Cable Viewer

Currently released so far... 3895 / 251,287

### Articles

Brazil Sri Lanka United Kingdom Sweden Editorial United States Latin America Egypt Yemen Jordan

### Browse latest releases

2010/11 2010/12 2011/01 2011/02
2010/11/28 2010/11/29 2010/11/30
2010/12/01 2010/12/02 2010/12/03 2010/12/04 2010/12/05 2010/12/06 2010/12/07 2010/12/08 2010/12/09 2010/12/10 2010/12/11 2010/12/12 2010/12/13 2010/12/14 2010/12/15 2010/12/16 2010/12/17 2010/12/18 2010/12/19 2010/12/20 2010/12/21 2010/12/22 2010/12/23 2010/12/24 2010/12/25 2010/12/26 2010/12/27 2010/12/28 2010/12/29 2010/12/30
2011/01/01 2011/01/02 2011/01/04 2011/01/05 2011/01/07 2011/01/09 2011/01/10 2011/01/11 2011/01/12 2011/01/13 2011/01/14 2011/01/15 2011/01/16 2011/01/17 2011/01/18 2011/01/19 2011/01/20 2011/01/21 2011/01/22 2011/01/23 2011/01/24 2011/01/25 2011/01/26 2011/01/27 2011/01/28 2011/01/29 2011/01/30 2011/01/31
2011/02/01 2011/02/02 2011/02/03 2011/02/04 2011/02/05 2011/02/06 2011/02/07 2011/02/08 2011/02/09

### Browse by creation date

66 72 73 75 79 86 88 89 90 00 01 02 03 04 05 06 07 08 09 10
1966/12
1972/02 1972/08
1973/04
1975/03
1979/08
1986/05
1988/01
1989/12
1990/01 1990/07 1990/08
2000/06 2000/09 2000/11
2001/02 2001/03 2001/07 2001/10
2002/02 2002/03 2002/11
2003/03 2003/04 2003/05 2003/06 2003/07 2003/08 2003/09 2003/10 2003/11 2003/12
2004/01 2004/02 2004/03 2004/04 2004/05 2004/06 2004/07 2004/08 2004/09 2004/10 2004/11 2004/12
2005/01 2005/02 2005/03 2005/04 2005/05 2005/06 2005/07 2005/08 2005/09 2005/10 2005/11 2005/12
2006/01 2006/02 2006/03 2006/04 2006/05 2006/06 2006/07 2006/08 2006/09 2006/10 2006/11 2006/12
2007/01 2007/02 2007/03 2007/04 2007/05 2007/06 2007/07 2007/08 2007/09 2007/10 2007/11 2007/12
2008/01 2008/02 2008/03 2008/04 2008/05 2008/06 2008/07 2008/08 2008/09 2008/10 2008/11 2008/12
2009/01 2009/02 2009/03 2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12
2010/01 2010/02

### Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z
Embassy Athens Embassy Asuncion Embassy Astana Embassy Asmara Embassy Ashgabat Embassy Ankara Embassy Amman Embassy Algiers Embassy Addis Ababa Embassy Accra Embassy Abuja Embassy Abu Dhabi Embassy Abidjan Consulate Amsterdam American Institute Taiwan, Taipei
Embassy Bujumbura Embassy Buenos Aires Embassy Budapest Embassy Bucharest Embassy Brussels Embassy Bridgetown Embassy Bratislava Embassy Brasilia Embassy Bogota Embassy Bishkek Embassy Bern Embassy Berlin Embassy Belgrade Embassy Beirut Embassy Beijing Embassy Banjul Embassy Bangkok Embassy Bandar Seri Begawan Embassy Bamako Embassy Baku Embassy Baghdad Consulate Barcelona
Embassy Copenhagen Embassy Conakry Embassy Colombo Embassy Chisinau Embassy Caracas Embassy Canberra Embassy Cairo Consulate Curacao Consulate Casablanca Consulate Cape Town
Embassy Dushanbe Embassy Dublin Embassy Doha Embassy Djibouti Embassy Dhaka Embassy Dar Es Salaam Embassy Damascus Embassy Dakar Consulate Dubai
Embassy Freetown
Embassy Guatemala Embassy Gaborone
Embassy Harare Embassy Hanoi Consulate Hamburg
Iran RPO Dubai Embassy Islamabad Consulate Istanbul
Embassy Jakarta Consulate Jerusalem Consulate Jeddah
Embassy Kyiv Embassy Kuwait Embassy Kuala Lumpur Embassy Kinshasa Embassy Kigali Embassy Khartoum Embassy Kampala Embassy Kabul
Embassy Luxembourg Embassy Luanda Embassy London Embassy Lisbon Embassy Lima Embassy Lilongwe Embassy La Paz Consulate Lagos
Mission USNATO Embassy Muscat Embassy Moscow Embassy Montevideo Embassy Monrovia Embassy Minsk Embassy Mexico Embassy Maputo Embassy Manama Embassy Managua Embassy Madrid Consulate Munich Consulate Montreal Consulate Monterrey
Embassy New Delhi Embassy Nassau Embassy Nairobi Consulate Naples
Embassy Ouagadougou Embassy Ottawa Embassy Oslo
Embassy Pristina Embassy Pretoria Embassy Prague Embassy Port Au Prince Embassy Phnom Penh Embassy Paris Embassy Paramaribo Embassy Panama Consulate Peshawar
Embassy Quito
REO Basrah Embassy Rome Embassy Riyadh Embassy Riga Embassy Reykjavik Embassy Rangoon Embassy Rabat Consulate Rio De Janeiro Consulate Recife
Secretary of State Embassy Stockholm Embassy Sofia Embassy Skopje Embassy Singapore Embassy Seoul Embassy Sarajevo Embassy Santo Domingo Embassy Santiago Embassy Sanaa Embassy San Salvador Embassy San Jose Consulate Strasbourg Consulate Shenyang Consulate Shanghai Consulate Sao Paulo
Embassy Tunis Embassy Tripoli Embassy Tokyo Embassy The Hague Embassy Tel Aviv Embassy Tehran Embassy Tegucigalpa Embassy Tbilisi Embassy Tashkent Embassy Tallinn
USUN New York USEU Brussels US Mission Geneva US Interests Section Havana US Delegation, Secretary UNVIE Embassy Ulaanbaatar
Embassy Vilnius Embassy Vienna Embassy Vatican Consulate Vladivostok
Embassy Windhoek Embassy Wellington Embassy Warsaw
Embassy Yerevan Embassy Yaounde
Embassy Zagreb

### Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
AF ASEC AE AR AG AJ AFIN AU AM APER ABUD ATRN AORC AEMR AMGT ACOA AEC AO AX AMED ADCO AODE AFFAIRS AC AS AL ASIG ABLD AA AFU ASUP AROC ATFN AGMT
BU BR BL BO BM BE BH BTIO BEXP BIDEN BK BY BA BG BF BB BC BBSR BRUSSELS BILAT BX
CJAN CH CU CASC CVIS CMGT CO CI CLINTON CIA CG CF CN CS CAN COUNTER CIS CA CBW CM CE CONDOLEEZZA COE CR CY CD CTM COUNTRY CLEARANCE CPAS CWC CT CKGR CB CACS COM CDG CJUS CARSON COUNTERTERRORISM CACM CDB CV
DR DA DHS DOE DEA DK DJ DISENGAGEMENT DS DOD DEAX
EU EFIN EG ETTC EINV ENRG EI ECPS EINT ECON EIND ETRD EPET EUN EZ EMIN ELAB EAID EAGR ET EC EAIR ENVR ES ECA EWWT ER ELTN EFIS EN EXTERNAL ECIN EINVETC ENIV EINN ENGR EUR ESA ENERG ELECTIONS ECUN EINVEFIN ECIP EINDETRD EUC EREL
FR FINR FAO FTAA FREEDOM FI FARC FBI FJ FMLN
GM GG GH GE GV GT GR GTIP GOI GCC GAZA GZ GA GTMO
HA HILLARY HR HUMAN HO HYMPSK HU HURI HK
IR IZ IS IT INRB IRAJ IN INRA INRO IO IC ID IIP IAEA ITPHUM IV IPR IWC IQ ICTY ISRAELI IRAQI ICRC ICAO IMO IF ILC IEFIN INTELSAT IL IA IBRD IMF ITALY ITALIAN INTERPOL
JO JA JOSEPH JP JOHNNIE JUS JAMES
KE KTFN KDEM KJUS KNNP KGHG KZ KIPR KWBG KIRF KPAO KDRG KHLS KCRM KSCA KPAL KISL KG KACT KN KS KGIC KRAD KU KCOM KBIO KMCA KCOR KV KHDP KTIP KVPR KDEV KWMN KSPR KTIA KHIV KPRP KAWC KOLY KCIP KCFE KOCI KMDR KPKO KTDB KMRS KFRD KLIG KBCT KICC KGIT KSTC KUNR KPAK KNEI KSEP KPOA KFLU KNUP KNNPMNUC KOMC KAWK KO KTER KSUM KHUM KRFD KBTR KDDG KWWMN KFLO KSAF KBTS KPRV KMPI KNPP KNAR KWMM KERG KFIN KTBT KCRS KRVC KR KPWR KWAC KMIG KSEC KIFR KDEMAF KGCC KPIN KNUC KPLS KIRC
LE LY LU LG LH LI LO LOG LT
MARR MOPS MU MASS MY MNUC MCAP MA MO MTCRE MG MASC MX MCC MZ ML MK MTRE MP MIL MDC MTCR MAR MEPI MRCRE MI MT MR MQADHAFI MD MAPS MUCN MPOS MEPP MOPPS MAPP
NATO NIPP NL NO NG NI NPT NE NS NAR NZ NU NPG NK NSG NA NT NASA NGO NATIONAL
OFDP OVIP OPRC OREP OIIP ODIP OTRA OSCE OAS OPIC OPDC OEXC OECD OPCW OSCI OTR OVP OFFICIALS OSAC
PGOV PREL PINR PO PINS PTER PK PHUM PARM PL PE PREF PHSA PBTS PGOF PROP PARMS PA PM PMIL PTERE POL PF PALESTINIAN PY PGGV PNR POV PAK PAO PFOR PHALANAGE PARTY PNAT PROV PEL POLITICS PEPR PSI PINT PSOE PU POLITICAL PARTIES PBIO PECON POGOV PINL PKFK
QA
RS RU RW RP RIGHTS RICE RO ROBERT RF RFE REGION
SU SA SY SP SNAR SENV SCUL SW SOCI SF SO SR SG SMIG SL SN SHUM SZ SYR ST SANC SC SAN SIPRS SK SH SI STEINBERG
TI TIP TBIO TR TX TU TSPA TS TRGY TH TT TW TERRORISM TO TFIN TD TSPL TZ TPHY TK TNGD TC
UK UNSC UG US UZ UP UNO UNMIK UY UN UNGA UE UNESCO UAE UNEP USTR UNHCR UNDP UNHRC USAID UNCHS UNAUS USUN USEU UV
VZ VE VT VM VTPREL VN
WA WI WMO WTRO WTRQ WHO WWARD WB WBG WTO
XA XT XM XY XG XC XH XL XF XZ XW XR XD XS XK
YM YI YE
ZI ZP ZK ZF ZB ZANU ZOELLICK ZR ZU ZA

### Browse by classification

CONFIDENTIAL CONFIDENTIAL//NOFORN SECRET SECRET//NOFORN UNCLASSIFIED UNCLASSIFIED//FOR OFFICIAL USE ONLY

### Community resources

Follow us on Twitter Check our Reddit Twitter this Digg this page Contact us on IRC

courage is contagious

### Viewing cable 06REYKJAVIK134, INTERNATIONAL MEDIA CONTINUES TO DISSECT ICELANDIC

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:

- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06REYKJAVIK134.

Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06REYKJAVIK134 | 2006-04-12 14:02 | 2011-01-13 05:05 | UNCLASSIFIED | Embassy Reykjavik

`

    VZCZCXYZ0004
    RR RUEHWEB

    DE RUEHRK #0134/01 1021429
    ZNR UUUUU ZZH
    R 121429Z APR 06
    FM AMEMBASSY REYKJAVIK
    TO RUEHC/SECSTATE WASHDC 2705
    INFO RUEHCP/AMEMBASSY COPENHAGEN 0296
    RUEHLO/AMEMBASSY LONDON 0106
    RUEHNY/AMEMBASSY OSLO 0238
    RUEHSM/AMEMBASSY STOCKHOLM 0125
    RUCPDOC/USDOC WASHDC
    RUEATRS/DEPT OF TREASURY WASHINGTON DC

` `

    UNCLAS REYKJAVIK 000134

    SIPDIS

    COMMERCE FOR 4212/ITA/OEURA/LMARKOWITZ

    SIPDIS

    E.O. 12958: N/A
    TAGS: EFIN ECON IC
    SUBJECT:  INTERNATIONAL MEDIA CONTINUES TO DISSECT ICELANDIC
    ECONOMY, THOUGH ANALSYSTS NOT AGREED ON WHETHER IMBALANCES
    REPRESENT SERIOUS THREAT TO ECONOMIC STABILITY

    REF: REYKJAVIK 78

    ¶1.  Summary.  Over the past two months, credit rating
    agencies and other international financial firms have
    released a torrent of reports raising questions about the
    state of the Icelandic economy and the activities and
    stability of Iceland's major banks.  These reports have been
    widely covered in the international financial press, causing
    a marked drop in the value of the Icelandic Krona and of
    shares listed on the Icelandic stock exchange.  This new
    level of scrutiny is also making it more challenging for
    Icelandic banks to secure financing on international
    markets.  There is no question that certain imbalances have
    emerged in the Icelandic economy, including a high current
    account deficit, high inflation and high private sector debt
    levels.  It remains an open question, however, whether these
    imbalances render Iceland particularly vulnerable to an
    economic crisis.  Financial analysts have articulately
    argued both sides of the case.  End summary.

    ¶2.  The release of a report by the credit rating agency
    Fitch in mid-February expressing concerns about overly risky
    practices on the part of Icelandic banks and troubling signs
    for the Icelandic economy provoked a sudden drop in the
    value of the Icelandic Krona and the main stock exchange
    index (the ICEX).  The Fitch report has subsequently been
    followed by a slew of other reports from international
    rating firms such as Moody's and Standard and Poor's, and
    from investment and commercial banks including Merrill
    Lynch, Morgan Stanley and JP Morgan.  Speculation and
    analysis about Iceland's economy now appears almost daily in
    the international press, including leading publications such
    as the Wall Street Journal, Financial Times, and The
    Economist.

    ¶3.  The various reports run the gamut from concluding that
    the Icelandic financial sky is falling to the view that
    despite a few economic indicators being out of balance, the
    Icelandic economy is sound and the negative prognostications
    wildly exaggerated.  In any case, just the fact that the
    Icelandic economy is now under the microscope -- fairly or
    unfairly -- has made the domestic and international markets
    jittery about the Icelandic Krona and Icelandic securities.
    As a result, the Krona has fallen 15 percent against the
    dollar since the beginning of the year, and the stock
    exchange index has dropped 18 percent since reaching an all-
    time high on February 16.

    ----------------------------------------
    The Case for Looming Economic Difficulty
    ----------------------------------------
    ¶4.  The main areas of economic concern most often cited by
    analysts are Iceland's large current account deficit (some
    16 percent of GDP), high inflation (4.4 percent), high
    personal indebtedness, and high levels of short-term foreign
    debt carried by Iceland's three major banks -- debt that the
    banks are now having some difficulty rolling over except by
    agreeing to pay higher interest rates.  In addition, some
    analysts maintain that Iceland's major banks (all of which
    do both commercial and investment banking) engage in overly
    risky practices and have "incestuous" relationships with the
    other banks and major domestic conglomerates   These
    factors, it is argued, indicate that serious challenges and
    difficulties are looming on the horizon for the banks and
    the economy generally.

    --------------------------------------------- --
    The Case that Analysts' Warnings Are Overstated
    --------------------------------------------- --
    ¶5.  Nonetheless, significant arguments have also been put
    forward that the threats posed by certain imbalances in the
    economy, and by extensive international borrowing on the
    part of the banks, have been exaggerated and misinterpreted,
    and do not pose the danger many have posited.  For example,
    the high current account deficit is in large part due to the
    three huge capital investment construction projects
    currently underway in Iceland -- two huge aluminum smelter
    facilities (including one owned by Alcoa) and a massive
    hydroelectric power plant.  These projects represent some
    $2.5 billion being pumped into a $15 billion economy over
    just a couple of years.   When these projects are all
    completed, sometime during 2007, the current account
    situation will likely return to normal (from 2000-2003 the

    average deficit was minus 4 percent).  The Krona's recent
    return to a more realistic level will also help even out the
    current account deficit by dampening imports.

    ¶6.  It is also pointed out that government debt at 30
    percent of GDP is low by most standards (and about half the
    level as in the U.S., Germany and France).  As for
    inflation, when real estate price increases are removed, the
    "core" rate of inflation is a mere 1.8 percent.  While the
    banks have indeed been borrowing heavily to finance
    Icelandic conglomerates' investments abroad, these foreign
    investments have largely been in non-speculative, low-risk
    sectors such as banking, pharmaceuticals and clothing and
    food retailing.  Another argument holds that rather than
    suggesting underlying weakness or instability, the fact that
    Icelandic banks now find it more difficult (i.e., costly) to
    tap financing most likely implies the banks will simply have
    to curtail their recent expansive lending activity and
    settle for "normal" growth instead of the torrid double- and
    triple-digit growth rates of the last few years.

    ¶7.  The most compelling analysis offered to date in defense
    of the Icelandic banks, the soundness of the economy, and
    the government's ability to handle any financial crisis
    comes from the well-respected U.S. credit rating firm
    Moody's.  In a report entitled "Iceland's Solvency and
    Liquidity Are Not at Risk," issued April 4, Moody's offers
    the following conclusions:

    -- "While we have warned of the risks that may accompany
    increased leverage in the economy, Iceland has our top
    rating with a stable outlook, and we believe these concerns
    have recently been exaggerated."

    -- "Iceland is a very wealthy country engaged in a major
    process of economic diversification.  It possesses ample
    sources of alternate external liquidity above and beyond the
    banks own liquidity positions that should enable the
    government and banking system to weather a period of market
    turbulence."

    -- "Iceland is well positioned to deal with any potential
    claims on government resources that might emanate from a
    systemic problem in any sector of the economy.  Our Aaa
    rating for Iceland is compatible with such an extreme
    scenario."

    --------------------------------------------- -------
    Government Defends Economy, but Warnings not Ignored
    --------------------------------------------- -------
    ¶8.  While the government has reacted to the current furor by
    consistently reiterating the message that the economy is
    sound and there is no need to worry, economic policymakers
    have also clearly taken some of the warnings on board.  For
    example, the Central Bank raised its official rate by a more-
    than-expected 0.75 percent (to 11.5 percent) at its last
    rate-setting meeting.  This action sent a signal that the
    government is indeed determined to rein in inflation, while
    also helping to ease the decline of the Krona.  The Central
    Bank has also sought to quell market jitters through
    reassuring statements that Iceland's financial system stands
    up to all its stress tests.  In addition, a new (though long
    in the works) joint Central Bank-Financial Supervisory
    Authority committee has been established to watch for signs
    of weaknesses in the financial sector and to formulate
    contingency plans for correcting them.

    --------------------------------------------- ----------
    Consequences of Altered Economic Conditions/Perceptions
    --------------------------------------------- ----------
    ¶9.  Comment: Certainly going forward the banks will have to
    curtail their lending activity now that foreign financiers
    are less willing to continue extending easy credit.  And the
    Icelandic stock market's phenomenal growth rate will
    undoubtedly return to more realistic levels now that
    Icelandic firms will be compelled to take a more incremental
    approach to foreign expansion in response to changed market
    conditions.  This evolving economic landscape has government
    forecasters envisioning Icelandic GDP growth going from 6
    percent in 2005 to 4.5 percent in 2006, and cooling further
    to between 0 and 2.0 percent in 2007.

    ¶10.  Comment continued: Given the intense financial media

    scrutiny Iceland has been under for the past two months, it
    can be argued that the country's economy, major
    conglomerates, banks, and financial markets have actually
    weathered the storm fairly well (e.g., the currency and
    stock market declines might have been far worse).  As the
    Wall Street Journal put it in an April 10 article, "The jury
    is still out on whether it (the current economic turmoil) is
    anything more than a rough spot."  End comment.

    van Voorst

`