US embassy cable - 05ATHENS830

S E C R E T SECTION 01 OF 04 ATHENS 000830 
 
SIPDIS 
 
FOR DEPUTY SECRETARY ZOELLICK FROM AMBASSADOR RIES 
FOR EUR/SE AND EUR/SCE 
 
E.O. 12958: DECL: 03/21/2014 
TAGS: CY, GR, PGOV, PREL, TU, ZL, VISIT 
SUBJECT: YOUR VISIT TO GREECE 
 
Classified By: Ambassador Charles P. Ries.  Reasons 1.4(b/d). 
 
1.  (C) SUMMARY:  I am delighted to welcome you to Greece 
March 30-31.  The Greeks see your trip to Athens, following 
on the heels of Foreign Minister Molyviatis' March 24 visit 
to Washington, as more proof of America's reengagement with 
Europe.  Greece will want to characterize your visit -- the 
first by a senior State Department official since President 
Bush took office -- as the start of a strategic dialogue with 
the U.S., and it is in our interest to have them think this 
way.  Greece may be one of the smaller and cash-strapped 
countries in the EU, but it can be a good partner for the 
U.S. in the Balkans, in resolving the Cyprus-Turkey-Aegean 
issues, and in outreach to the Middle East. END SUMMARY. 
 
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THE PLACE: ATHENS 2005 
---------------------- 
2.  (U) The last three years have been momentous for Greece. 
In 2002, Greece arrested the ringleaders of the domestic 
terrorist group "17 November".  In 2003, Greece held the EU 
Presidency, and kept the U.S.-EU relationship intact despite 
deep splits within Europe on relations with the U.S.  In 
2004, Greece hosted the Summer Olympics and Turkey's EU 
membership aspirations were advanced.  In 2005, Greece joined 
the UNSC as a non-permanent member for the first time since 
1952. 
 
3.  (C) Such successes boosted Greece's self-confidence that 
it can function effectively as a modern nation in Europe. 
But its future as an outward-looking, non-idiosyncratic 
nation is not yet cast in stone.  Whenever it can, Greece 
avoids staking out national positions on major issues by 
deferring to EU conventional wisdom.  And when it has to 
choose, Greece has tended to stick close to France and 
Germany.  This plays well at home, where Greece's 
inflammatory media is quick to hurl accusations of weakness 
whenever it considers the government has given in to 
"asphyxiating pressure" from the USG.  But old habits are 
beginning to change.  Across most of the political spectrum, 
Greeks now want their government to be seen as an important 
and valued partner of the United States. 
 
4.  (C) Part of your message should be that we value Greece's 
views and need Greece's help on important issues, especially 
in Greece,s backyard.  This is particularly true in the 
Security Council where Greece,s value-added is its own 
perspective on regional interests such as the Balkans and 
Cyprus.  In return for this validation, we can ask them to do 
more for us. 
 
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THE PLAYERS: FM MOLYVIATIS & PM KARAMANLIS 
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5.  (C) The 76-year old Petros Molyviatis was a career 
diplomat from 1956-1974, and has a close relationship with 
the Karamanlis family, serving Constantinos Karamanlis (the 
current PM's uncle) while he was PM and President. 
Molyviatis has coached the inexperienced Karamanlis on 
foreign policy.  He is a serious person, and while he is 
politically cautious, he is also pragmatic, particularly on 
Turkey.  On the other hand, Molyviatis has shown little 
creativity on Cyprus, and is inclined to pay more attention 
to the EU than to NATO. 
 
6.  (U) Karamanlis was educated in the U.S. and has a low-key 
and personable style.  When elected in March 2004, the Summer 
Olympics were only five months away and were necessarily his 
overwhelming priority.  As a result, however, his 
Administration did not really get going until October 2004. 
Karamanlis has not set out a bold foreign policy course, 
preferring to grapple with Greece's poor economy.  That said, 
Karamanlis stood firm at the December European Council to 
support Turkey's EU path.  In May, Karamanlis will travel to 
the U.S. to give the commencement address at the Fletcher 
School, and has asked for a meeting with the President in 
Washington.  The White House is considering the request. 
 
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THE ISSUES: REGIONAL INTERESTS, GLOBAL RESPONSIBILITIES 
--------------------------------------------- ---------- 
7.  (C) Your meeting with Foreign Minister Molyviatis will 
occur first, and he will want to treat it as preparation for 
your follow-on meeting with the Prime Minister by briefly 
reviewing regional items and the transatlantic agenda.  He is 
certain to seek your views on the Balkans and Cyprus. 
Karamanlis needs to hear an unambiguous message from you 
about USG concerns over successor domestic terrorist groups. 
 
THE BALKANS 
 
8.  (C) Greece supports the Standards for Kosovo review this 
summer, but does not want to prejudge the outcome.  While 
Greece does not rule out independence for Kosovo, the Foreign 
Minister is on record seeking "something less than 
independence" and the MFA has made a big push to increase the 
EU,s role in post-review Kosovo (despite some pushback from 
Brussels).  Molyviatis has already raised with me the 
prospects for Greece's inclusion in the Contact Group.  I 
have noted the problems with expansion of the Contact Group, 
while emphasizing our willingness to keep Greece in the loop. 
 I have urged the Greeks to continue to be more statesmanlike 
(rather than pro-Serb) on policy and to focus on concrete 
measures, such as their Balkans Reconstruction Program. 
 
9.  (C) Molyviatis will certainly raise the Macedonia name 
issue and is expected to reiterate that Greece could not 
accept a two-name solution.  He will want your support and 
advice.  We have emphasized to the Greeks that this issue 
does not preoccupy Washington, and have urged Molyviatis to 
move Greece beyond semantics to more urgent, shared 
priorities.  His response is that the name issue is important 
because it risks Macedonia's EU and NATO prospects since 
Greece's parliament must ratify accession.  Further, 
Molyviatis worries a contentious Macedonia EU accession 
process might lead to a referendum in Greece, which would be 
a bad precedent for even more unpopular Turkey later. 
Molyviatis believes that Macedonia does not understand these 
very real dangers, and may ask you to help transmit this 
message to Skopje.  In turn, you might suggest the Greeks try 
to engage their EU partners, who have as much -- or more -- 
stake in a negotiated outcome as we do. 
 
WATCH OUT FOR:  On the Macedonia name issue, both Karamanlis 
and Molyviatis will want you to support Greece's position in 
the UN talks.  Our standard line is to support the talks, not 
a particular outcome.  The Greeks will also be looking for 
your affirmation that the U.S. will implement a 
mutually-agreed solution, something we have said before. 
 
TURKEY AND CYPRUS 
 
10.  (C) Molyviatis has an ambitious schedule of high-level 
meetings with Turkey this spring aimed at putting in place a 
new package of CBMs, hopefully including the de-arming of 
Greek and Turkish fighters overflying the Aegean.  Both 
Molyviatis and Karamanlis will complain that although they 
are committed to rapprochement, they are hampered by 
frequent Turkish sorties into disputed Aegean airspace and 
waters.  Molyviatis understands Turkey's need to demonstrate 
that it challenges some of the Greek claims (which we 
generally don't accept either) but says the scale of 
show-the-flag exercises is excessive.  Exploratory talks 
between Athens and Ankara have established a good channel of 
communication, but no convergence of views.  Recently, 
Molyviatis has begun to warn us that the "provocations" by 
Turkey in the Aegean are undermining Greek support for 
Turkey's EU path. 
 
11.  (C) Meanwhile, Cyprus is at a standstill.  Greece gave 
only tepid support to the Annan Plan in April 2004.  It is up 
to the Parties to resume negotiations, and convince the UN it 
has a leading role to play.  The first stumbling block has 
been Cypriot President Papadopoulos, unwillingness to answer 
the SYG,s request that he elaborate, in writing, his central 
objections to the Annan Plan.  While Karamanlis has told me 
he has "zero influence" over Papadopoulos, Molyviatis told me 
on March 16 that he expected Papadopoulos to send a letter to 
the UNSYG.  In any case, Cyprus is not a serious priority for 
the GoG.  I would recommend you ask Molyviatis to consider 
ways Greece could show more support for efforts in the EU to 
ease the economic isolation of the Turkish-Cypriots. 
Molyviatis will probably ask you if Washington is prepared to 
put forward new ideas for Cyprus (I have told him that this 
is mainly the responsibility of the parties). 
 
12.  (S) WATCH OUT FOR:  Last September the Department 
notified Congress that Greece was in violation of the Arms 
Export Control Act for the unauthorized retransfer of 
U.S.-origin equipment (howitzers, helos) by Greece to Cyprus. 
 The Greeks and Greek-Cypriots insist the arms are crucial to 
the island,s security.  The Department is reviewing 
applications for third-party transfers of equipment from 
Germany to Greece, some of which would backfill the 
unauthorized U.S. equipment now on Cyprus. 
 
(If raised) The retransfer of U.S. arms to Cyprus is a 
violation of U.S. law.  The arms should be removed.  We are 
reviewing re-transfer requests, but won,t backfill what has 
been illegally retransferred to Cyprus. 
 
GREEK PARTICIPATION IN IRAQ/AFGHANISTAN 
 
13.  (C) PM Karamanlis made a campaign promise not to send 
Greek forces to Iraq.  Thus, Greece remains unwilling to lift 
its NATO caveat on participation of Greek officers in NATO 
billets in the NATO Training Mission-Iraq.  Greece has 
offered to train Iraqis in third countries, but has done 
nothing specific aside from a pledge of 300,000 euro for the 
NATO Training Mission-Iraq trust fund.  Molyviatis is willing 
to consider "filling in the holes" where U.S. and/or 
coalition forces/trainers need to be backfilled. 
 
14.  (U) In Afghanistan, Greece contributes about 170 troops 
to ISAF and offered in February to deploy a Role 2 Med Unit 
to Kabul this summer (fulfilling a NATO requirement).  We 
understand, however, that the Greek med unit, originally 
offered in response to a requirement to replace a Spanish 
unit in May, will not be ready to deploy until the fall and 
is understrength.  This is almost certainly too late to be of 
value. 
 
BROADER MIDDLE EAST/NORTH AFRICA 
 
15. (C) Greece,s proximity to the Middle East and its 
self-proclaimed good relations with the Arab world make it a 
good venue to bring Middle East partners together.  I have 
discussed options with Molyviatis, and he agreed it made 
sense for Athens to offer to host a BMENA/Forum for the 
Future ministerial in Athens. 
 
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HOMELAND SECURITY ISSUES 
------------------------ 
16.  (C) I urge you to raise with Karamanlis our concerns 
about the possibility of domestic terrorist successor groups 
in Greece.  In the last year, there have been five serious 
incidents directed against the Greek police, including the 
murder of a Greek guard outside the residence of the UK 
Defense Attache (a previous UK DATT was murdered by "17 
November" in 2000, the last victim of 17N.)  No group has 
claimed responsibility; no one has been arrested.  Greece has 
also released two convicted domestic terrorists on "medical 
grounds."  The message to deliver to Karamanlis is that 
Greece did an excellent job hosting the Olympics, but there 
can be no "Closing Ceremony" for the fight against terrorism. 
The release of two convicted terrorists sends the wrong 
signal and we are concerned a new chapter in domestic 
terrorism may be opening in Greece. 
 
WATCH OUT FOR: The Attorney General approved Greece for 
inclusion in the Visa Waiver Program in May 1999, subject to 
criteria that Greece did not then, and does not now, meet. 
Among other requirements, Greece needs to institute a central 
authority to issue and track biometric passports (it has 
adopted the requisite legislation and is now in the process 
of doing so).  The Greeks have noticed that the U.S. has 
given Poland a "road map" for qualification for the VWP, and 
CA has agreed to work with Washington agencies to develop a 
similar "road map" for Greece. 
 
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STATE OF THE ECONOMY 
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18.  (U)  Karamanlis will tell likely you that the economy is 
his highest priority, and there are good reasons for it. 
Greece continues to battle chronic deficits, declining 
competitiveness, and poor public sector performance. 
Structural change is urgent.  The government has been 
attempting to control expenditures through privatizations, 
but with unemployment nearing 11 percent, these moves provoke 
public outcry in a country accustomed to lifetime employment 
and generous pensions.   Greece caused an EU sensation when 
last fall it announced that the previous government had 
mis-reported expenditures and "discovered" that Greece had 
exceeded the three percent deficit threshhold for eurozone 
membership.  Just last week, Greece closed the books on 2004, 
with a fiscal deficit of 6.1 percent. 
 
19. (U) Foreign investment in Greece has been largely static 
for the last decade.  Notoriously complex regulations hamper 
business formation and the tax code is opaque.  The GoG is 
moving legislation to increase tax code transparency, cut 
corporate taxes from 35 percent to 25 percent, and to offer 
special incentives for investment in high tech and selected 
industries (e.g. food processing and tourism). 
 
20. (U) Although Greece has EU-standard IPR legislation on 
the books, we are pushing for increased enforcement to help 
promote investment.  Greece does not see itself as a major 
player in international trade affairs, and rarely takes a 
position ahead of the EU consensus.  This stance can lead it 
to fail to grasp the potential domestic impact of 
transatlantic trade disputes.  This occurred most recently 
with the rice dispute, in which Greece initially declined to 
take a role.  Only after the retaliation list was published, 
which included several key Greek exports (olives and 
peaches), did the government instruct its delegation in 
Brussels to help find a solution.  Greece continues to be a 
vocal opponent of agricultural biotechnology products, and 
has considered imposing excessive testing regulations that 
would threaten our exports of corn seeds.  Additionally, in 
1997, Greece imposed severe SPS restrictions on U.S. wheat 
exports, citing Karnal bunt (Kb) concerns.  Although these 
restrictions were moderated in 2000, U.S. wheat exports to 
Greece remain negligible. 
 
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PUBLIC DIPLOMACY 
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21.  (U) Burdened by a selective reading of postwar history 
which holds the U.S. responsible for the Greek junta and the 
Turkish invasion of Cyprus, Greek public opinion toward U.S. 
policies is generally the most negative in Europe.  A 
December 2004 poll, taken after the successful cooperation on 
the Olympics, showed 80 percent of Greeks nevertheless 
believing the U.S. plays a negative role in the fight against 
terrorism.  Many Greeks who are insecure about their 
country's place see the bumps and swerves of the relationship 
as part of an American master plan.  At the same time, Greeks 
make up the largest percentage of foreign students in the 
U.S., related to population, of any country in the EU.  Many 
Greek elites have a nuanced and balanced view gained from 
study in the U.S. or from working closely with Americans. 
The Karamanlis government has been reluctant to publicly 
criticize the U.S., which has in turn tempered the Greek 
media's editorial line toward our policies.  Your visit will 
be viewed here with mixed emotions.  Some will see your visit 
as an opportunity for Greece; others will carp that the 
Secretary hasn't come; and the elites will be relieved that 
 
SIPDIS 
she hasn't come, since her visit would launch local protests. 
Ries