified 
location.  According to press reports, Freixenet has invested 
USD 200,000 to help the Cuban wine industry. 
 
-- Repsol YPF: Energy.  Investment in Cuban territorial 
waters.  According to press reports, total Repsol investment 
is USD 25-40 million. 
 
-- Iberia Airlines: Transportation industry.  Investment in 
Varadero.  Investment amount unknown. 
MANZANARES