VZCZCXRO2456
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #1295/01 1841446
ZNR UUUUU ZZH
R 031446Z JUL 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 2912
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAS/AMEMBASSY ALGIERS 3945
RUEHLA/AMCONSUL BARCELONA 2864

UNCLAS SECTION 01 OF 02 MADRID 001295 
 
SIPDIS 
 
SIPDIS 
 
EUR/WE 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EFIN EIND ELAB ETRD TBIO SP EINV
UK, SMIG 
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT - 
JUNE 25 - JUNE 29 
 
 
MADRID 00001295  001.2 OF 002 
 
 
ECON/ENRG: Ambassador and AMCHAM promote renewable energy 
ECON/EINV: UN report warns real estate crisis is inevitable 
in Spain 
ECON: Spaniards unhappy with their job situation 
SENV: Proposed amendment to tax cars based on CO2 emissions 
EINV/ETRD: Spanish economic outreach abroad - China, South 
Korea, and Senegal 
ENRG/ETRD: Gas pipeline woes between Spain and Algeria 
ETRD: New plan to market Spanish wine abroad 
ELTN: Increased high speed trains to northern Spain 
 
 
AMBASSADOR PROMOTES ENERGY EFFICIENCY AT AMCHAM CONFERENCE 
 
¶1. (U) In a June 25 energy conference organized by the 
American Chamber of Commerce, the Ambassador spoke on the 
security, environmental and economic benefits of diversifying 
our energy sources.  The Ambassador discussed the President's 
new initiative on climate change and our commitment to 
renewable energy sources.  Other speakers at the two-day 
conference included Minister of Industry, Tourism, and 
Commerce Joan Clos as well as high-level representatives from 
the US Department of Energy, and notable industry leaders. 
The two day conference was a success, bringing together 
Spanish and US counterparts including executives and 
entrepreneurs of leading edge renewable energy firms from 
both countries. 
 
THE UN WARNS THAT SPAIN WILL FACE A REAL ESTATE CRISIS 
 
¶2. (U) According to the UN Special Rapporteur on Adequate 
Housing, Miloon Kothari, Spain should intervene more in the 
real estate market and adopt a transparent approach on 
informing investors and citizens of the risks of a potential 
housing price bust. According to Spanish press, this advice 
will be presented in a report to the UN in November.  Kothari 
notes that in the long term, the housing market is not 
sustainable, particularly given that a large portion of 
Spaniards dedicate more than 40 percent of their income on 
variable-interest rate mortgages.  Kothari further believes 
that the average Spaniard might not be able to absorb the 
increases in interest rates to already existing mortgages. 
Kothari urges the government to intervene and curb 
speculation while also be more open to the public about 
potential problems related to the volatility of the market. 
According to various local surveys, the potential collapse of 
the real estate market ranks alongside concerns about 
terrorism and unemployment. 
 
SPANIARDS ARE UNHAPPY WITH THEIR WORK SITUATION 
 
¶3. (U) According to a 2007 European barometer on work issues, 
45 percent of Spanish workers reported that they were 
dissatisfied with their work situation, primarily due to low 
salaries and weakened purchasing power.  In fact, Spain has 
one of the highest index of dissatisfied workers in Europe, 
surpassed only by Turkey with a rate of 55%.  However, those 
Spanish workers with higher level or management 
responsibilities reported higher satisfaction rates (82%). 
 
PROPOSED NEW AMENDMENT TO TAX CARS BASED ON CO2 EMISSIONS 
 
¶4. (U) The Spanish Congress is scheduled to debate two 
amendments to the Air Quality law that would charge car 
owners for their CO2 emissions.  The first proposal would 
exempt ecologically sound cars from the currently mandated 
vehicle registration tax, while the second would increase 
registration taxes on "polluting cars" by about 14.5 and 17 
percent of the total value of the vehicles. If both of these 
measures were adopted, experts estimate that this could 
significantly impact the market for different kinds of 
vehicles. 
 
SPAIN ECONOMIC OUTREACH ABROAD - CHINA, SOUTH KOREA, AND 
SENEGAL 
 
¶5. (U) The week of June 25 was busy for Spanish economic 
diplomacy.  A delegation from the telecom giant Telefonica 
visited South Korea to strengthen ties with Korean companies. 
 The King and Queen of Spain's visit to China received 
positive press over the past week.  The Spanish leaders were 
accompanied by 300 business representatives representing 163 
Spanish companies from a wide range of sectors such as 
agriculture, finance, tourism, and telecommunications.  In 
fact, thanks to these efforts, the Chinese may be eating more 
Spanish ham next year given a recent promise by the Chinese 
to lift trade restrictions on ham products beginning next 
 
MADRID 00001295  002.2 OF 002 
 
 
February.  Meanwhile, the Spanish Labor and Interior Ministry 
officials traveled to Senegal last week accompanied by 30 
Spanish businessmen in an effort to promote legal 
immigration. 
 
GAS PIPELINE WOES BETWEEN SPAIN AND ALGERIA 
 
¶6. (U) Members of the Spanish-Algerian gas pipeline 
cooperative Medgaz issued a condemnation this past week 
against the Spanish National Commission of Energy's (CNE) 
decision to prevent Algeria's Sontrach from obtaining more 
shares in the pipeline cooperative.  The Presidents of the 
various Medgaz member companies say that they will appeal 
this decision directly to the GoS Ministry of Industry. This 
issue created considerable anger in Algeria where the 
Minister of Energy Chakib Khalil suggested several weeks ago 
that Algeria might cut off gas supplies to Spain over this. 
 
MORE SPANISH WINE EXPORTS 
 
¶7. (U) The Ministry of Agriculture announced June 25 its new 
plan to market Spanish wine abroad.  Spain faced an 
unexpected fall in domestic demand in 2006, leaving producers 
with an unused surplus of wine.  The Ministry of Agriculture 
says that they will not only invest in promoting Spanish 
wines abroad, particularly to non-European countries such as 
the US, they will also more actively promote long-term 
improvements in the quality and diversity of wines throughout 
Spain. 
 
INFRASTRUCTURE: INCREASED HIGH SPEED TRAINS TO THE NORTH 
 
¶8. (U) As part of the Ministry of Fomento's 10-year plan, 
Spain will soon expand their high speed velocity trains 
(known as AVE) to northern Spain.  The AVE trains have opened 
up increased travel options, both tourist and otherwise. 
Until now, however, these high speed trains have been focused 
primarily on southern Spain.  By the end of 2007, the AVE 
will expand to the north, shortening travel times 
considerably to Cantabria, the Basque Country, Asturias, and 
Castilla y Leon.  These investments may also provide 
subcontracting opportunities for U.S. businesses. 
AGUIRRE