VZCZCXRO7024
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #1341/01 1901406
ZNR UUUUU ZZH
R 091406Z JUL 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 2959
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2892

UNCLAS SECTION 01 OF 02 MADRID 001341 
 
SIPDIS 
 
SIPDIS 
 
EUR/WE 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EFIN EIND ELAB ETRD KIPR TBIO SP
EINV, UK, SMIG 
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT - 
JULY 2 
 
 
MADRID 00001341  001.2 OF 002 
 
 
KIPR: Counterfeit ring taken down 
SOCI: 2,500 euros per newborn baby - to promote birth rate 
ENRG/EINV: Renewable Energy investments heating up 
ETRD: Vehicle sales down 
SOCI/ELAB: IBERO American countries to sign a social security 
agreement with Spain 
ELTN/EAIR: Low cost airlines see a 25% increase 
EAGR: Biothechnology corn growing despite lack of coexistence 
decree 
 
LARGEST COUNTERFEIT LUXURY CLOTHING RING TAKEN DOWN 
 
¶1. (U) Operation Glamour, a major police operation against 
pirating in Spain netted 334,095 name brand articles made in 
Asia with an estimated value of 25 million euros, according 
to Pedro Calvo, delegate of Community Security & Mobility. 
Operation Glamour was successful in dismantling an 
international sales ring of pirated clothing operating 
primarily from Leganes and in several of the capital's 
industrial premises. 
 
¶2. (U) The items were made in Asia and introduced to Spain 
through Italy, Portugal and the Port of Valencia.  There are 
three Spaniards, four Moroccans, two Senegalese and one 
Bangladeshi among the detained. 
 
PRESIDENT ZAPATERO PROMISES 2,500 EUROS FOR EACH NEW BABY 
 
¶3. (U) President Zapatero made a commitment to give families 
euros 2,500 per newborn during the State of the Nation debate 
on July 3.  Once implemented, it will cost the GOS euros 1.2 
billion a year.  The President specifically justified the 
measure by saying Spain needs more children given the 
country's low birth rate.  The birth rate is currently about 
1.4 births per female.  The replacement rate is 2.1 children 
per female.  The money will go to Spaniards and legal 
immigrants to forestall attracting more illegal immigrants. 
(Comment: Interestingly, despite low birth rates, Spain's 
population has grown from 40 million to 45 million in the 
last five years, all of this attributable to immigration. 
Zapatero's gambit should, at least in part, be seen as an 
election sweetener as parliamentary elections must be called 
by March 2008 at the latest.  In fact, this initiative was 
originally an idea from the opposition conservative PP party. 
 During the debate, however, opposition leader Mariano Rajoy 
sarcastically complimented Zapatero, although he said the 
amount should be euros 3,000.  The normally 
government-leaning El Pais criticized the planned aid, saying 
there should be a more comprehensive plan to increase 
fertility rates, and that not all families needed the money.) 
(Expansion, July 4; El Pais July 5) 
 
INVESTMENT BANKS INCREASE FINANCING FOR RENEWABLES 
 
¶5. (U) Investment banks in Spain financed USD 2.5 billion in 
wind power investments in 2006 and nearly USD 1.7 billion in 
biofuel projects in 2006.  Investments in these areas are 
likely to increase given the government's increased focus on 
renewable energy sources.  Spanish companies will be the 
largest beneficiaries of these investments, but there will be 
opportunities for American companies as well.  General 
Electric, for instance, manufactures wind turbines in Spain. 
(Expansion, July 4) 
 
VEHICLE SALES CONTINUE TO SLOW DOWN 
 
¶6. (U) According to Spain's vehicle manufacturer's 
federation, ANFAC, total vehicle sales in Spain fell by 1.6 
percent in the first semester of 2007.  Despite this overall 
decline, sales in luxury vehicles -- particularly luxury 
all-terrain vehicles -- increased dramatically during the 
same period.  Local experts blame increasing interest rates 
as well as increased personal debt levels for the decrease, 
explaining that moderate and lower-income consumers are 
purchasing fewer cars.  Citroen continues to hold its 
leadership position in the Spanish market, followed by 
Renault, Ford, Seat, Peugot, Opel, Volkswagon, and Toyota 
respectively.  Of these companies, only Citroen, Peugot, and 
Toyota increased sales in Spain this past June. 
 
SPAIN AND 20 OTHER COUNTRIES AGREE TO MUTUAL SOCIAL SECURITY 
 
¶7. (U) According to sources within the Ibero-American Social 
Security Organization (OISS), Spain will soon sign a "mutual" 
social security agreement with 20 other Ibero-American 
countries that could benefit over 4 million migrant workers. 
These migrant workers, who might otherwise not accumulate 
minimum working periods in any one country to qualify for 
 
MADRID 00001341  002.2 OF 002 
 
 
social security pensions, would be able to combine work 
periods in the various countries in which they work. Under 
the agreement, each signatory country would contribute the 
pro-rated social security pension amount corresponding to the 
time worked in that particular country. According to the 
OISS, Spain has more than a million workers from 
Ibero-American countries. 
 
LOW-COST AIRLINES INCREASE TO 25 PERCENT OF SPANISH MARKET 
 
¶8. (U) Director General Victor Aguado of the European 
Association for the Safety of Air Navigation (Eurocontrol) 
indicated this past week that the low cost airlines in Spain 
had grown by 36 percent in the first semester of 2007, 
increasing its sector share to 25 percent.  Conventional 
aviation companies in comparison grew by only 15 percent 
during this same time period.  Spain is the EU country with 
the second largest share of low-cost airlines (after Great 
Britain).  Eurocontrol estimates that air traffic will 
increase to higher levels in Spain than in the rest of the EU 
in the upcoming year. 
 
BIOTECHNOLOGY CORN STILL GROWING WITHOUT COEXISTENCE DECREE 
 
¶9. (U) After more than a decade of growing biotechnology 
corn, and three years of Government of Spain ministries 
trying to agree on a coexistence decree to control that 
production, Spanish corn farmers continue growing 
biotechnology corn without environmental incident, and 
without a decree to "protect" the environment, organic 
farmers, and/or consumers, as demanded by the 
anti-biotechnology lobby.  And, with each successive 
successful year, the "case" for a Government-imposed decree 
becomes increasingly more difficult to justify, unless forced 
politically via an internal domestic Government 
decision/agreement or an unequivocal European 
Commission-mandated requirement.  Within the EU, Spain has 
the largest number of hectares used for biotech cultivation. 
AGUIRRE