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Spanish Pull-Out Puts Pressure on U.S. Allies in Iraq

Hours after the new Spanish cabinet was sworn in on Sunday, Spanish Prime Minister Jose Luis Rodriguez Zapatero said he wanted Spanish troops out of Iraq as soon as possible, honoring an election campaign pledge that largely swept his party to power last month.

Zapatero had initially said that the United Nations should play the defining role as a condition of its keeping its troops in Iraq beyond June 30. But on Sunday, Zapatero (photo) said that a U.N. resolution seemed unlikely.

"With the information we have, and which we have gathered over the past few weeks, it is not foreseeable that the United Nations will adopt a resolution, " he said. "These circumstances have led me to take the decision to order the return of our troops with the maximum safety and thus in the shortest time possible," Zapatero said and added that he wasn't caving in to terrorist blackmail.

Spain: Decision won't hurt ties with U.S.

Spain has 1,300 troops stationed in south-central Iraq with responsibility for Diwaniya and the flashpoint Shiite holy city of Najaf. Eleven Spanish soldiers have been killed in Iraq since last August, including seven intelligence officers in a highway ambush in November.

The Spanish government's decision to call for a speedy withdrawal of troops is believed to be prompted by the terrorist attacks in Madrid on March 11 (photo), days before the general election, that killed 191 and amounted to the bloodiest in recent Spanish history. A terrorist group with links to al-Qaeda claimed responsibility for the attacks and said the bombings were punishment for former Spanish premier Aznar's support of the war in Iraq.

Aznar's conservative party was trounced in the polls by Zapatero's Socialists, who promised to pull out Spanish troops from Iraq if voted to power.

Zapatero will send Miguel Angel Moratinos, Spain's new foreign minister to Washignton on Tuesday to explain his government's decision.

On Monday, Moratinos was at pains to emphasize that Madrid's decision to withdraw troops would not damage Spain's relations with the U.S. "This decision should not affect bilateral relations between Spain and the United States," Moratinos told Spanish daily El Pais.

He also added that the new government would fulfill Spain's pledges at the recent Iraq Donor's Conference and aid Iraq's reconstruction and transition to democracy following last year's U.S.-led invasion.

Washington not surprised by Spanish move

Spain's decision to pull out troops quicker than earlier thought has not prompted surprise in the U.S.

"We knew from the recent Spanish election that it was the new prime minister's intention to withdraw Spanish troops from the coalition in Iraq," U.S. presidential spokesman Ken Lisaius told a press conference. "We will work with our coalition partners in Iraq and the Spanish government and expect they will implement their decision in a coordinated, responsible and orderly manner," he said.

Speaking in an interview with ABC television on Sunday, U.S. National Security Adviser Condoleeza Rice (photo) too said the Spanish move was to be expected. "We know that the Spanish have been talking about, perhaps, pulling their forces out. I would not be at all surprised if they do."

Pull-out expected to raise pressure on U.S. allies

Though the U.S. has remained unruffled by the Spanish decision, it's not expected to have the same effect on its other allies involved in keeping the peace in an increasingly volatile Iraq.

Portugal is reported to be doing a rethink on its own troops deployment in Iraq and Kazakhstan has already announced it will not be replenishing its troop contingent when its soldiers finish their current tour of duty in Iraq.

Both Italy and Japan are already under pressure in the light of domestic opposition to their involvement in the occupation of Iraq. Italian Prime Minister Silvio Berlusconi faces mounting wrath at home with the killing of an Italian hostage by Iraqi insurgents last week. Berlusconi's government is currently involved in negotiating the release of three Italian private security guards who are still being held captive in Iraq.

Similarly, Japanese Prime Minister Junichiro Koizumi, another close ally of Bush, has also been faced with angry protests in Japan following publication of video footage of the capture three Japanese nationals in Iraq. The three were released over the weekend.

Though both Berlusconi and Koizumi have vowed to stay the course in Iraq, the Spanish pull-out is expected to weaken their resolve.

Australia condemns Spanish move

Hard-line Australian Prime Minister John Howard, however, a strong supporter of the U.S. line in Iraq, has condemned Spain's decision to pull out and vowed to keep Australian forces in the region. Canberra has 850 soldiers in and around Iraq.

"It's likely to encourage those that are opposed to the coalition to believe that if they can cause more bloodshed and trouble, then more will pull out," Howard told Australian Broadcasting Corp. radio. "It will encourage the insurgency, it will not encourage more peaceful activity in Iraq," Howard said.

Euro Disney's Tragic Kingdom

All is far from magical at Disneyland Paris. Euro Disney, the debt-burdened operator of the theme park, announced on Thursday that unless creditors can be persuaded to give the ailing enterprise more breathing space after the end of May, Mickey, Pluto and Goofy could be looking for alternative employment come June.

The group's chief executive, André Lacroix, delivered the bad news that Euro Disney would be unable to meet its financial obligations if it failed to agree a new restructuring strategy with lenders and shareholders.

The group has revealed that it has sufficient liquidity until May 31, but after that the future looked increasingly uncertain. "If up to the end of this time no solution has been found, the group would not be able to fulfill the totality of its financial obligations," Lacroix told a news conference.

Huge debts and financial losses

The operator, which has debts of €2.43 billion ($2.87 billion), also announced that the Disneyland Paris theme park had increased its losses over the past six months from €82.7 million to €108.9 million, while sales were up 1.6 percent at €473.8 million. While financial charges associated with the groups debt accounted for €53.1 million of the losses, the resorts division epitomized the state of Disneyland Paris by posting a €56.3 million deficit.

Euro Disney has been feverishly negotiating with banks and Walt Disney, the entertainment and media group which has a 39 percent stake in the operating group, "to reach a mutually acceptable resolution to the company's financial situation." In an attempt to keep the park afloat, Walt Disney has deferred payments of royalties until 2005 and waived certain rights to ease the pressure.

Royalty costs and management fees jumped from €8.1 million to €25.5 million in the six month period ending March 31, but Walt Disney is not expecting payment from Euro Disney until the first quarter of the next financial year.

Stakeholders to be approached for aid

Lacroix told reporters that Euro Disney would continue to concentrate on sales growth and marketing efforts in its core businesses in an attempt to turn the deficit around. "At the same time, we must reach an agreement with our stakeholders to resolve our financial situation."

Disneyland Paris has been plagued by problems since it opened on April 12, 1992 at a cost of 22 billion French francs (€3.3 billion). On the inaugural day, an expected crowd of 500,000 visitors failed to materialize. In fact, barely 50,000 people were admitted. This was blamed on widespread protests throughout France as people feared their culture would be damaged by one of the most powerful and popular symbols of America. During the live opening television broadcast, a major electricity circuit was cut and signposts showing the way to the park's Marne-La-Vallee location were damaged.

Problems piled up from opening day

The problems continued throughout its first year, with up to 3,000 employees quitting in May 1992 over pay and working conditions. Attendances also remained below expectations with visitors on sunny weekend days totalling between 20,000 and 25,000, much lower than the predicted 60,000 announced before the park opened. Anti-Disney feelings continued to be expressed by stay-away locals. Only three out of 10 visitors at the time were French.

European recession hit hard

By the end of 1992, Disneyland Paris had attracted around 2 million visitors less than originally projected. At the same time, the European recession was causing a property slump which pushed Euro Disney over the precipice into its first bout of serious financial difficulty. High interest payments on its massive start-up loans further exacerbated the problems, and the cheap dollar rate meant that many tourists found it cheaper to fly to Florida for their holidays and visit the flagship Disney World resort there.

Further blame was placed on overstaffing and over-capacity at the Euro Disney hotels, since visitors could do the park in one day and few found the need to stay on site. Souvenir and food prices were also accused of being prohibitively high, meaning that visitors weren't spending enough money while inside the park. Original estimates had visitors spending around $33 per day at 1992 rates but analysts at the time suggested spending per person was only 12 percent of that.

Crisis meetings and rescue packages

The resort and theme park limped through the remainder of the 1990s shrouded by persistent rumors that it would have to close due to massive losses. A number of crisis talks were held with the banks and backers towards the end of the decade as the problems increased.

In the end, a financial rescue package was announced including a massive injection of $500 million by a Saudi prince. The Disney Company also agreed to waive its royalty fees for the first time, the group announced a new share issue, and a number of banks offered Euro Disney better loan repayment schedules. Disneyland Paris entered the 21st century in pretty much the same fragile state as it had left the last.

Thursday's announcement suggested that over a decade of bailing out Euro Disney might ultimately fail to secure the future of Disneyland Paris.

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