US embassy cable - 05MADRID4054

C O N F I D E N T I A L SECTION 01 OF 02 MADRID 004054 
 
SIPDIS 
 
E.O. 12958: DECL: 11/23/2015 
TAGS: ETRD, ETTC, PREL, CU, SP 
SUBJECT: SPAIN/CUBA: TITLE III OF LIBERTAD ACT 
 
REF: A. STATE 207359 
     B. MADRID 2131 
 
Classified By: Political Counselor Kathy Fitzpatrick; reasons 1.4 (B) a 
nd (D). 
 
1. (U) Spain remains among the most important foreign 
investors in Cuba, a position it has held since the beginning 
of the 1990s.  The "Association of Spanish Companies in Cuba" 
(AEEC) represents over 170 Spanish companies that trade with 
or invest in Cuba.  The current Socialist (PSOE) government 
has continued the long-standing Spanish policy of promoting 
trade with and investment in Cuba.  However, the AEEC 
complains that the Zapatero administration has not reinstated 
the provision of political risk insurance through the 
"Spanish Credit Insurance Company" (CESCE) for sales to and 
investments in Cuba, suspended several years ago due to 
Cuba's substantial unpaid debts to CESCE.  The Zapatero 
government has continued its policy of seeking engagement 
with the Cuban government and reduced the Aznar government's 
emphasis on promoting human rights.  Spain did not invite 
dissidents to its October 12 national day event in Havana in 
order to avoid conflict with the Cuban government on that 
issue.  Spain successfully argued in EU councils to delay a 
review of the EU Restrive Measures on Cuba from December 2005 
until June 2006. 
 
2. (C) At our insistence, Spanish officials acknowledge 
privately that normalized relations with the Castro 
government have not yielded significant results, but claim 
that more time is needed to allow their measures to bear 
fruit in the form of increased political space for dissidents 
and greater influence by EU governments over Cuban government 
human rights practices.  In meetings with USG officials, 
including Cuba Transition Coordinator Caleb McCarry, EUR A/S 
Dan Fried, and WHA PDAS Charles Shapiro, Spanish officials 
made clear that the GOS will continue to focus on building 
ties to members of the current Cuban regime, who they believe 
Spain may be able to influence in the post-Castro era.  At 
the same time, Spanish officials assert that they have 
replaced the invitations to dissidents to attend national day 
events with a more robust "structured dialogue" between 
dissidents and EU diplomats in Havana. 
 
3. (C) We do not believe Spain will deviate from its current 
policy of engagement with the Cuban government, both because 
of the substantial investments in Cuba by Spanish companies 
and because of the Zapatero government's belief that 
engagement will lead to increased Spanish influence over 
Castro's successors.  However, the continued intrasigience of 
the Castro government and opposition by some EU members to 
the suspension of EU Restrictive Measures against Cuba appear 
to have reduced for now Spain's willingness to seek a further 
weakening of EU policy towards Cuba.  This could change if 
the Cuban government releases a substantial number of 
political prisoners (which the GOS would claim as a 
vindication of its policy).  While the opposition Popular 
Party (PP) is highly critical of the PSOE government's 
diminished support for Cuban human rights activists, all 
political groupings in Spain are unified in their opposition 
to the Libertad Act, and particularly to Title III.  Both the 
PSOE and the PP would likely seek unified EU retaliatory 
action if Title III action were taken against a Spanish 
company. 
 
4. (U) Spanish companies are well aware of the potential of 
U.S. legal action against them under the Libertad Act and 
take care to obscure precise information 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. 
AGUIRRE