News:

US officials offered to help Spain claim an undersea treasure haul of gold and silver coins discovered by a controversial American exploration company in return for Spanish assistance in the recovery of valuable art looted by Nazi Germany, according to embassy cables released by WikiLeaks.

In a conversation with the Spanish culture minister, César Antonio Molina, the US ambassador in Madrid, Eduardo Aguirre, sought to tie the treasure found off the Iberian peninsula by Odyssey together with attempts by an American citizen, Claude Cassirer, to recover a painting by Camille Pisarro that hangs in a Madrid museum.

"The ambassador noted also that while the Odyssey and Cassirer claim were on separate legal tracks, it was in both governments' interest to avail themselves of whatever margin for manouevre they had, consistent with their legal obligations, to resolve both matters in a way that favoured the bilateral relationship," the embassy reported in a cable on 2 July 2008.

The offer was made after the Spanish government claimed ownership of half a million gold and silver coins found on the floor of the Atlantic Ocean by Odyssey's underwater robots. The company had provoked Spanish fury by landing the treasure at Gibraltar and flying it straight to the US.

The so-called Black Swan treasure, which Odyssey said came from an unidentified shipwreck, had been valued at about $500m.

Molina refused to tie the Odyssey case to the Pisarro painting, according to the embassy. "The minister listened carefully to the ambassador's message, but he put the accent on the separateness of the issues," the cable reported.

He promised, nevertheless, to meet Cassirer to discuss what could be done about the painting, Pisarro's Rue St Honoré. Après-midi. Effet de Pluie, which currently hangs in the Thyssen-Bornemisza museum in Madrid.

In another cable the embassy explained the background to Cassirer's claim. "The Nazis forced Mr Cassirer's grandmother to sell the painting in 1939. Baron Hans Heinrich Thyssen-Bornemisza acquired it in 1976. In the early 1990s, the Spanish government purchased the collection and built the current museum. In 1958, Mrs Cassirer received a DM120,000 restitution payment for the disappearance and provisional dispossession of the painting, but retained full right to the painting."

The museum has refused to hand over the artwork, claiming that it was bought in good faith. Baron Thyssen had not known the story of Lilly Cassirer, a wealthy German Jew who said she was forced to sell the picture for 900 marks (about $360). She said it was the only way she could obtain an exit visa from Germany as Nazi oppression of the Jews escalated. The painting of a rain-soaked Paris boulevard had hung on the walls of the family's Berlin and Munich homes since the impressionist painted it in 1897.

Molina pointed out that as the collection technically belonged to a foundation, there was little the Spanish government could do about it.

"The painting was acquired legitimately by the foundation in 1993, along with the rest of the Thyssen-Bornemisza collection," the museum said in a recent statement. "The foundation has been the peaceful owner of the picture ever since its purchase and has exhibited it permanently, so there can be no question of its ownership."

With Spanish courts unlikely to force the museum to give up the painting, embassy officials at one stage asked Spain's cultural policies director, Guillermo Corral, whether there might be some "creative solution".

"Spain is sensitive to the family's claim, Corral said, but does not believe it can legally negotiate compensation," the embassy reported. "It might, however, be able to make gestures to the family and to the Los Angeles Jewish community. The government could, for example, organise and fund travel to Spain and cultural exchanges to promote mutual understanding and appreciation while giving due recognition to the Cassirer family."

The family continues to pursue its claim, although Claude Cassirer died in September. Earlier this year a court in Los Angeles allowed the family to bring a case against Spain demanding that the picture be given back to them.

Spain claims that the Black Swan treasure find comes from a Spanish galleon, the Nuestra Señora de las Mercedes, which sank off Portugal's Algarve coast in 1804. The vessel had just returned from Montevideo when it was attacked by four Royal Navy ships, and was carrying half a million coins that had been minted in Peru.

Descendants of the 249 Spanish sailors who went down with the ship joined the Spanish government's case against Odyssey in a court in Altanta, Georgia. The court ruled that the cargo belonged to Spain; Odyssey has appealed.

The company claims that up to 70% of the treasure the Nuestra Señora de las Mercedes was carrying did not belong to the Spanish state at the time, and so the vessel was effectively on a commercial mission. That means the cargo cannot belong to the Spanish government today, it argues.

The leaked cables reveal that the US embassy had the previous year handed over to Spanish authorities the customs documents filed by Odyssey when it flew its hoard of coins into the US in mid-2007.

Embassy officials warned Spain's director of customs, Nicolas Bonilla, "that the information was confidential and to be used only for law enforcement purposes"