VZCZCXRO5403
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0393/01 0981516
ZNR UUUUU ZZH
P 071516Z APR 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 4577
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0624
RUEHLA/AMCONSUL BARCELONA 3379

UNCLAS SECTION 01 OF 02 MADRID 000393 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EUR/WE AND EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EFIN EIND EINV ENRG EPET SOCI SP
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL/AG UPDATE - MARCH 31 
APRIL 4 
 
 
MADRID 00000393  001.2 OF 002 
 
 
Table of Contents: 
 
¶1. ECON: Business activity declining 
¶2. SOCI/ECON: Call for immigrants 
¶3. ECON: Ex-Finance Minister Cristobal Montoro to coordinate 
PP economic policy 
¶4. EIND: National Competition Authority (CNC) to open 
investigation into egg, bread, chicken industries 
¶5. ECON/EFIN: Madrid Autonomous Community to do more to 
attract, keep foreign investment 
¶6. EAIR: Open Skies Agreement bringing U.S., Spain closer 
¶7. EAIR/ENRG: Boeing Spain announces first-ever airplane fuel 
cell battery 
¶8. ECON/EFIN: Construction firms to bid on Pennsylvania 
Turnpike project 
¶9. EINV/EPET: Repsol begins major exploration project near 
Brazil 
 
BUSINESS ACTIVITY DECLINING 
 
¶1. (U) Manufacturing and services sector surveys indicate 
that Spain experienced a notable decline in economic activity 
this past month.  The March Spanish purchasing managers index 
(PMI) shows a 16 point drop from a year ago, the sharpest 
decline in the survey's 9-year history.  Local businesses 
reported a decline in new orders and lower economic activity 
overall.  Manufacturing data also showed a similar decline in 
activity.  The Financial Times says that this is leading to 
fears that Spain will experience the a hard landing. (FT, 
4/4/08) 
 
CALL FOR IMMIGRANTS 
 
¶2. (U)  Due to Spain's aging population and low birth rates, 
157,000 new immigrants will be needed to fill jobs each year 
until the year 2020, according to a study from the Fundacion 
Empresa y Sociedad.  (Comment: We believe the current inflow 
of immigrants seeking to enter the labor force is even 
greater than this amount.) (Metro 4/3) 
 
EX-FINANCE MINISTER CRISTOBAL MONTORO TO COORDINATE PP 
ECONOMIC POLICY 
 
¶3. (U) The former minister is closely associated with another 
former Finance Minister, Rodrigo Rato.  (Comment: Rajoy's 
choice leaves commentators wondering what job (if any) will 
be offered to his supposedly star recruit, Manuel Pizarro, 
not to mention what will happen with other PP economic 
heavyweights such as Juan Costa and Miguel Arias.  Rajoy is 
certainly choosing his own team and keeping his own counsel 
in doing so.) (ABC, 4/3/08) 
 
NATIONAL COMPETITION AUTHORITY (CNC) TO OPEN INVESTIGATION 
INTO EGG, BREAD AND CHICKEN INDUSTRIES 
 
¶4. (U) The CNC is reported to be reviewing e-mails, internal 
documents, and even an August 29, 2007 press release to see 
whether industry associations engaged in anti-competitive 
practices such as "recommendations" to members and/or 
"conscious parallel" pricing.  Explicit price-fixing deals 
are not expected to be found.  Specifically, the food and 
beverage association (FIAB), the chicken association 
(Propollo), and the egg association (Improvo) and a number of 
other associations are under investigation.  (Comment: The 
CNC probe is likely to be followed with considerable 
interest, as there are a lot of complaints about price hikes 
for basic foodstuffs.) (El Pais, 4/3/08) 
 
MADRID AUTONOMOUS COMMUNITY TO DO MORE TO ATTRACT, KEEP 
FOREIGN INVESTMENT 
 
¶5. (U) The regional government is working with the Madrid 
Chamber of Commerce, which already has offices in Mexico 
City, Miami, Sao Paulo and Shanghai.  In 2008, offices in New 
York and Tokyo will be opened.  (Comment: The PP- governed 
Madrid regional government does not think that the national 
PSOE government treats Madrid well, so it plans to do more to 
attract and keep foreign investment, much as Catalonia and 
the Basque Country already do.) (Expansion, 4/1/08) 
 
OPEN SKIES AGREEMENT BRINGING U.S., SPAIN CLOSER 
 
¶6. (U) The Open Skies agreement that went into effect on 
March 27 will result in 15 new flights a week between Spain 
and the U.S. by Iberia, American, Continental, and Delta. 
Budget airline Ryanair has expressed interest as well. (Metro 
4/2) 
 
MADRID 00000393  002.2 OF 002 
 
 
 
BOEING SPAIN ANNOUNCES FIRST-EVER AIRPLANE FUEL CELL BATTERY 
 
¶7. (U) At an April 3 event attended by Ambassador Aguirre and 
the GOS Secretary General of Industry, Boeing Spain announced 
that it has flown a manned airplane powered by hydrogen fuel 
cells - the first time this has happened in aviation history, 
according to the company.  The airplane and fuel cell 
technology were created at Boeing,s Research and Technology 
Europe Center in Madrid with assistance from industry 
partners from various countries.  Three test flights took 
place in February and March 2008 at the airfield in Ocana, 
south of Madrid.  On each of the flights, the test pilot 
relied solely on fuel cell power while cruising at 3,300 feet 
for 20 minutes.  Boeing does not expect that fuel cells, 
which have zero carbon dioxide emissions, will ever be able 
to provide primary power for large passenger airplanes.  But 
company researches believe the technology could power smaller 
aircraft and be applied to secondary power units to improve 
environmental performance. (All media, Boeing press release, 
Embassy) 
 
CONSTRUCTION FIRMS TO BID ON PENNSYLVANIA TURNPIKE PROJECT 
 
¶8. (U) ACS and Abertis have agreed to present a joint bid. 
Initially they were going to bid separately, but the 
tightening credit conditions have made this impossible.  The 
two companies, bid is being financed by Citibank, UBS and 
Santander.  Ferrovial subsidiary Cintra is also bidding on 
the project and is being financed by Macquarie, an Australian 
bank.  The Australian construction firm, Transurban, is the 
third bidder.  Morgan Stanley is advising the state of 
Pennsylvania on the USD 15 billion 800 km project. (Expansion 
3/31/08) 
 
REPSOL BEGINS MAJOR EXPLORATION PROJECT NEAR BRAZIL 
 
¶9. (U) In the upcoming four years, Repsol plans to spend the 
majority of its investment resources (over 9 billion euros) 
in exploration and production in three primary regions: 1. 
the Gulf of Mexico/Brazil, 2. North Africa (including 
Algeria) and 3. Trinidad and Tobago/Latin America.  This past 
March, Repsol, as part of a larger consortium, began 
exploration activities in waters off the coast of Brazil. 
This project in Cuenca de Santos is considered to be one of 
the largest projects for Repsol under its 2008-2012 strategic 
plan.  (Expansion, 4/2/2008) 
 
 
 
 
 
 
AGUIRRE