VZCZCXRO3184
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0236/01 0631244
ZNR UUUUU ZZH
P 031244Z MAR 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 4380
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3344

UNCLAS SECTION 01 OF 02 MADRID 000236 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EUR/WE AND EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD EWWT PTER SP
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL UPDATE - FEBRUARY 
25-29 
 
MADRID 00000236  001.2 OF 002 
 
 
Table of Contents: 
 
EFIN - Mortgage Issuance Down by a Third in December 
EINV - Sovereign Wealth Fund Offers to Buy Real Estate Firm 
EINV - 2007 Corporate Profits Announced 
EINV - Prisa Group Aims to Expand in the U.S 
ETRD/EINV - Ambassador Aguirre Remarks on NAFTA, Trade, and 
IPR 
EFIN/PTER - New Wave of ETA Extortion Letters to Basque 
Businessmen 
EWWT/PTER - GOS Wants to Expand Cargo Radiation Scanning 
Program to 28 Marine Ports 
 
Mortgage Issuance Down by a Third in December 
 
¶1. (U) More evidence of the slowdown in housing came with the 
announcement that 32 percent fewer mortgages were issued in 
December 2007 than in December 2006.  The average value of 
mortgages issued in the month also declined, by 2 percent to 
144,000 euros, but it is not clear whether that represents a 
decline in housing prices, a change in the type of housing 
being built, or a change in the percentage of a unit's value 
that mortgages cover.  Issuance of permits for new housing 
showed a similar trend, with December's total 40 percent 
below that of December 2006.  (El Pais, 2/27/08) 
 
Sovereign Wealth Fund Offers to Buy Real Estate Firm 
 
¶2. (U) The Investment Corporation of Dubai (ICD) has offered 
to buy the troubled real estate developer Colonial for a 
little over three billion euros (usd 4.5 billion).  The main 
stockholders, Luis Portillo and the Nozar company, are 
holding out for more money.  New York and London investment 
funds are reported to be interested in Colonial if the ICD 
offer fails.  (Comment: The role of sovereign investment 
funds has not so far been the subject of political debate in 
Spain.  More likely than not, there would be widespread 
relief if a purchaser were found for Colonial.  However, a 
political debate would likely emerge were a sovereign wealth 
fund attempt to buy any firm that could loosely be considered 
a "national champion," such as Telefonica or Repsol.) 
(Expansion, 2/28-29/08) 
 
2007 Corporate Profits Announced 
 
¶3. (U) Corporate profits, while generally healthy, are 
providing additional evidence of the economy's slowing 
growth.  With nearly all of the Ibex 35 stock market 
blue-chips having reported 2007 figures, it appears that the 
blue-chips increased profits by 15 percent over their 2006 
levels, well below 2006's 31 percent increase.  34 of the 35 
companies made profits, but 10 earned less in 2007 than in 
¶2006.  Telefonica had the largest sales, with 57 billion 
euros, just ahead of Repsol's 54 billion.  The most 
profitable companies were Banco Santander (9 billion euros, 
up 19 percent), Telefonica (8.9 billion, up 43 percent), and 
BBVA (6.1 billion, up 29 percent). (El Pais, 2/29/08) 
 
Prisa Group Aims to Expand in the U.S 
 
¶4. (U) The Chairman of the group, Ignacio Polanco, says Prisa 
wants to expand in the U.S., and not just in the 
Spanish-speaking market.  Currently, Prisa is negotiating 
with the UK private equity group 3i to expand the group's 
radio network beyond Los Angeles and Miami.  Prisa, through 
its publishing house, Santillana, is already a leader in 
school textbooks in Latin America (including in 
Portuguese-speaking Brazil) and now wants to get into 
English-language school textbooks in the U.S.  Polanco is 
reportedly an admirer of big media groups in the U.S.: "In 
spite of the difference in size, they are the mirror we use 
to measure ourselves."  Prisa is best known for being the 
owner of Spain's leading daily, El Pais.  It owns 50% of the 
satellite pay-TV platform, Sogecable, and Spain's leading 
radio station, Cadena Ser.  The group also has a stake in Le 
Monde and has assets in Latin America, the U.S., and 
Portugal. The Prisa Group is controlled by the Polanco 
family.  The 53-year-old Ignacio Polanco took over the reins 
after his father died last year.  (Comment: The Prisa Group 
is best known in Spain as the owner of the slightly left of 
center El Pais, i.e. "liberal" in the U.S. context. Clearly, 
however, Polanco's main focus is commercial with a view to 
breaking into the English-speaking world.) (Financial 
Times/2/26/08) 
 
Ambassador Aguirre Remarks on NAFTA, Trade, and IPR 
 
¶5. (U) On February 27, Ambassador Aguirre spoke to a group of 
 
MADRID 00000236  002.2 OF 002 
 
 
prominent business leaders at the Circulo de Empresarios, one 
of Spain's leading business associations.  He spoke at a 
ceremony in honor of a Circulo study on Spanish business in 
and with the NAFTA countries.  Along with the Ambassadors of 
Mexico and Canada, Ambassador Aguirre described the benefits 
of the NAFTA and encouraged Spanish investment in North 
America.  He also discussed trade liberalization in general, 
emphasizing the importance of a successful conclusion of the 
Doha Round and of strengthening IPR protection.  His remarks 
received positive press coverage. (Embassy) 
 
New Wave of ETA Extortion Letters to Basque Businessmen 
 
¶6. (U) The Basque terrorist group ETA sent Basque businessmen 
a new wave of extortion letters in February.  Police sources 
believe that over 100 letters may have been sent, in line 
with the group's monthly average in recent years.  The 
terrorist group has organized Basque businessmen into three 
categories; those they want to pay part of what they earn "by 
exploiting the workers" (Note: ETA is a Marxist group), those 
who do not consider the Basque conflict their business, and 
those who "gladly contribute to maintain the current 
situation of oppression."  The Basque government and the 
region's leading business group called on recipients not to 
submit to ETA extortion, and the Spanish vice minister of 
Interior, Antonio Camacho, called the letters a form of 
terrorism that would be investigated.  (El Pais, 2/28-29/08) 
 
GOS Wants to Expand Cargo Radiation Scanning Program to 28 
Marine Ports 
 
7.(SBU) As a result of Spain's favorable experience with the 
Megaports initiative, a DOE NNSA program to detect illicit 
nuclear and radioactive cargo at ports, the GOS recently 
decided to expand this concept to up to 28 ports across 
Spain.  Working with NNSA Megaports experts, the GOS would 
first expand to Barcelona and Valencia and then use the 
expertise gained from this experience to expand to other 
ports across Spain.  Barcelona and Valencia will begin 
operating their radiation detection programs in 2009 if all 
goes well. 
AGUIRRE