VZCZCXRO1830
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHMD #1257/01 3331622
ZNR UUUUU ZZH
R 281622Z NOV 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 5682
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3682
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MADRID 001257 
 
SIPDIS 
 
STATE FOR EUR/WE:SAMSON,ZERDECKI AND EEB/IFD/OMA 
TREASURY FOR OIA/OEE/W.LINDQUIST 
COMMERCE FOR 4212/DON CALVERT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EIND EPET KIPR SP
SUBJECT: MADRID ECONOMIC WEEKLY, NOV. 21-28 
 
REF: MADRID 1226 
 
MADRID 00001257  001.2 OF 002 
 
 
Contents: 
 
ECON: Zapatero Unveils Additional Stimulus Package 
EIND: Difficulties Continue for Auto Industry 
EFIN/ECON: Inflation Falls to 2.4% in November 
KIPR: Culture Minister Launches Anti-IPR-Piracy Campaign 
KIPR: Digital Content and IPR Conferences 
KIPR: Counterfeiting Ring Broken Up 
EPET/EINV: Lukoil-Repsol Deal Faces Obstacles 
 
 
Zapatero Unveils Additional Stimulus Package 
 
1.(U)  President Zapatero, speaking before the Congress on 
November 27, unveiled a 10.85-billion-euro spending package 
to revive the economy and boost employment.  8 billion euros 
will go to municipal governments for new infrastructure 
projects to be started between mid-January and mid-April of 
2009 and finished by the first quarter of 2010.  This doubles 
the amount of municipal investment expected in 2009 and is 
expected to employ many of those who have lost construction 
jobs.  The remainder will go to the struggling auto sector, 
environmental initiatives, research and development spending, 
the handicapped, and other sectors.  Zapatero told the 
Congress that the aid package, which will amount to just over 
1% of Spain's GDP, will create 300,000 jobs in 2009.  The 
package will be financed with extraordinary borrowing during 
this year.  According to Second Vice President and 
Economy/Finance Minister Solbes, these and previous 
anti-crisis measures will keep the public sector deficit 
close to 3% of GDP in 2008 and 2009.  The package was 
approved by the Council of Ministers on November 28 and must 
be approved by the Congress.  Zapatero also announced that he 
would establish within two weeks a working group with the 
opposition Partido Popular and other parties to seek 
consensus on initiatives to modernize the economy's 
productive capacity.  (All Media, 11/28) 
 
Difficulties Continue for Auto Industry 
 
2.(U) 800 million euros of the stimulus package is to go to 
the auto industry to reduce labor costs and improve training 
and innovation, including the development of electric 
vehicles.  In exchange, firms would have to agree to maintain 
employment.  Before the announcement, Ford became the latest 
company to reduce hours, saying that it would temporarily 
idle 5,600 workers at its Almussafes, Valencia factory, not 
resuming production after the holidays until January 20 and 
closing one day every two weeks until June.  Separately, the 
president of Aragon region said the region intended, pending 
its legislature's approval, to provide a guarantee for 200 
million euros in lending so that General Motors can produce a 
new Opel model at its Figueruelas plant.  Spain's auto 
factories produced 25% fewer vehicles in October than in 
October 2007.  (All Media, 11/28; El Pais, 11/26) 
 
Inflation Falls to 2.4% in November 
 
3.(U) Inflation fell to 2.4% (November 2008 prices compared 
to November 2007 prices), according to a preliminary National 
Statistics Institute estimate.  This is a rapid drop from 
October's 3.6% and July's 5.3%.  The drop in oil prices 
played a large role, but some articles cited concern that the 
slowdown in domestic consumption also contributed and that 
deflation was a possibility in 2009.  Second Vice President 
and Finance/Economy Minister Solbes has said that inflation 
may fall below 1% by the middle of next year before starting 
to increase again.  (All Media, 11/28; El Pais, 11/26) 
 
Culture Minister Launches Anti-IPR-Piracy Campaign 
 
4.(U) On November 25, Culture Minister Molina launched 
Spain,s 3rd Anti-Piracy Public Awareness Campaign.  Noting 
Spain,s status as a "cultural power," the Minister stated 
that without strong IPR protection, Spanish cultural 
production would decline.  Ministry officials estimated the 
campaign,s budget at 1.95 million euros.  The campaign will 
broadcast public-service messages, aimed largely at young 
people,  on television, the Internet and other media, as well 
as in schools, with the slogan, "si eres legal, eres legal" 
(roughly, "if you,re legal, you,re all right").  (Embassy, 
11/25) 
 
Digital Content and IPR Conferences 
 
MADRID 00001257  002.2 OF 002 
 
 
 
5.(U) On November 25-26, the GOS held its second annual 
International Conference on Intellectual Property in the 
Digital Environment.  The IPR conference, part of a larger 
conference on digital content, brought Spanish government 
officials together with counterparts from other European 
countries and the U.S., the EC, the OECD, and other 
international bodies, along with a broad range of private 
sector representatives from the community of copyright 
holders and the telecommunications and internet service 
industries.  Dr. Michael Shapiro, Attorney-Advisor at the 
U.S. Patent and Trademark Office (USPTO), spoke on two 
panels.  Minister of Industry, Tourism, and Commerce Miguel 
Sebastian, who is responsible for telecommunications, 
emphasized the importance of fighting IPR piracy without 
discouraging the development of new technologies.  The 
conference also marked the first public appearance of the 
Anti-Piracy Coalition's recently hired spokesman, Aldo Ocese, 
who is seeking to encourage progress in the ongoing 
negotiations between the Coalition (of content providers) and 
the internet services providers' association Redtel. 
(Embassy, 11/26) 
 
Counterfeiting Ring Broken Up 
 
6.(U) The Presidency on November 27 announced that the 
Revenue Agency (Agencia Tributaria) detained five people at 
the end of last week and seized counterfeit merchandise with 
an estimated value of 500 million euros in Malaga, ending a 
year-long investigation into an Indian/Pakistani ring.  The 
operation is said to be the largest of its kind in European 
history.  The merchandise, which is still being documented, 
may include over a million watches, as well as thousands of 
handbags, wallets, perfumes, movies and video games. 
(Presidency Press Release, 11/27) 
 
Lukoil-Repsol Deal Faces Obstacles 
 
¶7. (U)  Political and economic obstacles remain to the 
potential purchase by Russian oil and gas company Lukoil of 
29.9% of the stock of Spanish oil and gas company Repsol YPF 
as reported in reftel.  The current proposal is for Lukoil to 
take over the 5 billion euros of debt used to fund the 
purchase of 20% of Repsol in 2006 by the now-troubled 
construction company Sacyr Vallehermoso.  However, the 50 
banks that hold that debt are demanding more collateral from 
Lukoil than just the Repsol shares in question.  In the face 
of some political opposition to the deal, Lukoil announced 
its agreement to the GOS condition that Repsol continue to be 
directed by Spaniards.  If the purchase goes through, Lukoil 
will be able to choose four of the sixteen members of 
Repsol's board.  Opposition PP leader Mariano Rajoy has 
expressed opposition to the deal.  Industry, Tourism, and 
Commerce Minister Sebastian has toned down his public 
statements since President Zapatero expressed support for the 
deal, but some press reports suggest that he may still be 
seeking to prevent it.  (El Confidencial, 11/28 and 11/24; El 
Pais, 11/26 and 11/25) 
 
AGUIRRE