This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 08 MADRID 000041 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV EFIN KTDB SP USTR OPIC
SUBJECT: Investment Climate Statement, Spain 
 
Ref: STATE 00202943 
 
¶1. Openness to Foreign Investment 
 
¶A. The socialist (PSOE) government of Spain that assumed 
office in March 2004 is interested in attracting foreign 
investment.   There have been no significant changes in 
Spain's regulations for investment and foreign exchange 
under the new government.  Spanish law permits foreign 
investment of up to 100 percent of equity, and capital 
movements have been completely liberalized. 
 
¶B. On April 1999, the adoption of royal decree 664/1999 
eliminated the need for government authorization of any 
investments save those in activities "directly related to 
national defense," such as arms production. The decree 
abolished previous authorization requirements on investments 
in other sectors deemed of strategic interest, such as 
communications and transportation.  It also removed all 
forms of portfolio authorization and established free 
movement of capital into Spain as well as Spanish capital 
out of the country.  As a result, Spanish law now conforms 
to the multi-disciplinary EU Directive 88/361, part of which 
prohibits all restrictions of capital movements between 
member states as well as between such states and other 
countries, and which classifies investors according to 
residence rather than nationality. 
 
¶C. Registration requirements are simple and straightforward, 
and apply to foreign and domestic investments equally. They 
aim to verify the purpose of the investment, and do not 
block any investment. 
 
¶D. Spain's privatization process is slowing down because the 
government has already sold off most of its leading state 
owned companies. The process for those remaining is open to 
all investors.  U.S. companies have successfully 
participated in several purchases.  In 2004 the government 
began the privatization of the railroad system.  Effective 
January 1, 2005, the GOS dissolved the National Rail Network 
(RENFE) and formed two new companies, ADIF and RENFE- 
Operadora, both of which remain under state control.  In 
2005, the GSO initiated the restructuring of the 
shipbuilding company Izar separating the civil (still called 
Izar) and military sectors (Navantia).  The Spanish 
privatization holding company (SEPI), has plans to privatize 
at least six companies and reduce ownership shares gradually 
in firms where SEPI is a minority shareholder.  SEPI has 
initiated the privatization of IZAR, a shipyard. 
 
¶E. The Spanish government has liberalized the energy, 
electricity, and telecommunications markets to varying 
degrees.  These efforts have opened Spain's economy to new 
investment, including by U.S. companies. However, many 
observers feel these changes have not been broad enough to 
fully stimulate the economy.   For example, in the 
telecommunications sector, many analysts believe that 
Telefonica's dominant position undermines competition and 
innovation.  Essentially, it is frequently difficult for new 
entrants to gain traction in sectors dominated by former 
state run monopolies such as Telefonica. 
 
¶2. Conversion and Transfer Policies 
 
There are no controls on capital flows.  On February 1992, 
royal decree 1816/1991 provided complete freedom of action 
in financial transactions between residents and non- 
residents of Spain. Previous requirements for prior 
clearance of technology transfer and technical assistance 
agreements were eliminated. The liberal provisions of this 
law apply to payments, receipts, and transfers generated by 
foreign investments in Spain. Capital controls on the 
transfer of funds outside of the country were abolished in 
¶1991.  Remittances of profits, debt service, capital gains 
and royalties from intellectual property can all be affected 
at market rates using commercial banks. 
 
¶3. Expropriation and Compensation 
 
Spanish legislation sets up a series of safeguards that 
virtually prohibit the nationalization or expropriation of 
foreign investment. No expropriation or nationalization of 
foreign investment has taken place in recent years.  There 
are no outstanding investment disputes between the United 
States and Spain. 
 
¶4. Dispute Settlement 
 
¶A. Legislation establishes mechanisms to solve disputes if 
they arise. The judicial system is open and transparent, 
although slow-moving at times. The Spanish judiciary system 
is independent from the executive; therefore, the government 
is obliged to follow court rulings.  Judges are in charge of 
prosecution and criminal investigation, which permits 
greater independence.  The Spanish prosecution system allows 
for successive appeals to a higher Court of Justice.  The 
European Court of Justice can hear the final appeal.  In 
addition, the Government of Spain abides by rulings of the 
International Court of Justice at The Hague. Spain is a 
member of both the International Center for the Settlement 
of Investment Disputes (ICSID) and the New York Convention 
of 1958 on the Recognition and Enforcement of Foreign 
Arbitral Awards. 
 
¶B. Spain has a fair and transparent bankruptcy regime.  In 
June 2003, the Spanish Parliament approved a new, modern 
bankruptcy law that entered into force on September 1, 2004. 
 
¶5. Performance Requirements and Incentives 
 
¶A. Performance requirements are not used to determine the 
eligibility or level of incentives granted to investors.  A 
range of investment incentives exist in Spain, and they are 
provided according to the authorities granting incentives 
and the type and purpose of the incentives. 
 
¶B. Authorities that provide incentives in Spain: 
 
- 1. The European Union: 
 
The European Union provides incentives in the form of 
subsidies in general development programs such as FEDER and 
F.S.E. FEOGA- Guarantee.  They also provide programs to 
target specific sectors under the EU Sixth Framework 
Programme.  The Government of Spain manages these incentives 
locally.  However, many benefits from EU-sponsored programs 
are limited to companies located in the European Community. 
These incentives will become less financially significant 
over the coming years as Spain's increasing wealth and EU 
enlargement will lead to a smaller share for Spain of the 
EU's general development programs. 
 
- 2. The Central Government: 
 
-      a. The central government grants incentives out of 
its annual budget.  Usually, these incentives match EU 
financing.  Central government incentive programs are easily 
available for direct investment plans. The Ministry of 
Economy and Ministry of Science and Technology play active 
roles in granting the incentives. 
 
-      b. The Foreign Investment Department, under the 
Ministry of Economy, counsels new market investors in the 
application for government incentives.  The Ministry of 
Economy's sector-related departments negotiate directly with 
the old market investors to inform them of incentives 
available for new investments. 
 
- 3. The Regional Government: 
 
Regional governments, called Autonomous Communities, also 
maintain specific programs to attract investment, which are 
often designed to complement central government incentives. 
 
- 4. Municipalities: 
 
-      a. Municipal corporations offer incentives to direct 
investment by facilitating infrastructure needs, granting 
licenses, and allowing for the operation and transaction of 
permits.  Usually they are designed to help ease the initial 
operations of direct investment. 
 
-      b. Generally, the regional governments are 
responsible for the management of each type of investment. 
This provides a benefit to investors as each autonomous 
community has a specific interest in attracting investment 
that enhances its economy. 
 
-      c. Types of incentives available: 
 
--     Financial subsidies 
--     Exemption from certain taxes 
--     Preferential access to official credit 
--     Reduction of burdens, with social security discounts 
to companies 
--     Bonuses for acquisition of certain material 
--     Customs exemption for certain imported goods 
--     Real estate grants, and gratuitous or favorable land 
grants 
--     Guarantees granted in credit operations 
--     Loans with low interest, long maturities, and grace 
periods 
--     Guarantee of dividends 
--     Professional training and qualification 
--     Indirect aid by means of supplying infrastructure 
facilities (accesses, services, communications, etc.) 
 
-      d. Incentives from national, regional or municipal 
governments and the EU are granted to Spanish and foreign 
companies alike without discrimination. 
 
-      e. Spain is in compliance with WTO TRIMS [Trade- 
Related Investment Measures] obligations. 
¶6. Right to Private Ownership and Establishment 
 
¶A. The Constitution protects private ownership.  Spanish law 
establishes clear rights to private ownership and foreign 
firms receive the same legal treatment as Spanish companies. 
 
¶B. There is no discrimination against public or private 
firms with respect to local access to markets, credit, 
licenses and supplies. 
 
¶7. Protection of Property Rights 
 
¶A. Spanish law protects property rights with enforcement 
carried out at the administrative and judicial levels.  Any 
decision by the Administration pertaining to property rights 
can be appealed first at the administrative level and then 
at the judicial level, which has three levels of court 
appeals.  Property protection is effective in Spain, 
although the system is slow.  The Spanish legal system fully 
recognizes property rights and facilitates their acquisition 
and disposition. 
 
¶B. Spanish patent, copyright, and trademark laws all 
approximate or exceed EU levels of intellectual property 
protection. Spain is a party to the Paris Convention, Bern 
Convention, the Madrid Accord on Trademarks, and the 
Universal Copyright Conventions.  Spain has ratified the 
World Intellectual Property Organization's (WIPO) Copyright 
Treaty (WCT) and the WIPO Phonograms and Performances Treaty 
(WPPT), the so-called Internet treaties.  However, it has 
not passed implementing legislation for these treaties 
because it has not yet implemented the EU Copyright 
Directive (dealing with much of the same substance of the 
internet treaties).  The GOS unveiled a good anti-piracy 
initiative in April, 2005.  However, it remains to be seen 
how aggressively this plan will be implemented and what 
effect it will have.  Industry groups are concerned about 
whether the GSO will allow copyright holders to use 
technological protection measures for consumer products like 
DVDs and CDs.  With respect to protecting copyrighted 
content on the Internet, there is a government-industry 
working group, which is trying to agree on what 
administrative procedures should exist for curbing Internet 
downloads of copyrighted material. 
 
¶C. Public and private sector enforcement actions (especially 
private sector initiatives) using Spain's new patent, 
copyright and trademark legal framework have greatly 
increased the number of criminal and civil actions taken 
against intellectual property pirates.  Despite enforcement 
efforts, piracy remains a significant problem.  Sale of 
pirate music CDs has increased dramatically sparked by 
growth in organized pirate CD production operations. 
Industry sources estimate that illegal CDs constitute 30% of 
the Spanish market with pirated versions of new releases 
approaching 50%.  Pirated software, videogames and DVDs are 
also sold widely. 
 
a.  Patents. 
A non-renewable 20-year period for working patents is 
available if the patent is used within the first three 
years.  Spain permits both product and process patents. 
 
Spain has ratified the 1973 Munich European Patent 
Convention allowing Spain to be designated in a European 
patent application.  European patents are administered by 
the European Patent Office, based in Munich (Germany). 
 
b.  Copyrights. 
The law extends copyright protection to all literary, 
artistic or scientific creations, including computer 
software.  Spain and the United States are members of the 
Universal Copyright Convention. For protection, U.S. authors 
must register with this organization. 
 
c.  Trademark. 
There are various procedures to register a trademark in 
Spain.  The Spanish Office of Patents and Trademarks 
oversees protection for national trademarks.  Trademarks 
registered in the Industrial Property Registry receive 
protection for a 10-year period from the date of 
application, which may be renewed.  Protection is not 
granted for generic names, geographic names, those that 
violate Spanish customs or other inappropriate trademarks. 
Spanish authorities published a new Trademark law in 2001 
(Law 17/2001), which came into effect in July 2002. 
 
Applicants must designate the countries where they wish to 
obtain protection.  The World International Property 
Organization (WIPO, headquartered in Geneva) oversees an 
international system of registration.  However, this system 
only applies to U.S. firms with an establishment in a 
country that is a party of the Agreement or the Protocol. 
 
Business may seek a trademark valid throughout the EU.  The 
Office for Harmonization in the Internal Market (OHIM) for 
the registration of community trademarks in the European 
Union started its operations in 1996.  Its headquarters are 
located in 
Alicante: 
 
Oficina de Harmonizacion del Mercado Interior (Office for 
Harmonization in the Internal Market) 
Avenida Aguilera, 20 
03080 Alicante 
Tel: (34) 96-513-9100 
Fax: (34) 96-513-9173 
 
¶8. Transparency of Regulatory System 
 
¶A. Spain modernized its commercial laws and regulations 
following its 1986 entry into the EU.  Its local regulatory 
framework compares favorably with other major European 
countries. Bureaucratic procedures have been streamlined and 
much red tape has been eliminated, though permitting and 
licensing processes can still suffer delays. Efficacy of 
regulation at the regional level is uneven. 
 
¶B. Quasi-independent regulatory bodies exist in several 
sectors; however, they are for the most part still finding 
their role and fighting to assert their independence. Making 
the transition from state-owned monopolies to promoting full 
and open competition has been a slow, but steady process. 
 
¶C. The comment process for proposed rule-making changes is 
not as formal as in the United States. Spain does not have 
an official comment procedure for government regulations 
like the U.S. system. Most new laws and regulations are 
published as drafts before they go into force, but by the 
time they are published, there are often limited 
opportunities to change them. Government officials do seek 
out stakeholder comments before finalizing significant 
regulations, but the comment system is geared towards 
collecting input from officially recognized industry sector 
associations or consumer organizations.  The general public 
will not necessarily be aware of a regulation until it is 
finalized and published. 
 
¶9. Efficient Capital Markets and Portfolio Investment 
 
¶A. Lower interest rates due to the convergence of monetary 
policy following the adoption of the euro has led to a 
significant lowering of interest rates in recent years. 
Foreign investors do not face discrimination when seeking 
local financing for projects.  There is a large range of 
credit instruments available through Spanish and 
international financial institutions. Many large Spanish 
companies rely on cross-holding arrangements and ownership 
stakes by banks rather than pure loans. However, these 
arrangements do not act to restrict foreign ownership. 
Several of the largest Spanish companies that engage in this 
practice are also traded publicly in the U.S. 
 
¶B. Corporate scandals in the U.S. and Europe, further 
integration of European capital markets and efforts to make 
Spain a more attractive destination for foreign investment 
have led to several new initiatives to improve the 
transparency of capital markets and corporate governance. 
Spanish business organizations and private economic think 
tanks are pro-active on corporate governance issues.  In 
2003 and 2004, Spanish business leaders created a 
progressive code of business practices and ethics.  In 2004, 
Spanish regulatory agencies and lawmakers codified the 
business codes and required Spain's listed companies to 
follow a rigorous set of corporate governance and 
transparency rules.  Spain's government views corporate 
governance rules as a means of ameliorating the effects of 
concentrated economic power and preventing a major corporate 
scandal along the lines of Enron or Parmalat. 
 
Due to extensive cross-ownership within a small universe of 
dominant companies, Spanish corporations have traditionally 
not had truly independent board members.  This situation is 
slowly changing, with several leading Spanish companies 
introducing independent members to their boards in an effort 
to improve transparency. 
Hostile takeover rules and the threat of a government 
"Golden Share" veto have been used to prevent takeovers of 
companies. While surfacing on occasion in purely Spanish 
transactions, these defenses are most often used when the 
acquiring company was partially or fully owned by other 
governments, with the Spanish government and securities 
regulators acting to prevent what they interpret as another 
government taking over a privatized Spanish company.  A 
European court of Justice decision has ruled such practices 
illegal.  The Spanish Cabinet approved on November 25, 2005 
a draft bill scrapping the "Golden Share" rule whereby the 
government had to approve the sale of more then 10% of the 
shares in strategically important companies such as 
Telefonica, Endesa, Iberia and Repsol.  The government 
intends to submit this bill urgently to parliament in order 
to ensure Spanish law is consistent with the court ruling. 
 
¶C. The domestic Spanish banking system is regarded as 
healthy, with four banks dominating the market.  Spanish 
regulators have recently focused attention on these banks' 
exposure to non-performing Latin American assets, and have 
required full provisions against this exposure. In 2004, new 
Spanish gross investment abroad was USD 44 billion, showing 
a 93.02 percent increase from the 2003 annual level.  During 
the first six months of 2005, Spanish authorities recorded 
USD 2.6 billion in new foreign direct investment, a decrease 
of 42.09 percent compared with investment in the first 
semester of 2004. (Note: Statistics on Spanish overseas 
investments and foreign investments in Spain for the second 
semester of 2004 will be available in May or June of 2005.) 
The drop in Spanish overseas investment reflects, in part, 
fewer attractive opportunities for Spanish companies in 
Latin America as many of the major privatizations there have 
already taken place. 
 
¶10. Political Violence 
 
¶A.   The Government of Spain is involved in a long-running 
campaign against Basque Fatherland and Liberty (ETA), a 
terrorist organization founded in 1959 and dedicated to 
promoting Basque independence.  ETA regularly targets 
Spanish government officials, members of the military and 
security forces, journalists, and members of the Popular 
Party and Socialist Party for assassination.  U.S. citizens 
and U.S. companies have not been ETA targets.  In recent 
years, the Spanish government has secured greater security 
cooperation from French authorities on the ETA threat. 
ETA has killed over 40 persons since January 2000 and about 
850 persons since its founding.  The last lethal ETA attack 
took place in 2003 when two police officers were murdered. 
Its main methods are car bombs and assassinations with 
firearms. ETA operatives extort  "revolutionary taxes" from 
businesspersons and professionals living in the Basque 
region, sometimes bombing their property to intimidate them 
into paying extortion demands. ETA supporters also engage in 
street violence and vandalism against government facilities, 
economic targets (particularly banks), and the homes and 
property of persons opposed to ETA's cause.  In 2004, the 
GOS arrested several important high-ranking ETA members and 
two top ETA leaders were arrested in France.  ETA responded 
by detonating small bombs in Madrid and other cities, but 
most observers believe the organization has been greatly 
weakened by the 2004 arrests. 
 
¶B. On March 11, 2004, Islamic terrorists killed 191 people 
on trains headed for Madrid's central Atocha train station. 
Several foreign nationals died in the attack, although there 
were no American citizen casualties.  Islamic extremists 
remain active in Spain and if there are other attacks, U.S. 
citizens/property could be hurt/damaged, although, so far, 
U.S. citizens and companies in Spain have not been direct 
Islamic terrorist targets. 
 
¶11. Corruption 
 
¶A. Giving or accepting a bribe is a criminal act.  Under the 
Spanish civil code, section 1255, corporations and 
individuals are prohibited from deducting bribes from 
domestic tax computations. 
 
¶B. Spain has a wide variety of laws, regulations, and 
penalties dealing with corruption.  The legal regime has 
both civil and criminal sanctions for corruption, bribery, 
financial malfeasance, etc.  The Spanish legal regime is 
hampered, however, by the fact that only natural persons, as 
opposed to legal persons, can be held criminally liable for 
the actions of a company.  Furthermore, civil and 
administrative proceedings cannot begin until there is a 
finding of criminal liability against a natural person. 
Although the Ministry of Justice has initiated an amendment 
process to provide for sanctions of legal persons, it has 
not yet become law. 
 
¶C. Spain is a signatory of the OECD Convention on Combating 
Bribery, and Spanish officials attach importance to 
combating corruption. The government is working to amend 
domestic law to make the Convention a more useful 
investigative and prosecutorial tool. 
 
¶D. The General State Prosecutor is authorized to investigate 
and prosecute corruption cases involving funds in excess of 
roughly USD $500,000.  The Office of the Anti-Corruption 
Prosecutor, a subordinate unit of the General State 
Prosecutor, has 15-20 prosecutors in Madrid, Barcelona, and 
Valencia who are tasked with investigating and prosecuting 
domestic and international bribery allegations.  There is 
also the "Audiencia Nacional," a corps of magistrates given 
broad discretion to investigate and prosecute alleged 
instances of Spanish businesspeople bribing foreign 
officials. 
 
¶E. Spain enforces anti-corruption laws on a generally 
uniform basis.  Public officials are probably subjected to 
more scrutiny than private individuals, but several wealthy 
and well-connected business executives have been 
successfully prosecuted for corruption.  There is no obvious 
bias for or against foreign investors. U.S. firms have not 
identified corruption as an obstacle to investment in Spain. 
 
¶F. Conversations with representatives of the Spanish legal 
community indicate that the Convention is increasingly being 
taken into account in the drafting of contracts.  Spanish 
companies, both domestic and multinational, are insisting 
that clauses protecting them against requests for bribes be 
inserted into business contracts.  Tax evasion, particularly 
by those who work in cash-based sectors has reportedly been 
heavy. 
 
11.B Bilateral Investment Agreements 
 
¶A. Spain has concluded bilateral investment agreements with 
Hungary (1989), Bolivia (1990), the Czech Republic (1990), 
Russia (1990), Argentina (1991), Chile (1991), Tunisia 
(1991), China (1992), Egypt (1992), Poland (1992), Uruguay 
(1992), Paraguay (1993), Philippines (1993), Algeria (1994), 
Honduras (1994), Pakistan (1994), Kazakhstan (1994), Peru 
(1994), Cuba (1994), Nicaragua (1994), Lithuania (1994), 
Bulgaria (1995), The Dominican Republic (1995), El Salvador 
(1995), Gabon (1995), Latvia (1995), Malaysia (1995), 
Romania (1995), Indonesia (1995), Venezuela (1995), Mexico 
(1995), Turkey (1995), Lebanon (1996), Ecuador (1996), Costa 
Rica (1997), Croatia (1997), Estonia (1997), India (1997), 
Panama (1997), Morocco (1997), Slovenia (1998), South Africa 
(1998), Ukraine (1998), the Kingdom of Jordan (1999), 
Trinidad and Tobago (1999), the Bolivian Republic (2001), 
Jamaica (2002), the Islamic Republic of Iran (2002), the 
Federal Republic of Yugoslavia (2002), Bosnia and 
Herzegovina (2002), Namibia (2003), Albania (2003), and 
Uzbekistan (2003), Syria (2003) 
 
¶B. Spain and the United States have a Friendship, Navigation 
and Commerce (FCN) Treaty and a Bilateral Taxation Treaty 
(1990).  Spanish officials have indicated that they would 
like to keep the FCN, despite indications in 2004 that the 
EU Commission wanted Member States to terminate bilateral 
FCN agreements. 
 
11.C OPIC and Other Investment Insurance Programs 
 
¶A.  As Spain is a member of the European Union, OPIC 
insurance is not applicable. Various EU directives, as 
adopted into Spanish law, adequately protect the rights of 
foreign investors. Spain is a member of the World Bank's 
Multilateral Investment Guarantee Agency (MIGA). 
 
11.D Labor 
 
¶A. Employment estimates for 2005 show that there are about 
20.9 million Spaniards in the work force.  This figure is 
expected to climb to 21.1 million for 2006.  Meanwhile, 
unemployment continued its decrease from the 1994 high of 
24.2 percent down to 8.42 percent in third quarter of 2005. 
Unemployment for women continues to be substantially higher 
than the male average, at 11.19 percent compared to 6.49 
percent.  Spain faces a shortage of high-tech workers for 
its IT sector, and of unskilled workers for its fishing and 
agricultural industries. 
¶B. Labor market reforms in 1994 and 1997 eased Spain's well- 
known labor market rigidities but did not fundamentally 
change the difficult labor situation.  The result is that 
one third of all employed Spaniards are classified as 
temporary hires. Spain's new socialist government promised 
to reform labor laws as part of its electoral program.  The 
government would like to move people from short-term 
contracts to regular employment status, but so far 
inducements to employers to make this happen have not been 
implemented.  The government recognizes that labor market 
reform is essential to increasing productivity, which Spain 
needs to do as it faces competition from lower-wage EU 
accession countries.  Collective bargaining reform should be 
part of this effort, but so far this has not happened 
either.  In early 2005, for instance, the Spanish government 
approved indexing the minimum wage to inflation.  The unions 
supported this position and employers accepted it, albeit 
unenthusiastically with some employer representatives 
questioning the decision. 
 
¶C. Collective bargaining is widespread in both the private 
and public sectors. Sixty percent of the working population 
is covered by collective bargaining agreements although only 
a minority (generally estimated to be about 10 percent) are 
actually union members.  Under the Spanish system, workers 
elect delegates to represent them before management every 
four years. If a certain proportion of those delegates is 
union-affiliated, those unions form part of the workers' 
committees.  Large employers generally have individual 
collective agreements.  In industries characterized by 
smaller companies, collective agreements are often industry- 
wide or regional. 
 
¶D. The constitution guarantees the right to strike and it 
has been interpreted to include the right to call general 
strikes called to protest government policy. 
 
11.E Foreign-Trade Zones/Free Ports 
 
¶A. Both on the mainland and islands there are numerous free 
trade zones (in most Spanish airports and seaports) where 
manufacturing, processing, sorting, packaging, exhibiting, 
sampling and other commercial operations may be undertaken 
free of any Spanish duties or taxes.  The largest free trade 
zones are in Barcelona, Cadiz and Vigo.  Others vary in size 
from a simple warehouse to several square kilometers. 
Spanish customs legislation allows for companies to have 
their own free trade areas.  Duties and taxes are payable 
only on those items imported for use in Spain. These 
companies have to abide by Spanish labor laws. 
 
11.F Foreign Direct Investment Statistics 
                              2002*     2003*     2004* 
(In USD Millions) 
Total new foreign 
direct investment 
in Spain                      10,811    11,214    13,844 
 
U.S. direct investment 
in Spain                         692     1,663.7  2,358.6 
 
U.S. share of total 
direct invest (%)                  6.4      14.84    17.04 
 
Total new Spanish 
investment abroad             23,841    20,747    44,045 
 
Spanish investment in U.S.    1,548.6   1,820.9      742.7 
 
U.S. share of total 
Spanish investment (%)            6.49      8.78       1.69 
 
New Foreign Direct Investment in Spain (2003*): by country 
of origin 
 
U.S.                17.04 percent 
The Netherlands      7.67 percent 
Germany              3.27 percent 
United Kingdom      18.09 percent 
France              11.17 percent 
Luxembourg           0.73 percent 
Canada               1.30 percent 
Italy                2.33  percent 
Sweden               0.90 percent 
Other EU countries  10.45 percent 
 
New Foreign Direct Investment in Spain (2004*): by industry 
sector destination 
 
Food and Beverage               3.88 percent 
Electric Energy Production      5.61 percent 
Manufacturing                   6.55 percent 
Commerce                       19.8 percent 
Transportation & 
Communication                  4.09 percent 
Banking and Insurance          14.49 percent 
Real estate and services       11.62 percent 
Company Management and 
Share Holding                  18.93 percent 
Others                         11.33 percent 
Source: Directorate General of Trade and Investment, 
Ministry of Industry, Tourism and Trade.  Note (*): data are 
not comparable with previous investment figures for previous 
years.  It is a new concept that corresponds to Registered 
Gross Investment discounted: a) acquisitions of shares and 
stakes in Spanish companies from other non-residents; and b) 
multiple accounting for the same investment as a result of 
business group restructuring in Spain. 
 
11.G Major Foreign Investors 
 
Foreign investment has played a significant role in 
modernizing the Spanish economy over the past 35 years. 
Attracted by Spain's large domestic market, export 
possibilities and growth potential, foreign companies in 
large numbers have set up operations.  Spain's automotive 
industry is almost entirely foreign-owned. 
 
Multinationals control half of the food production 
companies, a third of chemical firms and two-thirds of the 
cement sector. Several foreign banks have acquired networks 
from Spanish banks, and foreign firms control close to one 
third of the insurance market.  In 2004, Spain recorded USD 
13.8 billion in new foreign direct investment, a light 
increase of 0.25 percent compared with investment in 2003. 
In 2004, the European Union countries were the largest 
investors accounting for 55.9 percent.  The non-European 
OECD countries invested USD 2.6 billion, accounting for 18.9 
percent.  By countries, the largest investors were United 
Kingdom, the United States, Mexico, France, Portugal, the 
Netherlands, Germany, Italy and Switzerland. 
 
Note: FDI numbers provided in this section do not include 
portfolio investment 
 
AGUIRRE