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### Viewing cable 07BRATISLAVA112, FICO'S LIBYA TRIP A COMMERCIAL SUCCESS

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07BRATISLAVA112 | 2007-02-23 16:15 | 2011-08-23 00:00 | UNCLASSIFIED | Embassy Bratislava

`

    VZCZCXRO6395
    RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
    RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
    DE RUEHSL #0112/01 0541615
    ZNR UUUUU ZZH
    R 231615Z FEB 07
    FM AMEMBASSY BRATISLAVA
    TO RUEHC/SECSTATE WASHDC 0707
    INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

` `

    UNCLAS SECTION 01 OF 02 BRATISLAVA 000112

    SIPDIS

    SIPDIS

    E.O. 12958: N/A
    TAGS: PGOV PHUM PREL ETRD ENRG LY LO
    SUBJECT: FICO'S LIBYA TRIP A COMMERCIAL SUCCESS

    ¶1. (SBU) Summary. Prime Minister Robert Fico's February 20-22
    delegation to Libya focused on commercial objectives,
    primarily gaining Slovak military and infrastructure
    contracts in Libya as repayment for Libya's debt to Slovakia.
     Initial press reports indicate that Libya and Slovakia
    reached preliminary agreements on aircraft repair contracts,
    and made promises of much greater investments down the road.
    Commercial aspects of Fico's visit have received less
    international press attention that the PM's comments on
    Bulgarian nurses (see reftel), but the delegation's
    composition and interests (profiled here) provide insight
    into motives for Fico's comments and his broader foreign
    policy objectives.  End Summary.

    Official Side
    -------------

    ¶2. (SBU) Prime Minister Fico's visit to Libya was officially
    designed to find a means of repayment for Libya's
    communist-era debt to Slovakia, which is estimated at 130
    million USD.  Fico hopes to restructure the debt by securing
    infrastructure and military sales contracts, in many cases
    renewing old Czechoslovak business relationships from 1970s
    and 1980s.  To meet these objectives, he assembled an
    unusually large and high-profile delegation led by Minister
    of Economy Lubomir Jahnatek (to press for new contracts) and
    Ministry of Finance State Secretary Peter Kazimir (to
    renegotiate foreign debt).  The Ministry of Foreign Affairs
    was represented by State Secretary for Economic Affairs Olga
    Algayerova.

    Business Side
    -------------

    ¶3. (SBU) The private business component of the delegation was
    perhaps even more high-powered, representing a range of
    interests including Slovak oil, gas, aircraft repair, general
    military/arms sales, boiler production, water purification,
    and the spa industry.  Aircraft repair companies came hoping
    to secure contracts in return for payment of Libya's debt to
    the GOS; the same might be said for Slovak boiler production,
    water purification, and military sales companies.  The role
    of Slovakia's oil and gas company representatives is more
    nebulous and seemingly political in nature.  Slovak spas have
    been offered as a carrot for Libyan investment.  In any case,
    Slovak companies are eager to access the Libyan market.
    Sources at SARIO (the Slovak government investment agency)
    and the trade company EBD told Emboff that they see Libya as
    Slovakia's strongest growth market in the Middle East for the
    immediate future.  The delegation members are listed below:

    - Miroslav Vyboh is General Director and owner of Willing, a
    Zvolen-based military material company specializing in
    anti-tank and anti-aircraft systems, spare parts for ground
    combat vehicles, ammunition and small arms sales, aircraft
    repair, and testing/repair of missiles and rockets.  Willing
    has contracts in over 50 countries, including several with
    Slovakia's Ministries of Defense and Interior.  The company
    also procures materials for the Slovak Ministry of Defense,
    including three rockets from Russia in 2006.  Media sources
    indicate that Willing has already been trading with the
    Libyan government since 2004, but we don't know what it might
    be selling.  Closely connected with Smer, media reports
    indicated that Vyboh needed intervention by Minister of
    Interior Robert Kalinak to pass emergency legislation so that
    he could get a security clearance for the Libya trip.  He had
    been denied clearance twice in the past two years for
    undisclosed reasons.

    - Ozskar Vilagi, CEO of Slovnaft, is the most powerful
    businessman in the delegation.  Slovnaft announced prior to
    the trip that it "hopes to partner with Libyan businesses in
    the oil industry," but media speculation suggests that Vilagi
    is accompanying Fico in order to curry favor with the new
    government.  An ethnic Hungarian and executive board member
    of Slovnaft's Hungarian parent company, MOL, Vilagi is
    considered the primary financial backer of the SMK party.
    With SMK out of power, Vilagi has been removed from boards of
    two state industries and a wide range of his private business
    interests are under pressure.  In January, Vilagi struck a
    deal with primary Smer financier Juraj Siroky to sponsor
    Slovakia's hockey leagues.  This trip ban be seen as more of
    the same political maneuvering, but also as a serious attempt
    to seek opportunities to diversify Slovnaft/MOL oil interests
    away from Russia.

    - Milan Filo accompanied the delegation as Chairman of
    Eco-Invest, a Slovak holding company owning everything from
    Slovak banks to paper mills to meatpacking.  A business
    partner of Vilagi, in the past year Filo has placed many of
    his associaties on the board of Slovakia's state gas
    distribution company SPP, and was likely really representing
    SPP on this trip.  Strongly connected to Smer party backers,

    BRATISLAVA 00000112  002 OF 002

    Eco-Invest announced it would construct a new pulp factory in
    Russia one week after Jahnatek visited Moscow.  The partial
    owner of 17 Slovak companies, including Markiza TV, Filo is
    increasingly perceived as one of PM Fico's primary
    benefactors.  It is in unclear what SPP or Eco-Invest
    interest in Libya might be.

    - Dusan Rychtarik is General Director of Letecke Opravovne
    Trencin, an aircraft repair and manufacturing company which,
    in its pre-1989 form, held long-term contracts with the
    Libyan government.  (Many Slovak air force officers were also
    instructor pilots in Tripoli until the mid-1990s).  LOT would
    like to revive contracts both for repair of aging aircraft
    and for sales of new equipment.

    - Jan Brandner is Director of the Letecke Opravovne Banska
    Bystrica branch.

    - Stanislav Elias is Director and reportedly partial owner of
    Kupele Bojnice, a Slovak spa.  Embassy sources indicate that
    the GOS has been courting Middle Eastern investment in its
    spa industry as part of the Slovak government's outreach to
    the region's governments and businesses.  In January, the
    Ministry of Economy made a similar sales pitch to a visiting
    Saudi prince.  Historically, Slovak spas have attracted
    clients from Middle Eastern countries, but fewer in recent
    years.  Slovak spa (and sports team) owners are often
    co-owners of other companies, so spa (or sports team)
    ownership can be offered on investor-friendly terms in
    exchange for other business favors.

    - Jan Kukucka is a board member for SES Tlmace, Slovak's top
    designer and producer of steam boilers for power and heating
    plants using fossil, liquid and gas fuels.  SES Tlmace
    recently won a major construction contract for building
    boilers in the Chinese Shen Tou Power plant, which is being
    built for Beijing in anticipation of the 2008 Olympics.  SES
    Tlmace is looking for similar contracts in Iraq.  Kukucka
    also accompanied Fico on his recent China trip.

    - Milan Spano serves as CEO of EBD, a contracting firm
    appointed by the GOS to coordinate terms of Slovak company
    sales to Middle Eastern companies, particularly Iraq.  EBD
    has had some recent success in identifying Slovak water
    treatment  companies of interest to the Iraqi government and
    related firms.  Spano believes these and other Slovak
    companies have greater potential in Libya, based on the
    country's needs, finances, and security situation.  EBD is
    actually a Florida-based firm and Spano is an American
    citizen, despite his poor English skills.

    - Milan Michalik is a Board Member of BEZ Group, a
    diversified Slovak company that purchased a water
    purification system manufacturer in 2006.  BEZ Group has been
    trying to break into the Middle Eastern market for municipal
    water purification, but has not had any visible success thus
    far.

    Commercial Results
    ------------------

    ¶4. (SBU) According to initial Slovak press reports, Libyan
    Prime Minister El Babdadi Ali Mahmudi confirmed on February
    23 that Slovakia and Libya reached preliminary agreement that
    Slovak companies would obtain contracts for repairing Libyan
    airplanes.  The details will be negotiated by experts on both
    sides, and no connection to debt repayment was specified.
    Mahmudi also confirmed Libya's interest in investing up to 50
    billion USD in Slovakia over the next 20 years in the form of
    real estate, tourism/spas, construction and the oil industry.
     In addition, Libya offered Slovakia the opportunity to bid
    on tenders for various government contracts that reportedly
    total over 30 billion USD.  The specific contracting
    opportunities were not specified.

    ¶5. (SBU) Comment.  Given the range of Slovak business
    interests who see dollar signs in Libya and the massive
    hypothetical sums being casually discussed, it is not
    surprising that Fico commented on the Bulgarian nurse
    situation as he did.  He wanted to send a message to both
    Kaddafi and Slovak businesses that commercial interests are
    the most important component of his foreign policy, then
    clean up any potential messes with the international
    community afterward.  Since Fico appears to walk away from
    Libya with significant preliminary agreements in hand, it
    will likely strengthen Fico's inclination to believe that
    potential commercial opportunity trumps even rhetorical
    attention to human rights issues during his foreign visits.
    In any case, Slovakia and Libya will likely draw closer
    economically based on Fico's visit.  End Comment.

    VALLEE

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