US embassy cable - 05ATHENS2992

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 002992 
 
SIPDIS 
 
STATE PASS TO USTR 
 
E.O. 12958: DECL: 10/26/2015 
TAGS: ECON, ETRD, GR 
SUBJECT: GREEKS FLEXIBLE ON WTO MARKET ACCESS, BUT 
UNWILLING TO RISK FRENCH WRATH DURING EU BUDGET SEASON 
 
\\FOLLOWING MESSAGE BEING RESENT UNDER NEW MRN AND MCNS. 
MESSAGE WAS SENT AS DUPE ATHENS 02791 ON 31 OCTOBER 2005.\\ 
 
REF: A. ALLGEIER - EU AMBASSADORS TELCON 10/21 
     B. STATE 190730 
 
Classified By: AMB Charles P. Ries, E.O. 12958 reasons 1.4 (b) and (d) 
 
1.  (SBU) Summary:  At the end of a week of pressing at all 
levels, Ambassador met with Greek Minister of Finance 
Alogoskoufis for second time, who admitted that while Greece 
is willing to be flexible regarding market access for the 
Doha Development Agenda (DDA), their national interest does 
not allow them be seen as willing to compromise lest the 
French abandon them on domestic support, or retaliate against 
them in the EU budget process.  End Summary. 
 
2.  (SBU)  In response to requests to energize EU member 
states to produce a more meaningful EU offer on agriculture 
for the upcoming Hong Kong WTO ministerial, Ambassador raised 
the issue with Minister of Economy and Finance Alogoskoufis, 
Minister of Foreign Affairs Molyviatis, and the Chairman of 
the Federation of Greek Industries. Econcouns also met with 
the Secretary General of Finance and Trade Policy Director. 
Ambassador and econcouns met together with Alogoskoufis 
October 26 to get a definitive view of the Greek position. 
Alogoskoufis told Ambassador that Greece could be more 
flexible on agricultural market access, but dares not be seen 
as among those willing to compromise, for fear that France 
would abandon Greece on the issue of domestic support, or 
even retaliate against Greece in the EU budget process. 
 
3.  (SBU)  Alogoskoufis noted that Greece has agricultural 
concerns: it has the largest percentage of its population 
still working in agriculture and derives a larger percentage 
of its GDP from agriculture than most EU nations. 
Furthermore, many regions of Greece, particularly in the 
poorer north, depend almost entirely on agriculture for their 
livelihood.  That said, Alogoskoufis was clear that Greece 
was not irretrievably opposed to a better EU agricultural 
market access offer.  Greece is mainly interested, he said, 
in protecting the ability to receive substantial domestic 
support in the green and blue boxes, and only secondarily in 
ensuring a few products (peaches, olive oil, cotton and 
sugar) are considered sensitive. 
 
4.  (C)  Regarding the current EU offer and Commissioner 
Mandelson's position, Alogoskoufis felt the French were 
ensnared in a box of domestic politics, with no flexibility, 
and that the Commissioner had gone too far in trying to 
ensure a successful outcome. While Alogoskoufis acknowledged 
a good outcome for Hong Kong was a laudable goal, he felt 
that countries with threatened interests were now reining in 
Mandelson.  Alogoskoufis also observed that Hong Kong did not 
equal Doha, and that agriculture was not the only issue in 
the DDA.  Ambassador noted there was a severe risk to Hong 
Kong and the DDA in the event that the EU failed to produce 
an offer somewhere in the negotiable range, but Alogoskoufis 
demurred. In his assessment the EC could make its offer to do 
more on agricultural market access in Hong Kong, when it has 
had a chance to evaluate offers in other areas.  Ambassador 
noted that the U.S. supported Mandelson on the issue of 
working on NAMA and services as well as agriculture, but 
stressed that in our assessment Lamy was correct: the gap on 
agricultural offers was outside the negotiable range, and had 
to be narrowed in order to have any hope for success. 
 
5. (C)  Ambassador asked whether the GoG would support a 
proposal for the EU to promise to improve its agricultural 
market access offer at Hong Kong.  Alogoskoufis said this 
could be possible on the condition that there was sufficient 
quid pro quo on NAMA and services. He observed that an 
improved EU offer was going to take longer than a couple of 
days to put together, especially as the Germans were 
currently without strong leadership and the French were 
backed into a corner. He observed that those two countries do 
not agree about everything, but were pretty close on this 
issue, and Greece simply could not be seen as being bold in 
the face of that opposition. 
 
6. (C)  Comment: Alogoskoufis returned time and again to the 
idea of French retaliation against Greece, either on domestic 
support issues in the DDA or in the EU budget process, 
emphasizing that this was the crux of the Greek position.  He 
acknowledged that Mandelson was pursuing a sound economic 
strategy in pushing for liberalization, and that many EU 
countries were in fact, working against their own interests 
by being intransigent on agriculture.  Nonetheless, 
Alogoskoufis made it clear that there was a lot of concern, 
which the GoG shares, that after the CAP reform of 2003, it 
was politically impossible to take on domestic agricultural 
concerns again this soon.  In Greece's case, he noted that 
the issue was currently passing without much press attention, 
but could ignite in the event that farmers smelled a 
possibility of being sold out. 
 
7.  (C)  Alogoskoufis also candidly acknowledged that Greece 
was exposed because of its excessive deficit procedure as 
well as its failure to implement ECJ decisions (directing 
repayment of subsidies to Olympic Airlines), and EU 
directives (deregulating the energy sector, environmental 
failures, and others).  This "vulnerability," caused by Greek 
failures to be good Europeans, will continue to keep Greece 
from taking strong stands in the EU.  Last summer, at the 
prodding of the EC, Greece nearly became the first EU nation 
to unilaterally abrogate its bilateral air transport 
agreement with the U.S., citing exactly the same concerns; it 
was weak vis-a-vis the EU and larger members because of the 
excessive number of cases and judgments pending against it. 
Also, the Greek economy is quite reliant on EU transfers, and 
while they understand at some level that they are going to 
lose much of that money to the ten new entrants, it is clear 
they are anxious to hang on to whatever they can get. 
Alogoskoufis summed it up best when he noted that the 
discussion was not just about the DDA or Hong Kong, but had 
greater implications for Greece in general; "In the EU," he 
said, "everything is related."  End comment. 
RIES