VZCZCXYZ0000
PP RUEHWEB

DE RUEHMD #2150/01 3271818
ZNR UUUUU ZZH
P 231818Z NOV 07
FM AMEMBASSY MADRID
TO RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 3843
INFO RUEHRL/AMEMBASSY BERLIN 0630
RUEHLO/AMEMBASSY LONDON 1014
RUEHFR/AMEMBASSY PARIS 1459

UNCLAS MADRID 002150 
 
SIPDIS 
 
SIPDIS 
 
FOR SECRETARY PETERS AND DELEGATION 
 
E.O. 12958: N/A 
TAGS: SP ECON OREP PREL
SUBJECT: SCENESETTER: SPAIN WELCOMES SECRETARY PETERS 
 
 
¶1. (SBU) I welcome you to Spain on behalf of our 362 American 
and Spanish colleagues serving the United States at Mission 
Spain.  Your visit comes just three months before the general 
elections, an exciting time for the country in what appears 
will be a very close race between incumbent President 
Zapatero and opposition party leader Mariano Rajoy.  The U.S. 
relationship with Spain is an important one, and we 
frequently partner with Spain on issues of counter-terrorism, 
law enforcement and multilateral policy.  Fueled by a growing 
economy as well as by support from the EU, Spain has 
undergone a rapid infrastructure modernization process over 
the past two decades.  Now the ninth largest economy in the 
world, Spain's ties to the U.S. continue to grow particularly 
as more Spanish businesses "rediscover" America.  Your visit 
is an important one and will help to promote our bilateral 
relationship.  I hope you and your delegation will enjoy your 
visit. 
 
------------------------- 
THE POLITICAL ENVIRONMENT 
------------------------- 
 
¶2. (SBU) We currently enjoy a strong relationship with Spain, 
partnering on various transformational diplomacy objectives 
despite some differences in policies (such as on Cuba).  This 
strong institutional relationship has resulted from sustained 
efforts to reinforce ties that were temporarily strained in 
2004 when Spain abruptly removed its troops from Iraq.  We 
enjoy excellent cooperation in areas such as 
counter-terrorism, counter-narcotics, military and defense 
programs, Latin America, North Africa, and many others. 
Spain is an important NATO ally, a key player in the European 
Union and currently holds the rotating presidency of the 
Organization for Security and Cooperation in Europe (OSCE). 
It is involved in long-term commitments to NATO's mission in 
Afghanistan, to Lebanon where it leads a multi-national 
brigade of UN peacekeeping forces (UNIFIL), and to Iraq where 
it continues to support efforts through significant financial 
contributions.  Spain further demonstrates itself to be an 
important partner to the U.S. by allowing the U.S to share 
the Spanish bases of Rota and Moron, strategic hubs for 
moving men and materiel into Iraq and Afghanistan. 
 
--------- 
ELECTIONS 
--------- 
 
¶3. (SBU) President Zapatero will face reelection in March, 
¶2008.  His governing Spanish Socialist Workers' Party (PSOE) 
currently holds control of the Parliament and several local 
and regional governments.  The opposition conservative 
People's Party (PP) holds several municipal and regional 
governments, including those of the city and region of 
Madrid.  Many local pundits are predicting the re-election by 
a small margin of Zapatero over PP candidate Mariano Rajoy, 
though Spanish voters often make up their minds just before 
elections.  Should Zapatero win re-election, he will remain 
the leader with the most seniority among the EU's big five 
(UK, France, Germany, Italy, Spain). 
 
--------------------- 
ECONOMIC ENVIRONMENT 
--------------------- 
 
¶4. (U) The economy has grown in each of the last 15 years, 
and the Spanish are blessed with the world's ninth largest 
economy and per capita income levels have reached the EU 
average.  Structural reforms, EU aid, and membership in the 
Euro zone have greatly contributed to this growth.  A recent 
housing boom has further boosted Spain's economic position, 
but as elections approach, housing prices are stagnating, 
construction is slowing, and unemployment and inflation are 
starting to creep up. 
 
¶5. (U) U.S. investment has long been important to the Spanish 
economy (more so than bilateral trade).  U.S. subsidiaries in 
Spain generate approximately 7 percent of the country's GDP 
and U.S. portfolio investment may account for up to 20 
percent of large companies' market capitalization.  The 
tables have recently turned as Spanish investors are 
"rediscovering" America.  So far this year Spain has been the 
fourth largest foreign investor in the U.S., with particular 
emphasis in banking, construction and renewable energy. 
Spanish construction companies have won important contracts 
in the U.S., though U.S. firms have not been as successful 
here. 
 
----------------------------- 
TRANSPORTATION INFRASTRUCTURE 
----------------------------- 
 
¶6. (U) Spain boasts a robust transportation infrastructure 
with over 50 international maritime ports, 47 airports, and 
an extensive road and highway system.  Subway systems exist 
in five Spanish cities: Madrid, Barcelona, Bilbao, Valencia, 
and Palma de Mallorca, and are also being constructed in 
Alicante, Seville, Malaga, and Granada. 
 
¶7. (U) Transportation infrastructure investments are largely 
guided by Spain's "Infrastructure and Transport Plan 
2005-2020" which foresees a total public and private 
investment of 250 billion euros (about $370 million) over 15 
years.  The plan anticipates that by 2020 94 percent of the 
country's population will be within 30 kilometers of a 
highway and that 90 percent will have access to a high-speed 
rail connection within 50 kilometers of their homes.  The 
central, regional, and local governments all invest in 
Spain's transportation network and often contract out highway 
or subway expansions to private firms who subsequently charge 
user fees. 
 
¶8. (U) The government places a large focus on expanding its 
railway network, particularly its high-speed AVE train 
network.  This emphasis has been partially fueled by Spain's 
desire to reduce high levels of CO2 emissions caused by 
private vehicles and to improve Spain's transport 
competitiveness within the EU.  Each year the GOS slates 
roughly 50 percent of its infrastructure funding to the 
railways for a net amount of over 8 billion euros per year. 
High speed AVE lines connect Madrid to Toledo, Madrid to 
Seville and Madrid to Tarragon.  Future AVE projects are 
slated to link a number of cities, and to eventually link 
Spain with Portugal and France. 
 
¶9. (SBU) The long-delayed construction of an AVE line from 
Madrid to Barcelona has become a contentious issue in the 
current political arena.  As a culmination to various 
problems, three of Barcelona's six local commuter lines were 
shut down in October as a result of recurring landslides 
caused by the AVE's construction, greatly inconveniencing 
over 150,000 local commuters.  President Zapatero eventually 
acknowledged that the arrival of the AVE to Barcelona, which 
he had repeatedly confirmed would happen by December 21, 
would not be finished before the March 2008 general 
elections.  Catalan regional anger over the AVE and other 
infrastructure problems may complicate the Socialists 
prospects in Catalonia for the national elections.  On 
November 16, the regional Catalan regional legislature voted 
for the resignation of Minister of Infrastructure and Public 
Works Magdalena Alvarez. 
 
--------------- 
BIO INFORMATION 
--------------- 
 
¶10. (SBU) During your visit, you will be meeting with the 
Minister of Infrastructure and Public Works Magdalena Alvarez 
and Madrid Mayor Alberto Ruiz-Gallardon. 
 
-(SBU) Minister Magdalena Alvarez: Minister Magdalena Alvarez 
was appointed Minister of Infrastructure and Public Works by 
President Zapatero in April, 2004 when President Zapatero 
took office.  Minister Alvarez obtained a Bachelor's degree 
and a doctorate in Economic and Business sciences from the 
prestigious Complutense University in Madrid.  She spent a 
large portion of her career teaching in higher education and 
served for a period of time as an economics and finance 
advisor for the regional government of Andalusia.  In 2000, 
Minister Alvarez was elected to the regional legislature of 
Andalusia representing the province of Malaga.  She headed 
the Socialists' list for Malaga province in the 2004 general 
election and was subsequently elected to the Spanish national 
legislature in March 2004.  She was selected to be Minister 
of Infrastructure and Public Works soon after, with purview 
over road, air, and sea transport as well as postal and 
telegraph services and the national geographic institute. 
Although Minister Alvarez understands English, she feels more 
comfortable using an interpreter. 
 
-(SBU) Mayor Alberto Ruiz-Gallardon: Hailing from a prominent 
family with historical political ties, Mayor Alberto 
Ruiz-Gallardon is a leading figure in the conservative 
People's Party.  He was elected mayor of Madrid in 2003 after 
holding various other political positions including as the 
spokesperson for his party (1987-1995) and the President of 
the Autonomous Community of Madrid (1995-2003). 
Ruiz-Gallardon is viewed as potential future presidential 
candidate.  His public aspirations for this position at times 
have been the cause for tensions within his party and with 
current PP presidential candidate, Mariano Rajoy. 
Ruiz-Gallardon holds a degree in law.  He speaks some English 
but prefers to use an interpreter. 
 
------------------- 
Security Assessment 
------------------- 
 
¶11. (U) In general, Spain is safe.  However, Madrid and other 
large cities attract a large number of criminals and 
pickpockets and frequent incidents of crime of opportunity 
against the unwary do occur.  It is best to carry only 
essential items, including a photocopy of your passport's 
photo page.  Visitors can protect themselves by being 
street-smart, alert, and aware of their surroundings. 
Additional information regarding safety and security is 
available on the U.S. Department of State's website 
(www.embusa.gov). 
 
 
LLORENS