VZCZCXRO9796
RR RUEHRN
DE RUEHMD #2129/01 3231038
ZNR UUUUU ZZH
R 191038Z NOV 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 3821
INFO RUEHSS/OECD POSTS COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3177

UNCLAS SECTION 01 OF 03 MADRID 002129 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EUR/WE 
EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ELAB ETRD KIPR PTER SOCI TBIO SP
EINV 
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE - NOVEMBER 
12-16 
 
MADRID 00002129  001.2 OF 003 
 
 
Table of Contents: 
 
ECON: Spanish economy grew by 0.7% during the third quarter 
of 2007 
EINV: Spain the number four foreign investor in the U.S. 
SENV: UN SYG to attend Valencia IPCC meeting 
SENV: CO2 emissions expected to rise in 2007 after declining 
in 2006 
KIPR: Commercial Counselor and EconOff meet with R&D-based 
pharmaceutical representatives 
ECON: Autonomous Communities' 2008 budget proposals show 
large increases 
PTER/KCRM: ETA estimated to have collected 3.5 million euros 
through extortion since June 2007 
ELTN: New high-speed train to the north close to opening 
EMIG: Spain signs work permit agreement with Senegal 
ETRD: Jamon Iberico arrives in the US market, heading to China 
SENV: Galicia 5 years after the Prestige disaster 
 
SPANISH ECONOMY GREW BY 0.7% DURING THE THIRD QUARTER OF 2007 
 
¶1. (U) The 0.7% quarter-on-quarter GDP growth figure was 
lower than the second quarter's 0.9%, so it tracks with other 
signs of a slowdown.  The Spanish government forecasts 
full-year 2007 growth of 3.8%.  (Comment: The big question is 
how much lower growth will be in 2008.  The opposition 
conservative PP party is trying to make the economy an issue 
in the March 2008 election.  Inflation (people are 
complaining about rising food prices), interest rates, and 
rising unemployment creation is of concern to the government. 
 The opposition PP is hoping to get some traction on economic 
issues, even though the overall state of the economy remains 
good. (Europa Press, 11/13/07) 
 
SPAIN THE NUMBER FOUR FOREIGN INVESTOR IN THE U.S. 
 
¶2. (U) During the first ten months of 2007, Spanish companies 
invested USD 21.3 billion in the U.S., behind only Canada, 
the UK and Holland.  BBVA's purchase of Compass Bank and 
Iberdrola's purchase of Energy East were two of the biggest 
acquisitions during this period.  Other Spanish companies 
such as Ferrovial, FCC, Acciona, Ebro Puleva, Gamesa, Inditex 
and Telvent are also very active in the U.S. (Comment:  This 
level of investment in the U.S. is truly new for corporate 
Spain.   Acquisitions, rather than traditional FDI, seem to 
be the preferred Spanish mode of getting into the U.S. 
market.) (El Pais, 11/11/07) 
 
UN SYG TO ATTEND VALENCIA IPCC MEETING 
 
¶3. (U) The Intergovernmental Panel on Climate Change (IPCC) 
meeting this week in Valencia is scheduled to conclude on 
Saturday, November 15, with the release of a summary report 
of the most recent state of knowledge on the science of 
climate change.  This "summary for policymakers" is based on 
three previously released reports that the USG played a 
significant role in developing and fully supports.  The 
fourteen person-U.S. delegation is being led by Harlan Watson 
of OES and Sharon Hays of the White House Office of Science 
and Technology.  U.N. Secretary General Ban Ki-moon plans to 
attend the closing of the IPCC meeting, and he discussed 
global warming with Spanish President Zapatero in Madrid on 
Wednesday, November 14. 
 
CO2 EMISSIONS EXPECTED TO RISE IN 2007 AFTER DECLINING IN 2006 
 
¶4. (U) Spain's CO2 emissions are expected to increase by 1 
percent during 2007 after experiencing a 4 percent reduction 
in 2006.  Electricity generation figures show that through 
November 12, Spain has increased its production of 
coal-generated electricity by nearly 5 percent while reducing 
its use of nuclear electricity by 7.6 percent and natural 
gas-generated electricity by 2.3 percent.  The implication of 
these shifts, according to the Spanish representative of 
Worldwatch Institute, is an estimated 1 percent increase in 
Spain's CO2 emissions for the year.  A 1 percent increase 
would bring Spain's emissions to about 50 percent above their 
level in 1990.  Under the Kyoto Protocol, Spain's emissions 
are required to be no higher than 15 percent above its 1990 
level.  An article in the pro-government El Pais newspaper 
noted that it was the previous government that had agreed to 
the Kyoto target that now looks unattainable.  The article 
added that European countries' excessive issuance of 
emissions quotas to companies had caused a dramatic drop in 
the cost of carbon dioxide emission allowances, reducing the 
incentive for companies to reduce emissions.  The article 
 
MADRID 00002129  002.2 OF 003 
 
 
also pointed out inconsistent use of data by the government. 
When she opened the IPCC meeting earlier this week, Vice 
President Fernandez de la Vega had cited Worldwatch's 
estimated 4 percent 2006 decline as proof that it was 
possible for the economy to grow while emissions declined, 
but the GoS had not used Worldwatch's 2007 estimate even 
though it had issued advance forecasts before the end of 2006 
when the news was better.  (El Pais, 11/15/2007) 
 
COMMERCIAL COUNSELOR AND ECONOFF MEET WITH R&D BASED 
PHARMACEUTICAL REPRESENTATIVES 
 
¶5. (SBU) Visiting Pharma representative Jonathan Kimball and 
a local pharmaceutical industry representative, Gema Delgado, 
explained on 11/14 that the industry is still trying to 
persuade the Spanish government to grant retroactive product 
patent protection for drugs that only benefited from process 
patent protection prior to 1992.  Kimball said that Finland 
had recently changed legislation in ways that were 
potentially relevant to the Spanish situation.  He said he 
would send more information.  Kimball also said that Pharma 
representatives would be meeting in the next few weeks with 
USTR and USPTO representatives to explain the industry's 
TRIPS rationale for Norway's providing retroactive product 
patent protection along the lines that industry wants in 
Spain.  (Note: At least in the Spanish case, USG lawyers have 
not found a TRIPS argument for arguing for retroactive patent 
law change, although the local industry uses TRIPS arguments 
in local court cases, in some cases successfully.) Commercial 
Counselor and EconOff reiterated the Embassy's willingness to 
broker meetings with the government and to make policy-based 
arguments on behalf of the R&D-based pharmaceutical industry. 
 Commercial Counselor explained that the Ambassador's 
11/14/07 lunch for the Minister of Health, to which 
pharmaceutical industry representatives were invited, was 
part of that effort. 
 
AUTONOMOUS COMMUNITIES' 2008 BUDGET PROPOSALS SHOW LARGE 
INCREASES 
 
¶6. (U) The 2008 Autonomous Communities' budget proposals, 
which were recently made public, project increases in real 
terms over 2007.  The combined budgets of the regional 
governments for operations and personnel expenses total 164.4 
billion euros, an amount that is 7.8 percent higher than the 
central government's allocation for similar expenses. 
Overall, the regional budget total represents a 22.5 percent 
increase in investment over 2007 and a 7.9 percent increase 
in administrative funding.  The largest increases are 
proposed by the Basque region, while the largest budgets 
overall are in Andalucia and Catalonia.   (Expansion, Nov. 9) 
 
 
ETA ESTIMATED TO HAVE COLLECTED 3.5 MILLION EUROS THROUGH 
EXTORTION SINCE JUNE 2007 
 
¶7. (U) According to research by the Department Head of 
Terrorism Economics at the University of Madrid Complutense, 
the Basque terrorist group ETA has successfully extorted 
approximately 3.5 million euros since the end of its cease 
fire in June 2007.  This amount far surpasses the estimated 
1.35 million euros collected by ETA in all of 2006 through 
the same means.  Over the past summer, there were numerous 
reports of ETA extortion letters reaching businesses in the 
Basque and Navarra regions.  (Comment: ETA continues to carry 
out occasional attacks, but a combination of good police work 
and a bit of luck has thus far allowed the GOS to disrupt or 
thwart several planned attacks.) (Expansion, Nov. 9) 
 
NEW HIGH-SPEED TRAIN TO THE NORTH CLOSE TO OPENING 
 
¶8. (U) Perhaps to show that not all railway news these days 
is bad, on November 15 Public Works Minister Alvarez took 
reporters on a test ride on the high-speed "AVE" train 
connecting Madrid with the northwest cities of Segovia and 
Vallodolid, which is expected to open on December 22.  This 
project, which was co-financed with European Union funds, 
will cut the travel time to Segovia and Vallodolid by a 
third.  This is likely welcome news, given the continuing 
unanticipated interruptions in Barcelona commuter rail 
service caused by construction of the long-delayed AVE rail 
line that will link Madrid and Barcelona.  (El Mundo, 
Expansion, Public Bulletin, 11/16) 
 
SPAIN SIGNS WORK PERMIT AGREEMENT WITH SENEGAL 
 
 
MADRID 00002129  003.2 OF 003 
 
 
¶9. (U) Senegal and Spain signed an agreement granting 2,700 
work permits to Senegalese in an attempt to stem the wave of 
illegal migration to Europe.  The agreement was signed by 
Labor Minister Jesus Calderon on Friday, November 9.  A group 
of 2,000 Senegalese will be trained to work on Spanish 
fishing boats, and the remaining 700 will be employed in the 
agricultural sector. (AFP) 
 
JAMON IBERICO ARRIVES IN THE U.S. MARKET, HEADING TO CHINA 
 
¶10.  (U) Customs in New York received the first legal 
shipment of Iberian ham ("Jamon Iberico"), 300 pieces from 
Salmantina Embutidos Fermin, the only company to meet the 
current requirements.  Separately, after four years of 
negotiations, Spain and China signed an agreement on November 
15 allowing exportation of Spanish pork products into the 
country.  According to Secretary of State in the Industry and 
Commerce Ministry, Pedro Mejia there are currently ninety 
Spanish companies interested in selling pork and Jamon 
Iberico to China.  (20 minutos) 
 
GALICIA 5 YEARS AFTER THE PRESTIGE DISASTER 
 
¶11. (U) November 13th marks the fifth anniversary of the most 
catastrophic oil spill in Europe, when 70,000 tons of fuel 
were spilled off of Galicia's coast by the Prestige oil 
tanker.  The fishing villages of Galicia were hit hard as 
their way of life came to an abrupt end.  Thousands of 
volunteers poured in to help clean up the disaster, and the 
villagers have moved to other work.  There are several 
manufacturing companies in the area, and more than half of 
the Spanish naval fleet is manufactured in Galicia.  A recent 
study of seagulls indicated that even birds born a year after 
the spill had high concentrations of hydrocarbons in their 
blood.  This study suggested that the estimated time of 
recuperation from the spill may have been underestimated. 
The Director of the Spanish Oceanographic Institute in Vigo 
said that almost 98% of the affected area is now clean, even 
though the vessel continues to leak its remaining fuel. 
 
¶12. (U) The recycling of the more than 60,000 tons of 
residual contaminants from the disaster is anticipated to be 
completed in 18 months, according to the President of the 
Galician regional government.  Emilio Perez Tourino described 
the recycling process as "a technological pioneer and unique 
in the world."  "Our capability to respond to the collection 
of hydrocarbourants has multiplied by thirty" thanks to 
initiatives such as this one. (Note: The company that runs 
the industrial waste treatment plant that recycled the 
contaminants is seeking a patent for its recycling process, 
and countries such as France have expressed interest.) (La 
Vanguardia Magazine, 11/11/07) 
LLORENS