VZCZCXRO3840
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0396/01 0611756
ZNR UUUUU ZZH
R 021756Z MAR 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1993
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2500

UNCLAS SECTION 01 OF 02 MADRID 000396 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EUR/WE 
 
E.O. 12958: N/A 
TAGS: EAGR EAID EAIR ECON EFIN ENRG ETRD SENV TBIO
SP, EINV, UK 
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT 
 
MADRID 00000396  001.2 OF 002 
 
 
SENV: Waste water treatment below standards 
KIPR: Speaker Visit of Judge Bernice Donald 
KIPR: Spain - hotbed of digital piracy 
EAGR/ETRD: Renewable fuels homegrown vs imports 
EAID: Spain an equal opportunity donor 
EAGR: Biothechnology corn 
 
SPAIN FAILING TO IMPLEMENT EU WASTE WATER TREATMENT DIRECTIVE 
 
¶1. (U) An EU Directive from 1991 requires Member States to 
treat waste water in towns containing over 2,000 inhabitants 
to specified standards by December 2005.  Spain codified this 
directive into national law via its 1995 Water Treatment 
Plan.  But it is clear that Spain has failed to implement 
this directive in an effective fashion.  According to the EU, 
approximately 800 Spanish towns with over 2,000 people 
(representing a total 6.5 million people) are not treating 
their waste water to EU standards.  To make matters worse, 
the EU has declared 288 of these towns to be "sensitive 
areas" which require even stricter waste water treatment 
standards.  Prominent population centers on the EU hit list 
include Vigo, Oviedo, Burgos, Ibiza, Ourense, Gijon, Badajoz, 
Ciudad Real, Ubeda, Algeciras, and Moron de la Frontera. 
Experts cite several reasons for Spain's failure to comply, 
including:  population growth, a building boom, climate 
change and low rainfall levels.  Another key factor is the 
fact that towns are not required to install water treatment 
facilities when they approve new residential developments. 
The GOS counters that it has budgeted 17.5 billion euros to 
bring all Spanish towns into compliance with the directive by 
2015 (10 years after the EU deadline). 
 
JUDGE BERNICE B. DONALD MADRID/BARCELONA INTELLECTUAL 
PROPERTY RIGHTS (IPR) TOUR 
 
¶2. (U) Judge Donald (U.S. District Court for the Western 
District of Tennessee) spoke February 19-21 about 
developments in U.S. IPR law and the importance of respecting 
intellectual property with a variety of audiences in Madrid 
and Barcelona.  Judge Donald was well received, and her 
Spanish audiences were very interested in what she had to 
say.  Her trip was very useful in confirming that the Spanish 
judiciary (both acting judges and future judges) are our 
toughest target.  Judge Donald spoke to about 100 future 
judges at the Judicial Training School in Barcelona who 
displayed almost unanimous opposition to prosecuting 
individual illegal internet downloads, in part because the 
Spanish penal code does not provide for administrative type 
sanctions for these violations.  Embassy's PD section funded 
and supported the trip.  EconOff accompanied the Judge to all 
her events and provided additional substantive input, 
especially in dealing with more policy-oriented questions. 
This was well worth doing. 
 
IIP RECOMMENDS SPAIN FOR SPECIAL 301 WATCH LIST 
 
¶3. (U) Financial Times reports Spain is a "hotbed of digital 
piracy": Box office receipts were down by 2.2 percent in 
Spain last year.  The EU as a whole saw a 4 percent increase 
in box office receipts.  In the U.S., box office receipts 
were up by 3.4 percent. (Comment: These numbers no doubt 
explain in part why the International Intellectual Property 
Alliance (IIPA) has recommended Spain for inclusion on the 
Special 301 Watch List.) (FT, 2/23/07) 
 
 
RENEWABLE FUELS 
 
¶4. (U) Can Europe meet its currently voluntary "renewable" 
fuels-use targets using Europe-produced renewable fuels from 
locally produced feedstock?  Without European Commission 
intervention, when the vagaries of very complex local and 
world commodity markets turn against European renewable fuels 
producers, local producers may become hard pressed to remain 
financially viable. 
 
¶5. (U) One of the Spanish companies that currently leads 
Europe in the production of ethanol from grains, has just 
reminded everyone that production of ethanol and bio-diesel, 
for that matter, can be an economic challenge.  Abengoa, an 
engineering group that operates three grain-to-fuel 
distilleries in Spain, just announced that it will close its 
newest and largest ethanol-producing plant during April, May 
and June of 2007.  The reason was not disclosed, but 
reportedly it has to do with the information outlined in the 
graph found at USDA.FAS.com (Attache 2007 reports SP7011). 
Immediately after the announcement, local barley and wheat 
prices reportedly dropped four Euros/ton, and some analysts 
 
MADRID 00000396  002.2 OF 002 
 
 
believe they will drop another three-to-four Euros/ton, in 
particular, as the new-crop comes on in late June-to-early 
July.  When in full-out production, the Salamanca plant in 
question uses 50,000 tons of grain feedstock per month. 
 
¶6. (U) Abengoa's Spanish ethanol plants are landlocked and 
highly dependent on local barley and wheat production and 
stocks.  In December 2006, Abengoa announced that it was 
switching from wheat to barley, perhaps due to barley's lower 
price and greater availability in Spain (GAIN SP6034).  But, 
the switch may not have been enough, because just as grain 
prices increased steeply in late 2006 (see graph), crude oil 
prices moved just as hard and quickly in the opposite 
direction, setting up Abengoa's current dilemma. 
 
¶7. (U) European grain prices are Euros per ton, FOB (Source: 
CESFAC - FEGA-MAPA) European fuel prices are USD per barrel 
in the Brent spot market (source: DOE-EIA at 
http://www.eia.doe.gov/emeu/international/oil price.html) 
 
 
FOREIGN ASSISTANCE FOR EVERYONE 
 
¶8. (U)  Continuing the Zapatero policy of dramatically 
expanding Spanish foreign assistance levels, Spain in recent 
weeks announced several disaster-relief related donations: 
 
--  On February 23, the Spanish Agency for International 
Cooperation (AECI) announced that Spain had provided 450,000 
euros in emergency assistance to Mozambique in the aftermath 
of cyclone Favio.  250,000 euros will be used to buy in South 
Africa 500 tents, two electricity generators, 600 water 
tanks, 100 shelters, and 500 food and medicine kits.  200,000 
euros was provided via a February 16 AECI airlift of 
emergency supplies to the stricken country.  This airlift 
included four potable water treatment plants. 
 
--  On February 22, AECI announced that it had increased it 
assistance to Bolivian flood victims to a total of 600,000 
USD.  100,000 USD was provided via UNDP on February 12.  On 
February 21, AECI sent an additional 131,000 USD via UNDP, as 
well as 269,000 USD to the AECI office in Bolivia to locally 
purchase food, tents, hammocks, mosquito nets, and tools. 
Finally, AECI provided 100,000 USD to the Spanish Red Cross 
to purchase foodstuffs for the flood victims. 
 
--  In response to food shortages experienced by Western 
Sahara refugees in Tindouf, Algeria, AECI announced February 
16 that it would both send emergency food supplies from Spain 
and help feed the refugees via locally purchased foodstuffs. 
850,000 tons of corn flour was dispatched from Spain while 
800,000 tons of lentils and 450 tons of oil was purchased 
locally for the refugees.  An additional 1,000,000 tons of 
rice and 152 tons of sunflower oil was also provided (it is 
not clear if they were dispatched from Spain or purchased 
locally).  The total cost of this emergency food assistance 
was about 1.5 million euros, bringing total 2006 Spanish 
support for the Sahara refugees to over 6 million euros. 
 
INCREASING POLEMICS OVER BIOTECH IN SPAIN 
 
¶9. (U) The Basque Autonomous Regional Government has declared 
the Basque Country a transgenic-free zone, the third of 
Spain's 17 autonomous regional governments to do so, after 
Asturias and the Balearic Islands.  In addition, in Murcia, 
an association of agricultural cooperatives publicly 
petitioned their regional government to declare its own 
transgenic-free zone.  The three transgenic-free Autonomous 
Regions do not have corn-borer infestations, so, they had 
very little to lose since only biotechnology-derived, 
corn-borer resistant corn has been approved for planting in 
Spain.  However these regions do have feed manufacturers that 
use corn and/or corn gluten feed that is of likely 
biotechnology origin.  We expect that very little will be 
said by these local governments about the use of 
biotechnology corn/products to keep their animal industries 
supplied with feed.  We also note that there is not any 
anti-GMO legislation currently being contemplated in 
Autonomous Regions such as Catalonia and Aragon where corn 
farmers have adopted biotechnology corn in response to corn 
borer infestations (see FAS Gain Report No. SP7001). 
AGUIRRE