VZCZCXRO8690
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0671/01 1651210
ZNR UUUUU ZZH
R 131210Z JUN 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 4944
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3466

UNCLAS SECTION 01 OF 02 MADRID 000671 
 
SIPDIS 
 
STATE FOR EUR/WE AND EEB/IFD/OMA 
 
E.O. 12958: N/A 
TAGS: ECON EINV ELAB ENRG SOCI SP
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL UPDATE JUNE 9 - JUNE 
13 
 
REF: A. MADRID 641 
     ¶B. MADRID 616 
 
MADRID 00000671  001.2 OF 002 
 
 
Table of Contents: 
 
ECON/ELAB: Strikes lead to empty grocery shelves 
ECON: Financial Times special report on Spain 
SOCI/ECON: Spain strongly opposes EU proposal to allow longer 
work week 
ENRG/EINV: Iberdrola rules out bid for British Energy 
ENRG/EINV: Repsol files suit against Ecuador 
ECON: May inflation 4.6 percent 
 
 
STRIKES LEAD TO EMPTY GROCERY SHELVES 
 
¶1. (U) The combination of various strikes in Spain, primarily 
led by independent truckers and fishermen, have led to 
notable shortages in fresh produce and a potential shortage 
in medical supplies nationwide.  Store owners reported June 
12 that supplies of fresh fish and vegetables were extremely 
low and close to being depleted.  A prominent pharmaceutical 
distributor added that pharmaceutical stocks could hold until 
Monday, June 16 at which point there could be problems in 
supply should the strike continue.  The strikes come in large 
part as a result of the impact of high fuel prices, but are 
also based on complaints by workers who say they are being 
undercut by larger businesses and cheaper imports (as in the 
case of the fishermen's strike).  The fishermen's strike 
began on May 30 and came to an end on June 11, but the 
truckers' strike continues, although the GOS has now broken 
blockades so that the 80% of truckers who are not striking 
will be able to deliver shipments. The strikers are seeking 
GOS responses to rising fuel prices that they say are causing 
them to operate at a loss.  Madrid taxi drivers also 
announced a strike beginning June 13, saying that the fare 
increase offered by the GOS would not fully compensate for 
the increased fuel price, but as of midday June 13 taxis 
appeared to be operating normally.  Post will report in more 
detail on the trucking strike septel. (All Media) 
 
 
FINANCIAL TIMES SPECIAL REPORT ON SPAIN 
 
¶2. (U) The lead article is called "After the bust, a time for 
adjustment."  The piece explains how the slowdown has come 
faster than people expected and how sharp it is.  Two years 
ago, Spain was creating about a third of new jobs in Europe. 
This year, unemployment is rising faster than anywhere else 
in the EU.  However, belying the FT's reputation in Spanish 
government and business circles as the purveyor of doom and 
gloom about Spain, the FT also quotes Spanish Banking 
Association adviser Federico Prades' "glass half full" 
perspective.  He says that public and corporate finances are 
strong, much external borrowing has gone to modernize Spain's 
manufacturing sector, and the banking system is healthy.  But 
critics insist that additional labor market reform is 
essential and that public spending must be more efficient.  A 
more efficient judicial system would also be very beneficial. 
 The FT Special Report also contains articles on banks, real 
estate, the Prince of Asturias awards, Expo 2008 in Zaragoza, 
small firms in the Basque Country, and energy.  (Comment: 
While not underplaying the problems affecting the Spanish 
economy, the report also highlights some of the Spanish 
economy's strengths, including the economy's 
internationalization.  For instance, the Ibex-35 blue-chip 
companies earned almost half of their income outside of Spain 
in 2007.) (FT 6/11) 
 
 
SPAIN STRONGLY OPPOSES EU PROPOSAL TO ALLOW LONGER WORK WEEKS 
 
¶3. (U) Spain remained strongly opposed to the European 
Council's approval of a measure to allow member states to 
increase the maximum work week from 48 to 65 hours.  Foreign 
Minister Moratinos and Minister of Labor Celestino Corbacho 
have vowed that Spain will act to change the directive - 
which must be approved in the European Parliament -- before 
it takes effect.  Minister Corbacho criticized the measure, 
saying that it would represent a strong setback to the social 
agenda in Europe.  Others, including Spanish unions such as 
the UGT, have warned that the proposal sets a dangerous 
precedent and hinted at the possibility of "confrontations" 
should the measure near approval by the parliament. 
Meanwhile opposition Partido Popular spokesperson Jose 
Ignacio Echaniz accused the government of confusing public 
opinion on this matter noting that increasing work hours 
would be optional and not obligatory for member states.  (EL 
Pais, 6/10) 
 
MADRID 00000671  002.2 OF 002 
 
 
 
 
IBERDROLA RULES OUT BID FOR BRITISH ENERGY 
 
¶4. (U) Iberdrola Chairman Ignacio Sanchez Galan told 
reporters that the company would not bid on Britain's largest 
nuclear energy producer, British Energy, because the asking 
price was too high.  Earlier this week, British Energy said 
it had rejected the proposals it had received so far because 
they were not high enough.  Galan said Iberdrola remained 
interested in the British nuclear power sector.  (El Pais, 
6/13) 
 
 
REPSOL FILES SUIT AGAINST ECUADOR 
 
¶5. (U) Spanish petroleum company Repsol YPF was the fifth 
petroleum company to file suit against the government of 
Ecuador for the controversial Law 42, which increases taxes 
on Repsol,s "extraordinary earnings" from 50 percent to 99 
percent.  The suit has been filed with the International 
Center for Settlement of Investment Disputes (ICSID), which 
is based in Washington.  In Ecuador, Repsol operates block 16 
and produces over 50,000 barrels per day. (El Pais, 6/13) 
 
 
MAY INFLATION 4.6 PERCENT 
 
¶6. (U) Official Spanish year-to-year consumer price inflation 
for May (May 2008 compared to May 2007) was 0.1 percent below 
the 4.7 percent estimate announced two weeks ago (ref b) for 
the EU-harmonized index.  This is still a significant 
increase from April's figure. (All Media) 
AGUIRRE