VZCZCXRO1676
RR RUEHAG RUEHDF RUEHLZ
DE RUEHRL #0008/01 0061325
ZNR UUUUU ZZH
R 061325Z JAN 10
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC 6189
INFO RHEHAAA/WHITE HOUSE WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCNFRG/FRG COLLECTIVE
RUEHBS/AMEMBASSY BRUSSELS 1893
RUEHLO/AMEMBASSY LONDON 0615
RUEHFR/AMEMBASSY PARIS 1132
RUEHRO/AMEMBASSY ROME 2637
RUEHNO/USMISSION USNATO 1658
RUEHVEN/USMISSION USOSCE 0821
RHMFIUU/HQ USAFE RAMSTEIN AB GE
RHMFISS/HQ USEUCOM VAIHINGEN GE//J5 DIRECTORATE (MC)//
RHMFISS/CDRUSAREUR HEIDELBERG GE
RUKAAKC/UDITDUSAREUR HEIDELBERG GE

UNCLAS SECTION 01 OF 05 BERLIN 000008 
 
STATE FOR INR/R/MR, EUR/PAPD, EUR/PPA, EUR/CE, INR/EUC, INR/P, 
SECDEF FOR USDP/ISA/DSAA, DIA FOR DC-4A 
 
VIENNA FOR CSBM, CSCE, PAA 
 
"PERISHABLE INFORMATION -- DO NOT SERVICE" 
 
SIPDIS 
 
E.0. 12958: N/A 
TAGS: AF IF XF IC EFIN
SUBJECT: MEDIA REACTION: U.S., AFGHANISTAN, IRAN, MIDEAST, ICELAND, 
 
DEFENSE, ECONOMIC;BERLIN 
 
¶1.   Lead Stories Summary 
¶2.   (U.S.)   Obama - Intelligence Services' Meeting 
¶3.   (Afghanistan)   London Conference 
¶4.   (Iran)   Ban to Talk to Foreign Institutions 
¶5.   (Mideast)   New Peace Efforts 
¶6.   (Iceland)   Government Won't Repay Debts 
¶7.   (Defense)   A 400 M 
¶8.   (Economic)   State of U.S. Economy 
 
 
¶1.   Lead Stories Summary 
 
The main story in today's print media is the conflict between 
Foreign 
Minister Westerwelle and the head of the Expellee Organization, 
Erika 
Steinbach, on her future job as board member of the Foundation 
"Flight, Expulsion, Reconciliation."  Other stories deal with 
Iceland's refusal to repay debts to the UK and the Netherlands 
(Handelsblatt, FT Deutschland) and the most recent unemployment 
figures (Berliner Zeitung).  Editorials focused on the Steinbach- 
Westerwelle conflict and on the renewable energies project in the 
North Sea.  ZDF-TV's early evening newscast heute and ARD-TV's early 
 
evening newscast Tagesschau opened with reports on Steinbach. 
 
¶2.   (U.S.)   Obama - Intelligence Services' Meeting 
 
Under the headline "Obama acts as counterterrorism President," 
Spiegel 
Online led with a story noting: "He wanted to move away from the 
warlike politics of his predecessor George W. Bush, but the failed 
Detroit attack makes clear:  the fight against terrorism is also the 
 
main business for Barack Obama.  His speech after the intelligence 
meeting shows how much the new role will change his style of 
government." 
 
Berliner Zeitung (1/6) noted: "One result was clear already prior to 
 
the security meeting: The dark shadow of terror fears has settled 
down 
around Obama's presidency.  Before the Detroit plot, the topic 
hardly 
played a role eight years after 9/11...  Experts now believe that it 
 
will play a greater role on Obama's agenda this year." 
 
FT Deutschland (1/6) carried a page on America's airport security 
policy, highlighting:  "America closes down - In fear of new terror 
 
attacks, the U.S. tightens its entry regulations.  However, many of 
 
the protectionist measures are ineffective and put off tourists and 
 
businessmen.  Israel shows how to create high security standards 
with 
little use of technology." 
 
Berliner Zeitung (1/6) headlined "Double agent humiliates the CIA," 
 
and notes in its intro: "Many things that happened last week at the 
 
CIA outpost Forward Operating Base Chapman in the Afghan border 
region 
are still unclear....  However, it seems to be clear what led to the 
 
 
BERLIN 00000008  002 OF 005 
 
 
serious setback: the suicide bomber was obviously a double agent 
with 
connections to al Qaida....  The terror network humiliated the CIA 
with 
a cat-and-mouse game." 
 
¶3.   (Afghanistan)   London Conference 
 
Frankfurter Allgemeine (1/6) editorialized on Foreign Minister 
Westerwelle's statement that he seeks a "political" solution to the 
 
conflict in Afghanistan:  "He believes that this will allow him to 
avoid the discussion over an increase of German troops in 
Afghanistan. 
The reality looks different.  Westerwelle and the Americans share 
the 
same goal, but they differ on the path to get there.  2,500 American 
 
soldiers are supposed to be deployed to Kunduz, which is in the 
north 
of the country, where the Germans bear the responsibility.  Some of 
 
them are supposed to train 4,000 Afghan soldiers; other units will 
protect the camp and secure the region....  This makes clear what a 
 
challenge it is to set up Afghan security forces.  It will not be 
possible without additional foreign assistance, including a military 
 
component." 
 
¶4.   (Iran)   Ban to Talk to Foreign Institutions 
 
Under the headline "Iran also focuses on German foundations," Die 
Welt 
(1/6) reported that "the regime imposed a ban on contacting 60 
institutions in the country and abroad....  The prohibition to talk 
to 
international broadcasters further limits the freedom to move for 
opposition leader Musawi and Medhi Karubi."  Frankfurter Allgemeine 
 
(1/6) headlined "Regime in Iran Broadens its Censorship," adding 
"Given the ongoing protests against the regime, the Iranian 
intelligence service tries to isolate 60 domestic and international 
 
institutions." 
 
¶5.   (Mideast)   New Peace Efforts 
 
Frankfurter Allgemeine (1/6) commented: "The kind of two-state 
solution that would be acceptable to Israelis and Palestinians is 
not 
a secret.  It is more difficult to get both conflicting parities to 
 
reach these compromises despite the great political risks.  The 
current path of building confidence has not worked.  President Obama 
 
and his Mideast envoy Mitchell obviously want to try it the other 
way 
around: they lure both sides into new negotiations by promising that 
 
they will be finished after two years....  Given the many failed 
efforts, the new attempt is worthwhile.  However, the Israelis and 
Palestinians - and their leaders - must be willing themselves to 
create peace." 
 
¶6.   (Iceland)   Government Won't Repay Debts 
 
Several papers (1/6) reported that the Iceland's President Grimsson 
 
 
BERLIN 00000008  003 OF 005 
 
 
announced that he would veto the repayment of 3.5 billion euro to 
foreign depositors and that he refused to sign a bill from which 
primarily British and Dutch savers would have profited.  Frankfurter 
 
Allgemeine reported under the headline: "Iceland Blocks 
Compensations," while Die Welt headlined: "Iceland's President Uses 
 
His Right to Veto Compensation of Savors" and reported: "It was the 
 
second time in the 65-year history of the country that a president 
whose job is primarily to represent the country, used his right to 
refuse to approve a bill.  According to the Constitution, a 
referendum 
must decide in such a case.  Grimsson's step is likely to intensify 
 
domestic turbulence in the island state, which has been especially 
hard hit by the financial crisis....  The unresolved compensation 
question is an obstacle to Icelandic efforts to join the EU and to 
get 
support from the IMF."   Tagesspiegel headlined: "Presidential Veto 
 
Plunges Iceland Into Crisis," while Financial Times Deutschland led 
 
with the lead story: "Iceland Risking Accession to the EU." 
Handelsblatt carried a lead story under the headline: "Iceland 
Risking 
Conflict with IMF." 
 
Berliner Zeitung (1/6) analyzed the situation in the country and 
wrote: "The nation held its breath, for what usually happens was 
declared a vital question this time.  More than 60,000 Icelanders - 
 
one quarter of al voters - called upon their president in a petition 
 
to stop the so-called compensation bill.  He did it yesterday and 
suggested a referendum on it.  This bill is more than a technical 
formality.  It is the key document for the self understanding of the 
 
Icelanders after the collapse of their economy but also for their 
country's rapprochement with Europe.  However, a referendum could 
jeopardize Iceland's quick accession to the EU because it cannot 
bypass London and The Hague on its way to Brussels.  And both 
governments clearly signaled yesterday that, without compensation 
for 
foreign depositors, there will be no accession and no further [EU] 
loans." 
 
In a front-page editorial, Handelsblatt (1/6) argued under the 
headline: "Fear of State Bankruptcy," that "Iceland's refusal 
clearly 
shows that, in 2010, we will have to fight fears that countries do 
not 
or are incapable of repaying their debt.  Cases such as Dubai, 
Greece, 
Latvia, and Ukraine are nurturing this fear.  But Iceland is a 
special 
case and has good chances to recover....  The country does not have 
to 
repay external debt by the end of 2011 and will have good chances 
with 
a high per capita income to be in a better situation soon if it 
wants 
to get fresh money from investors.  Despite the economic misery it 
is 
at least possible to play a poker game, as the president and the 
Icelanders are doing.  Other states such as Greece do not have such 
 
possibilities - and we will hear quite a lot from these countries in 
 
 
BERLIN 00000008  004 OF 005 
 
 
2010." 
 
According to Financial Times Deutschland (1/6), "The Icelandic 
government signed a contract in which it gave assurances to pay 
compensation.  Serious contractors stick to such promises when the 
contract has not even entered into force.  By withholding his 
signature, the Icelandic president is now also questioning Iceland's 
 
membership of the circle of industrialized countries that need to be 
 
taken seriously, let alone its declared goal of joining the EU. 
Obviously, neither the protesting people nor the President are aware 
 
of what is at risk.  In addition to the country's political 
respectability, Iceland's economic prosperity is at risk.  Who wants 
 
to invest in the country on whose promises we cannot rely?  And who 
 
will save Iceland and its currency during the next crisis if the 
Europeans - and this is understandable - have had enough?" 
 
¶7.   (Defense)   A 400 M 
 
Frankfurter Allgemeine (1/6) carried a report under the headline: 
"Airbus Threatens To Scrap Military Transportation Aircraft," and 
wrote: "The tone in the controversy over the financing of the A 400 
M 
military transportation aircraft is getting sharper.  Airbus is now 
 
openly threatening to scrap the program if the governments do no 
make 
concessions in the talks with the company.  Financial Times 
Deutschland reported that EADS CEO Thomas Enders only sees a 50:50 
chance for a successful agreement.  This threat is primarily direct 
 
against the German government, which is taking the toughest position 
 
in the talks.  The parliamentary Undersecretary of Defense, 
Christian 
Schmidt (CSU) explained the German position towards FAZ: 'Cancelling 
 
the contract is not the subject matter of talks.'  The negotiating 
partner would be EADS, not Airbus, he said, and added: 'For us, the 
 
contract is the basis.  Additional demands from EADS are on the 
table 
and that is the subject matter of talks.'" 
 
According to Die Welt (1/6), "the Europeans are threatened with a 
disgrace.  When Airbus is threatening to scrap the A 400 M military 
 
transportation aircraft, then this is in reality the last attempt to 
 
save the project.  Saber rattling is a well tested tactical game in 
 
difficult negotiations...and a continuation of the project is very 
likely.   First, the end of the project would also be expensive for 
 
EADS.  In addition, EADS's reputation as a reliable supplier would 
be 
at risk....  And the nations that have ordered the plane will not be 
 
able to avoid additional payments either.  They must also be blamed 
 
for an increase in costs.  Germany, France, and the other countries 
 
wanted to demonstrate together with EADS that Europe is able to 
finance enormous arms projects such as the A 400 M.  It would be a 
disgrace for the producer and for the ordering nations to display 
 
BERLIN 00000008  005 OF 005 
 
 
the 
three prototypes of the aircraft, whose development already cost 
billions of euros, in a museum." 
 
¶8.   (Economic)   State of U.S. Economy 
 
Under the headline: "U.S. Recovery Lacks Strength," Handelsblatt 
(1/6) 
editorialized: "The U.S. economy is turning around, profits and 
orders 
increase and the stock markets are cheering, but the biggest economy 
 
has been put on drugs and these drugs are losing their effect.  The 
 
arguments of the optimists, according to which the U.S. economy has 
 
embarked upon a path of growth, are only true for the short term. 
The 
current upswing is based on the fact that companies have increased 
their production after previous historic cuts and are rebuilding 
inventories.   On paper, this creates a strong increase in 
production, 
even though the turnover of many companies has hardly recovered from 
 
their plunge.  Experience teaches us that such recoveries, which are 
 
only based on a change with respect to inventories, do not last very 
 
long.  In addition, the optimists hardly say that the upswing rests 
 
almost exclusively on state doping. This effect is, on a short term 
 
basis, stimulating, but in the long run, dangerous.  For a long-term 
 
recovery, the U.S. economy, which is driven by domestic consumption, 
 
needs signs of relaxation from the highly indebted consumers and 
profound optimism on the part of the companies to initiate a new 
wave 
of investments.  The optimists can wish for such a development, but 
 
they cannot make it happen." 
 
DELAWIE