VZCZCXRO0113
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0287/01 0701037
ZNR UUUUU ZZH
P 101037Z MAR 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 4444
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3354

UNCLAS SECTION 01 OF 02 MADRID 000287 
 
SIPDIS 
 
SIPDIS 
 
EUR/WE, EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EIND ENIV ENRG ETRD KIPR SP
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL/AG UPDATE MARCH 1-7 
 
MADRID 00000287  001.2 OF 002 
 
 
Table of Contents: 
 
ECON/EFIN: Dubai Sovereign Investment Fund (ICD) buys 
Troubled Real Estate Company 
EFIN/EINV/ENRG: Solbes Calls for Level Playing Field as 
Iberdrola Opposes Possible EDF Bid 
ENRG/EINV: ECJ Rules Against Spain for Defying EC on German 
ENDESA Takeover Bid 
ECON: Ana Palacio Leaving World Bank 
KIPR: Barcelona Judge Orders Website Selling Counterfeit 
Goods Blocked 
EFIN/ETRD: BBVA is World Leader in Trade Finance 
EIND: Ferrovial wins 3 large service contracts 
EIND: Renault showing signs of growth 
 
DUBAI SOVEREIGN INVESTMENT FUND (ICD) BUYS TROUBLED REAL 
ESTATE COMPANY 
 
¶1. (U) The ICD came to an agreement with troubled real estate 
construction company Colonial owners Luis Portillo and Luis 
Nozaleda on 3/4/08.  The Dubai fund will buy Colonial's 
bricks and mortar real estate assets and will end up paying 
something between euros 1.9 billion and 2.1 billion, i.e., 
about euros 1.3 per share.  Portillo and Nozaleda are keeping 
the land owned by Colonial, which is valued at euros 1.8 
billion.  The investment fund had originally offered euros 
1.72 per share.  (Comment: We cannot evaluate whether the 
parties' business strategy makes sense.  The Dubai investment 
fund's entry into the troubled Spanish real estate sector is 
likely welcomed by the Spanish government, although the 
National Securities Exchange Commission (CNMV) is 
investigating the details of the transaction to make sure it 
is being conducted properly.) (Expansion, 3/5/08) 
 
SOLBES CALLS FOR LEVEL PLAYING FIELD AS IBERDROLA OPPOSES 
POSSIBLE EDF BID 
 
¶2. (U) While in Brussels on 3/4/08, Second Vice President and 
Finance Minister Solbes said that the fact that it was 
impossible to mount a takeover bid for French majority 
government-owned energy giant EDF was a "pertinent" factor in 
Iberdrola's defense against a possible EDF and ACS (Spanish 
construction firm) attempt to take over Iberdrola.  However, 
Solbes was careful to add that the Spanish government had 
nothing to say for or against a possible takeover of 
Iberdrola.  His emphasis was on the need for a level European 
playing field in the energy sector.  Iberdrola has filed a 
complaint in Brussels against the French government for its 
role in the possible EDF bid.  (Comment: The possible 
takeover of Iberdrola, like Gas Natural's bid for Endesa in 
the past, has become a political football in Spain.  The 
Spanish government has indicated neutrality on the issue. 
The opposition conservative PP party has said it would like 
Iberdrola to remain in Spanish hands.) (Expansion, 3/5/08 and 
WSJ, 3/4/08) 
 
ECJ RULES AGAINST SPAIN FOR DEFYING EC ON GERMAN ENDESA 
TAKEOVER BID 
 
¶3. (U) On March 6, the EU Court of Justice ruled that Spain 
violated EU law in refusing to comply with an EC ruling 
related to the Endesa takeover controversy.  Endesa, one of 
the world's largest electricity utilities, was the subject of 
a bitter takeover battle that lasted over a year.  During the 
contentious battle, Spain had imposed restrictive conditions 
against one of the primary bidders, Germany energy giant 
E.ON.  In response, the EC had mandated that Spain withdraw 
those conditions.  Spain had refused to do so, citing its own 
national authority on such matters.  The March 6 ruling 
affirmed that EC authority superseded Spain's authority in 
this matter.  Although the proposed acquisition has fallen 
through, and Italian firm Enel and Spanish firm Acciona won 
control of Endesa in 2007, Spain must still withdraw the 
conditions.  If the EC is not satisfied with Spain's actions, 
it may bring another case to the ECJ that could result in 
Spain being fined.  (EFE 03/06/08, CNN.Money 03/06/08) 
 
ANA PALACIO LEAVING WORLD BANK 
 
¶4. (U) The Bank's legal director, who was Spain's Foreign 
Minister under President Aznar, has announced her departure 
as of April 15.  Expansion writes that her departure is one 
more sign of diminishing Spanish presence in important 
international economic organizations.  Rodrigo Rato left his 
post as head of the IMF last fall.  EU Commissioner for 
Economic and Monetary Affairs Joaquin Almunia is likely to 
leave his job next year.  Jose Manuel Gonzalez Paramo is 
likely to leave the board of the European Central Bank soon. 
One exception: former Spanish Central Bank President Jaime 
Caruana remains in the IMF as head of the influential markets 
 
MADRID 00000287  002.2 OF 002 
 
 
division.  There is still discussion in the media about the 
possibility of Spain joining the G-8, although the GOS has 
not formally applied for membership.  The opposition 
conservative PP part would like Spain to join, but it 
recognizes that, realistically, this could not happen before 
¶2012.  (Expansion, 3/5/08) 
 
BARCELONA JUDGE ORDERS WEBSITE SELLING COUNTERFEIT GOODS 
BLOCKED 
 
¶5. (U) On March 3, a Barcelona judge ordered a website that 
supposedly sells counterfeited products from China blocked to 
Spanish users.  This is the first time this has happened in 
Spain.  The National Police and the President of the 
Association of the Defense of Namebrands (ANDEMA), Jose Luis 
Bonet, have underscored the importance of this action as a 
stepping stone to pursue other such sites. (Terra) 
 
BBVA IS WORLD LEADER IN TRADE FINANCE 
 
¶6. (U) According to Dealogic numbers, last year the Spanish 
bank had 8.3% of the global market in this year and financed 
deals worth USD 9.3 billion, making it the leader in trade 
finance, exclusive of aircraft and shipping.  Citi came in 
fourth place and Santander in 11th place. (Expansion, 3/5/08) 
 
FERROVIAL WINS 3 SERVICES CONTRACTS 
 
¶7. (U) Spanish construction group Ferrovial was awarded three 
service contracts totaling 42.5 million euros.  One is to 
manage buildings at schools, sports centers, and 
administration offices for the Madrid autonomous community 
(region) government.  This expands its presence in the Madrid 
community, where it already manages university, hospital, and 
jail buildings.  Another contract is to manage a 24 hour 
emergency call center in Valencia for the autonomous 
community government, and the third is to maintain 264 
kilometers of highway in Valencia for the national public 
works ministry. (Terra 2 Mar) 
 
RENAULT SPAIN SHOWING SIGNS OF GROWTH 
 
¶8. (U) Renault Spain is finally seeing the light at the end 
of the tunnel after three years of struggling due to the lack 
of success of the Modus model made at its Valladolid plant. 
With the introduction of a new Megane model at its Palencia 
plant, the company plans to hire 4,200 workers and expand its 
2008 production by 7.8 percent to 303,000 vehicles, the first 
growth in four years.  The firm is not expected to approach 
its 2003 production level of 547,000 vehicles until the 
Valladolid plant begins to produce a new model sometime after 
¶2009. 
AGUIRRE