VZCZCXRO2181
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0583/01 1441527
ZNR UUUUU ZZH
R 231527Z MAY 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 4835
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3444

UNCLAS SECTION 01 OF 02 MADRID 000583 
 
SIPDIS 
 
STATE FOR EUR/WE AND EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EFIN EINV KGHG SENV SP
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL UPDATE MAY 19 - MAY 
23 
 
REF: MADRID 00566 
 
MADRID 00000583  001.2 OF 002 
 
 
Table of Contents: 
 
ECON/ETRD/KIPR/ENRG/TBIO:DCM Pays Courtesy Call on new 
Secretary of State for Trade 
EFIN: GOS announces "twin peaks" financial regulatory system 
for Spain 
ECON/EINV: Securities and Exchange Commission (SEC) letter to 
Repsol 
EINV/ELTN: Abertis wins big Pennsylvania road project 
EFIN: Delinquency rate rises, although it is still below 
the European average 
ECON/EINV: Minister of Industry prioritizes the U.S. 
ENRG: Abengoa CEO says Spain is failing on biofuels use 
 
DCM PAYS COURTESY CALL ON NEW SECRETARY OF STATE FOR TRADE 
 
1.(U) DCM met with the new Secretary of State for Trade, 
Silvia Iranzo Gutierrez, on May 19, 2008.  DCM used the 
opportunity to deliver the Iran critical needs equipment 
demarche (reftel) and to reiterate our interest in working 
with Spain on copyright-related intellectual property rights 
issues.  DCM reviewed current priorities: Doha, agricultural 
biotechnology, food security, and renewable energy.  Iranzo 
thanked the DCM for the call and said she was interested in 
working with us.  She is still forming her personal staff so 
she took the DCM,s call with no staff present.  (Bio Note: 
Iranzo is a senior career civil servant economist.  Prior to 
assuming her current position, she worked at the Bank of 
Spain as the head of Country Risk Division.  Iranzo was born 
in San Sebastian in 1958, is married and has four children. 
Her father was a career Ministry of Industry employee who was 
posted for a number of years in San Francisco.  As a result, 
Iranzo speaks excellent American accented English.) 
 
GOS ANNOUNCES "TWIN PEAKS" FINANCIAL REGULATORY SYSTEM FOR 
SPAIN 
 
¶2. (U) On 5/22/08, Second Vice President and Finance Minister 
Pedro Solbes announced that that the National Commmission for 
Securities Markets (CNMV) will be abolished and that a 
National Commission for Financial Services (CNSF) will be 
created in its place.  Under the new regulatory architecture, 
the Bank of Spain will assume the responsibility for 
monitoring solvency for insurance companies and investment 
companies, as well as continue to monitor solvency in banks 
and savings and loan associations.  The new CNSF will ensure 
that investors, savers and insurance consumers are protected. 
In the past, the CNMV was only responsible for protecting 
investors, rights. This reform has been received quite well 
by market observers, although as Expansion pointed out in an 
editorial, the success of the new regulatory scheme will 
depend in large measure on the independence afforded the CNSF 
and the resources afforded the new regulatory entity. 
Expansion considers the Bank of Spain to be  independent and 
adequately staffed. (Note: Under the so-called twin peaks 
financial regulatory system, one regulator protects consumers 
and another regulator monitors and regulates the financial 
entities, solvency.  Australia and a number of other 
European countries already have such regulatory systems.  The 
UK combines all these functions under one regulator.  Some 
observers believe that the Northern Rock banking failure 
demonstrated a fatal flaw in such a system as the regulator 
could not separate its solvency and consumer protection 
mandates in such a way as to ensure the bank,s solvency.) 
 
 
 
SECURITIES AND EXCHANGE COMMISSION (SEC) LETTER TO REPSOL 
 
¶3. (U) El Pais reports that on August 28, 2007, the SEC sent 
a letter to Repsol asking for information on Repsol,s 
investments in Iran and Cuba.  El Pais characterizes the 
letter as having an "inquisitorial tone."  Repsol reportedly 
responded by saying that it had not made a final investment 
decision with respect to Iran. (Note: Repsol,s response was 
presumably sent prior to the company,s reported decision to 
desist from investing in phase 13 of the South Pars gas 
project.)   With respect to Cuba, the company told the SEC 
that in 2000 it signed an agreement with Cuba to explore for 
oil&gas in seven blocks in Cuban territorial waters, but that 
so far nothing had been found.  (El Pais, 5/18/08) 
 
ALBERTIS WINS BIG PENNSYLVANIA ROAD PROJECT 
 
¶4. (U) Abertis, together with Citigroup and Criteria, will 
pay USD 12.8 billion to manage for 75 years the Pennsylvania 
Turnpike between Philadelphia and Pittsburgh.  This is an 801 
 
MADRID 00000583  002.2 OF 002 
 
 
km stretch of road.  Abertis beat Goldman Sachs/Transurban 
and Macquarie/Cintra to win the contract.  (El Pais, 5/20/08) 
 
DELINQUENCY RATE RISES, ALTHOUGH IT IS STILL BELOW THE 
EUROPEAN AVERAGE 
 
¶5. (U) At this time, roughly 1.2% of borrowers are behind on 
their payments, compared with 0.66% in March 2007.  This is 
still better than the average EU rate of 2.5%.  And it is 
still very low compared with the 8% delinquency rate Spain 
had in 1993 at the height of a financial crisis then.  Still, 
it is one more piece of bad economic news. (El Pais, 5/20/08) 
 
MINISTER OF INDUSTRY PRIORITIZES THE U.S. 
 
¶6. (U) Speaking before the Senate on May 19, Minister of 
Industry, Tourism and Trade Miguel Sebastian said that given 
the current exchange rate, it was beneficial for Spanish 
companies to invest in the U.S., and that he would encourage 
this.  The Minister emphasized especially small and medium 
sized businesses.  The article mentions the April 24 meeting 
that Ambassador Aguirre had with Minister Sebastian, and that 
Sebastian wants to strengthen U.S.-Spain ties.  (Expansion, 
5/20/08) 
 
ABENGOA PRESIDENT STATES SPAIN HAS FAILING MARKS ON BIOFUELS 
USE 
 
¶7. (U)  Sustainable solutions in the transportation industry 
are lacking according to Abengoa Bioenergy President Javier 
Salgado.  He believes that the central government should set 
mandatory blending requirements through a ministerial 
order/decree. (Note: Recently, the GOS did announce modest 
mandatory blending requirements.  However, they will only 
take effect in 2009.) 
Aguirre