VZCZCXRO2139
RR RUEHRN
DE RUEHMD #1982/01 2901608
ZNR UUUUU ZZH
R 171608Z OCT 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 3623
INFO RUEHSS/OECD POSTS COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3121

UNCLAS SECTION 01 OF 02 MADRID 001982 
 
SIPDIS 
 
SIPDIS 
 
EUR/WE, EEB/EFD/OMA 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EFIN EIND ELAB KIPR SP EINV
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT - 
OCTOBER 8-12 
 
 
MADRID 00001982  001.2 OF 002 
 
 
Table of Contents: 
 
ECON/EFIN: Second Vice President and Finance Minister 
maintains Spain will still grow by 3.3% in 2008 
ECON/ELAB: New minimum wage? 
EFIN: Prices rise for basic foodstuffs 
KIPR: Minnesota illegal downloading court judgment widely 
reported 
ECPS: 2 billion euros invested in telecommunications 
EIND: Tourism Estimates 
EIND/ELAB: Barcelona better than Madrid for business 
start-up, housing and quality of life 
EAIR: Ministry of Industry unveils plan to strengthen 
aeronautical sector 
 
SECOND VICE PRESIDENT AND FINANCE MINISTER MAINTAINS SPAIN 
WILL STILL GROW BY 3.3% IN 2008 
 
¶1. (U) The President of the Bank of Spain, Miguel Angel 
Fernandez Ordonez, forecasts 2008 GDP growth of 3% or 
possibly somewhat less.  The IMF currently forecasts 2.7% 
growth for Spain in 2008.  (Comment: The lower central bank 
forecast is perhaps most interesting, as Fernandez was 
appointed to his position by the Socialist government, so he 
is demonstrating independence by submitting this lower 
forecast.  Also, while the IMF is still led by former Partido 
Popular Finance Minister Rodrigo Rato, the Zapatero 
government cannot claim the Fund's lower growth estimates to 
be entirely politically driven, as the IMF is revising growth 
estimates downwards for many countries as a result of 
financial sector turbulence.) (El Pais, 10/10/07 and 
Expansion, 10/10/07) 
 
NEW MINIMUM WAGE? 
 
¶2. (U) Second Vice President and Finance Minister Pedro 
Solbes is in a new public spat with a cabinet colleague, this 
time with Minister of Labor Jesus Caldera's proposal to 
insert into the ruling Socialist party's electoral program a 
commitment to raise the minimum wage from 570 euros to 800 
euros a month. (Comment: Caldera is a political heavyweight, 
so Solbes is expected to lose this battle, although he will 
no doubt seek to delay the implementation of the proposal for 
as long as possible.  Given all the other inflationary 
pressures on the Spanish economy, he can certainly muster 
strong economic arguments.) (Expansion 10/10/07) 
 
PRICES RISE FOR BASIC FOODSTUFFS 
 
¶3. (U) Spaniards notice increases in prices of basic 
foodstuffs such as milk, beans, oranges, lemons, etc.  During 
the month of September, for instance, the price of milk rose 
12.7%.  According to an Expansion poll, over 90% of Spaniards 
say they have noticed the rise in prices of basic food 
products. (Comment: What is happening in Spain is not very 
different from what is happening in the rest of the world as 
a result of greater Asian demand for food plus the shift to 
biofuels.  It is not clear if these rises will have an 
electoral impact in the next parliamentary elections, 
expected in March, 2008.) (Expansion, 10/10/07) 
 
MINNESOTA ILLEGAL DOWNLOADING COURT JUDGMENT WIDELY REPORTED 
 
¶4. (U) Minnesota court USD 220,000 judgment against internet 
illegal song downloader Jamie Thomas was widely reported in 
the Spanish press.  The Spanish articles report that courts 
in Spain cannot fine illegal consumer downloaders unless they 
can prove a profit motive, i.e. a commercial scale gain. 
However, the Spanish Society of Authors and Editors (SGAE - 
MPAA is associated with SGAE) maintains that Spanish law does 
permit action to be taken against some of the newer websites 
(not consumers) such as Ares, Azureus, Sinlamula.com, and 
Peliculasonline.net.  (Comment: The issue of illegal internet 
downloading will be discussed at a November 7-8 intellectual 
property rights conference in Madrid organized by the 
Ministry of Industry, Tourism and Trade.  The U.S. Copyright 
Office is sending a representative, who will participate in 
the discussions.) (El Pais, 10/9 and 10/07; Expansion, 
10/6/07) 
 
2 BILLION EUROS INVESTED IN TELECOMMUNICATIONS 
 
¶5. (U) Minister of Industry, Tourism, and Commerce Joan Clos 
testified in an October 9 Senate committee-level hearing that 
no less than 2 billion euros a year was being invested 
towards the development of the telecommunications sector in 
Spain.  He said that the federal government was contributing 
between 1.2 and 1.3 billion euros annually towards this goal, 
and that regional governments and the private sector were 
 
MADRID 00001982  002.2 OF 002 
 
 
contributing the rest.  Clos told the Senators that 
telecommunications was a fast-growing market in Spain, with 
recent annual profits of 42 billion euros and an annual 
growth rate of 9 percent.  He added that Spain was moving 
ahead of schedule to lay down high capacity networks, 
efficiently manage its radio-electric spectrum, and overall 
modernize and increase capacity in its telecommunications 
sector. 
 
TOURISM ESTIMATES 
 
¶6. (U) The number of foreign tourists expected to visit Spain 
in 2007 is estimated to be up 2 % from last year.  Tourism 
Secretary Amparo Fernandez commented on Tuesday that the GoS 
 
SIPDIS 
expects 60 million foreign tourists this year cementing 
Spain's position as the second-most visited country, after 
France. (Herald Tribune) 
 
BARCELONA BETTER THAN MADRID FOR BUSINESS START-UP, HOUSING 
AND QUALITY OF LIFE 
 
¶7. (U) According to a survey by real-estate consultants 
Cushman & Wakefield, London was the best EU city in which to 
start-up a business, followed by Paris second, Frankfurt 
third, Barcelona fourth, and Madrid seventh.  The presence of 
the two Spanish cities among the top 10 "consolidates the 
solidity of the development of Spanish cities and positions 
Spain as a reference point with regard to urban business 
locations," according to the survey's author. 
 
¶8. (U) Barcelona, followed by Madrid, also heads up the list 
of best residential housing for expatriate executives.  In 
hotel accommodations, they placed third and fourth, 
respectively.  Both cities earned high marks for employee 
quality of life, with Barcelona first and Madrid third. (El 
Pais) 
 
MINISTRY OF INDUSTRY UNVEILS PLAN TO STRENGTHEN AERONAUTICAL 
SECTOR 
 
¶9. (U) This past week, the Ministry of Industry, Tourism, and 
Commerce unveiled its 8-year aeronautical strategic plan to 
strengthen Spain's civil aviation and aerospace sectors.  The 
plan envisions an increase in private and public investment 
to spur these sectors into tripling the 2005 level of 
production by 2016.  The strategy envisions that with the 
proper strategic investments, earnings from these sectors 
would be able to contribute at least 1 percent to the 2016 
GDP.  The plan proposes greater public-private cooperation 
and greater regional government involvement, particularly by 
governments in the regions with a greater concentration of 
these businesses (Madrid, Andalusia, the Basque region, 
Castilla la Mancha, and Catalonia). 
AGUIRRE