VZCZCXRO2057
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #2183/01 3371305
ZNR UUUUU ZZH
R 031305Z DEC 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 3884
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3189

UNCLAS SECTION 01 OF 02 MADRID 002183 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EUR/WE 
EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: EAGR ECON ELAB ENRG ETRD KGHG KIPR PGOV SENV
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL/AG UPDATE - NOVEMBER 
26 - 30 
 
MADRID 00002183  001.2 OF 002 
 
 
¶1. Table of Contents: 
 
EFIN: Inflation up again 
PGOV: Solbes agrees to run with Zapatero 
PGOV/SENV/KGHG/ENRG: Socialist climate change policy ideas in 
flux 
PGOV/ELAB: Opposition conservative PP proposes labor market 
change 
EAGR: Livestock producers receive subsidies; biotech could 
address problems 
ETRD/EAGR/KIPR: USEU Brussels trade officer visits Madrid 
 
¶2. (U) Inflation up again: November prices were 4.1 percent 
above their level of a year ago, according to preliminary 
estimates.  As recently as September, the inflation rate was 
below 3 percent.  With the rate continuing to be above the EU 
average, Spanish goods are gradually becoming less 
competitive. 
 
¶3. (SBU) Solbes agrees to run with Zapatero:  President 
Zapatero has convinced Second Vice President and Finance 
Minister Pedro Solbes to run with him in Madrid as the number 
two on the Socialist list.  Should the Socialists win in 
March 2008, Solbes has also agreed to stay in the government 
as Finance Minister. (Comment: Running in Madrid is 
traditionally high profile.  Solbes, agreeing to run and to 
stay is widely interpreted as Zapatero,s shoring up his 
right wing.  It is also an example of the PSOE,s strategy of 
getting prominent candidates to run in areas where the 
Socialists are weak; Madrid is a bastion of the opposition 
conservative PP party.  The question is whether Solbes, 
running in Madrid will boost the Socialists, numbers in the 
capital.  It is hard to say, because Solbes, reputation is 
not as stellar as it was four years ago, as he has been 
forced to accept some spending he openly disagreed with such 
as the 2500-euro "baby check" for every newborn.  Still, 
Solbes remains a prestigious figure, so it is something of a 
coup for Zapatero to have convinced the 65-year-old to run 
and to stay in government.  Given the likelihood of a tight 
race, Solbes, presence is likely to be an asset for the 
Socialists.) (El Pais, 11/27/07) 
 
¶4. (U) Socialist climate change policy ideas in flux:  El 
Pais reported on November 27 that the draft party electoral 
program called for charging one cent for every liter of 
gasoline to fight climate change, the creation of a 
cabinet-level Vice Presidency of Sustainability, an emphasis 
on renewables, and the gradual closing of nuclear electricity 
plants, starting with the Garona facility in 2009.  PSOE 
Secretary Jose Blanco shot down the tax idea that same day 
 
SIPDIS 
and noted that the question of creating a Vice Presidency for 
Sustainability was an issue for President Zapatero. (Comment: 
The most notable element of the socialist plan is the 
rejection of nuclear energy.  The rejection is justified by 
positing that nuclear waste is inconsistent with 
sustainability, though reducing nuclear generation will 
increase Spain's dependency on power generation methods that 
emit greenhouse gases.  The document calls for increased 
renewable electricity generation, but despite the rapid 
increase of wind power over the last five years, total 
electricity consumption has increased by a slightly larger 
amount.  El Pais ran a photo of former President Bill Clinton 
and President Zapatero that described Clinton as Moncloa,s 
"new advisor on climate change."  It is not likely that 
Clinton directly influenced the PSOE climate change electoral 
program, although Clinton and Zapatero have had several 
meetings and Spain is a donor to the Clinton Global 
Initiative.  It is also interesting that senior Socialists 
seem to have determined that promising new taxes is clearly 
not the way to go as in the runup to the March 9 elections.) 
(El Pais 11/27/07 and 11/28/07) 
 
¶5. (SBU) Opposition conservative PP party proposes labor 
market changes: The proposals are not fully developed, but 
two elements have been announced.  First, measures to promote 
working beyond 65 on a voluntary basis.  Second, longer 
maternity or paternity leave. (Comment: What Spain needs is 
additional labor market flexibility in terms of hiring and 
firing.  Spain has more of this flexibility than, for 
instance, France, because of the widespread use of short-term 
contracts, but most economists think Spain could use more of 
it.  Interestingly, the PP has not made proposals on this 
highly controversial topic, which is consistent with the 
party,s moderate or even centrist orientation on economic 
issues, coupled with a much more conservative hard-line 
stance on political, social, and constitutional questions.) 
(Expansion, 11/27/07) 
 
MADRID 00002183  002.2 OF 002 
 
 
 
¶6. (U) Livestock producers receive subsidies; biotech could 
address problems:  While the EU agricultural biotechnology 
approvals progress creeps along, holding down crop yields, 
Spanish livestock producers have asked for and received 300 
million euros in GOS subsidies to help offset the high cost 
of feed ingredients.  EU Farm Commissioner Mariann Fischer 
Boel had predicted that this would happen, saying on various 
occasions that any potential biotechnology moratoriums 
(including the current glacial approvals process) could 
seriously jeopardize the EU livestock industry, possibly even 
forcing meat production to move outside Europe.  She 
correctly noted that if the EU cannot quicken its approvals 
process, member state livestock producers will be further 
disadvantaged, because grain exporters like the US, 
Argentina, and Brazil will export biotechnology-based grains 
to their competitors. 
 
¶7. (SBU) USEU Brussels trade officer visits Madrid:  USTR,s 
Dan Mullaney visited Madrid on 11/26/07 and met with Embassy 
and Ministry of Industry, Tourism and Trade officials. 
Mullaney emphasized USG Special 301 concerns and exchanged 
views on Geographical Indications (GIs) with the Ministry's 
Subdirector General for EU Trade Policy, Inigo Febrel. 
Febrel is a strong GI proponent; Mullaney said that the USG 
continues to be unconvinced that the TRIPS agreement and the 
trademark system do not provide sufficient protection for 
GIs.  Mullaney expressed to Subdirector General Teresa 
Zapatero our concerns over French, Italian, and Austrian 
biotechnology developments, coupled with Commissioner Dimas, 
calls to reject two biotech events (genetic modifications of 
organisms) that have been cleared by the European Food Safety 
Agency (EFSA). Zapatero said that as far as the Ministry of 
Industry was concerned, as long as events are approved, 
Member States should vote in favor of them.  However, she 
indicated that it was often a struggle to sustain this view 
within the GOS because of opposition from the Ministry of 
Environment. 
 
¶8. (SBU) Mullaney spent the most time on Special 301 with the 
Ministry's Subdirector General for the Information Society, 
Salvador Soriano Maldonado.  Soriano said he understood that 
the USG was looking for some sign of tangible progress on 
dealing with illegal internet downloads.  He said he was 
"optimistic" that the GOS could convince the Internet Service 
Providers (ISPs) and content providers on a voluntary notice 
system, leaving takedown for later.  Mullaney also spoke with 
Subdirector General for Industrial Products Rafael Marques 
Osorio about our concerns over the EU,s classification of 
certain products so that they are not covered by the 
Information Technology Agreement (ITA) zero-import-tariff 
requirement.  Marques said that the EU,s understanding was 
that the ITA was not meant to include "consumer electronics," 
although he conceded that there was nothing in the agreement 
itself that said so.  He was very open in saying that 
Spain,s defensive interest was that Sony produced TVs in 
Spain, and that there were 4,000 jobs in this sector. 
Therefore, he implied, classifying flat screen computer 
monitors that can also be configured for television as TVs 
(and thus making them subject to import tariffs) was 
understandable.  Marques also claimed that the Commission had 
the lead on these matters, as well as the Customs 
authorities. 
LLORENS