VZCZCXRO4446
RR RUEHRN
DE RUEHMD #1600/01 2320828
ZNR UUUUU ZZH
R 200828Z AUG 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 3228
INFO RUEHSS/OECD POSTS COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2993

UNCLAS SECTION 01 OF 02 MADRID 001600 
 
SIPDIS 
 
SIPDIS 
 
EUR/WE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EIND ENRG ETRD SP EINV EAGR SMIG
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT - 
AUGUST 13 
 
MADRID 00001600  001.2 OF 002 
 
 
Table of Contents: 
 
EFIN/ECON: Ibex 35 up Friday by 1.84% shortly before closing 
EFIN: New takeover law effective 8/13/07 
EFIN: GE forms partnership with Catalan firm 
SMIG: Spain is the second source of remittances in the world 
after the US 
ENRG: Spain's petroleum station owners call for subsidies on 
renewable fuels 
ELTN/PGOV: Opposition parties ask Minister of Infrastructure 
to resign 
 
IBEX-35 UP FRIDAY BY 1.84% SHORTLY BEFORE CLOSING 
 
¶1. (U) This follows Thursday's 3.72% drop.  Spain's Dow 
equivalent, the Ibex-35, had a rocky week, like most European 
stock markets.  The market fell by about 4% over the week. 
The general and financial press has been full of stories 
about the dramatic events on the stock market, particularly 
after Thursday's 3.72% fall, the biggest drop since the March 
11, 2004 train bombing.  Most analysts still believe the 
market will recover, but clearly investors are nervous. 
Spanish banks and real estate companies have taken the 
biggest hits.  So far, however, no Spanish banks seem to be 
dangerously exposed to bad investments in securities backed 
by sub-prime loans, at least so far.  Investors want to be 
sure though.  (Comment: We expect continued turbulence over 
the next couple of weeks.  One immediate consequence of this 
problem is that Spain's major construction groups will find 
it more difficult to obtain financing so it is likely that 
their big acquisition spree is at an end.)  (Expansion, 
8/17/07) 
 
NEW TAKEOVER LAW EFFECTIVE 8/13/07 
 
¶2. (U) The new takeover law implements a 2004 EU directive on 
the subject.  The law has been commented upon extensively in 
the national and international press.  The immediate reason 
for the commentary is that everybody has the long and 
tortured Endesa takeover saga in mind.  But, as the Financial 
Times reports, the law was also written with the Spanish 
"partial takeover" in mind, the practice whereby important 
Spanish companies have been able to gain effective control of 
companies with minority stakes, and at the same time put 
other minority stockholders at a disadvantage.  The key 
feature of the new law is that companies will be able to buy 
up to 30% of a takeover target after announcing a bid, but 
they will then also be forced to make an offer to all the 
shareholders so that minority shareholders are not 
disadvantaged.  (Comment: It will be interesting to see 
whether the new takeover law, in fact, changes the somewhat 
clubbish nature of the way business is done in Spain.) (FT 
8/13/07; El Pais 8/13/07; Expansion 8/13/07) 
 
GE FORMS PARTNERSHIP WITH CATALAN FIRM 
 
¶3. (U) GE forms partnership with a small Barcelona-based 
healthcare group to enhance GE "cross-selling" in the growing 
healthcare industry.  The partnership with the Catalan firm, 
USP Hospitales, engendered an admiring article in the 
Financial Times, something of a boon to GE Spain's dynamic 
CEO, Mario Armero.  (FT 8/10/07) 
 
SPAIN IS NOW THE SECOND SOURCE OF REMITTANCES IN THE WORLD 
AFTER THE US 
 
¶4. (U) In three years, Spain has gone from being a net 
recipient of remittances to a net source of remittances.  In 
2006, immigrants in Spain remitted euros 6.8 billion.  This 
represented 0.7% of Spain's GDP and accounted for almost one 
percentage point in Spain's current account deficit of about 
8% of GDP.  Almost 70% of the money went to Latin America; 6% 
went to Morocco, and eastern European countries received 
almost 8%.  In terms of the importance of remittances from 
Spain as a percentage of receiving countries' GDP, the 
numbers are: Bolivia (8.5%);  Ecuador (3.6%); Senegal (1.9%); 
Dominican Republic (1.5%); Colombia (1.25%); Morocco (0.91%); 
Romania (0.5%); Peru (0.31%). (Comment: The numbers for 
Africa and the Maghreb are still relatively low, but they 
will undoubtedly become more important.  Bolivia's dependence 
on remittances from Spain is truly remarkable.) (Expansion, 
8/14/07 citing Bank of Spain numbers) 
 
SPAIN'S PETROLEUM STATION OWNERS CALL FOR SUBSIDIES ON 
RENEWABLE FUELS 
 
¶5. (U) Spain's petroleum station owners are calling on 
national and regional governments to subsidize Spain's move 
towards the use of renewable fuels.  One of the Spanish 
 
MADRID 00001600  002.2 OF 002 
 
 
associations of petroleum station owners (Aevecar) has 
petitioned the Spanish Government for subsidies to defray the 
costs of installing new equipment that will be required to 
meet the European Union's renewable fuels-use requirements. 
According to Aevecar, the average cost per station will be 
from the 30-50 thousand euro range, to include the costs of 
new storage tanks and pumping equipment. 
 
¶6. (U) The other important petroleum station owner's 
association (CEEES) has announced that the Government of the 
Autonomous Region of Valencia has agreed to subsidize half 
the costs of 61 renewable-fuels use projects for refueling 
station owners.  According to the CEEES press release, 48 of 
the projects are new stations and 13 are equipment 
replacement in now existing stations.  The subsidies will 
increase by more than ten times the number of petroleum 
stations dispensing renewable fuels in Valencia. 
 
OPPOSITION PARTIES ASK MINISTER OF INFRASTRUCTURE TO RESIGN 
 
¶7. (U) On August 14, the Spanish Congress convened a special 
session to question the Minister of Public Works and 
Infrastructure, Magdalena Alvarez, over the numerous train, 
electricity, and airport infrastructure failures occurring in 
the Catalonian region over the past months.  Listing the 
blackouts, train derailments and delays, and problems with 
Barcelona's El Prat airport, members of the PP and other 
opposition parties demanded that Minister Alvarez resign. 
Minister Alvarez refused, saying that she would only leave if 
President Zapatero requested that she do so. During the 
five-hour session, the Minister defended her work at the 
ministry, outlining improvements in investments in 
Catalonia's infrastructure during her tenure.  She admitted 
that there had been numerous problems, but claimed that some 
of the failures were beyond the Administration's control. 
She also said that that the Ministry had spent much more on 
improving Catalonia's infrastructure than the previous 
administration, perhaps suggesting that some fault be placed 
with the former administration's "inadequate" investment in 
this region's infrastructure. 
AGUIRRE