VZCZCXRO5645
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHMD #0746 2051156
ZNR UUUUU ZZH
R 241156Z JUL 09 ZDK
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1008
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS MADRID 000746 
 
SIPDIS 
 
STATE FOR EUR/WE, EEB/IFD/OMA 
COMMERCE FOR 4212/D.CALVERT 
TREASURY FOR OIA/OEE/T.O'KEEFFE,D.WRIGHT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV EAIR ELTN EIND SENV
SUBJECT: MADRID ECONOMIC WEEKLY, JULY 20-24 
 
REF: MADRID 721 
 
CONTENTS: 
 
EIND,ECON: Tourism Industry Struggles Due to Economic 
Downturn 
EFIN: Merger Movement among Spanish Savings Banks Accelerates 
EAGR, SENV: Wildfires Ravage Spain, Temporarily Shut Down 
High Speed Train to Barcelona 
EIND: Infrastructure Company INECO to Open Headquarters in 
Washington 
EAIR, ELTN:Pasenger Airline and Bus Operators Speak Out 
Against the AVE 
 
Tourism Industry Struggles due to Economic Downturn 
¶1. (U) Spain,s tourism industry, traditionally one of the 
pillars of the Spanish economy, has fallen victim to the 
economic crisis.  Spain experienced an 11.4% decrease in 
visitors in the first half of 2009 compared with the same 
period in 2008, when the country received a record high 
number of tourists.  The decline is being felt all over 
Spain, with every autonomous community but Madrid 
experiencing a drop in tourism.  (Comment: The drop in 
tourism may have a noticeable macroeconomic impact given that 
the tourism industry represents 10 percent of Spain's GDP and 
employs 2.4 million workers.  End Comment). (All media, 7/22). 
Merger Movement among Spanish Savings Banks Accelerates 
¶2. (U) The merger movement among Spain,s savings banks 
("cajas") appears to be accelerating.  Days after announcing 
its merger with Caja de Jaen (ref A), Unicaja announced it 
would merge with a third Andalucian bank, Cajasur.  Cajasur, 
which is controlled by the Catholic Church, was  forced to 
accept a merger in order to remain solvent.  It is widely 
expected that the merger will require the use of public 
funds.  The merger would create Spain,s 6th largest caja, 
with total assets of just over 50 billion euros and over 
9,000 employees.  Meanwhile, three smaller Catalonian cajas 
have tentatively agreed to a merger which would create 
Spain,s 9th largest caja (El Pais, 7/21, 7/22). 
Wildfires Ravage Spain, Temporarily Shut Down High-Speed 
Train to Barcelona 
 
¶3. (U) Twenty-one separate major wildfires continue to burn 
uncontrollably, primarily in central and northeastern Spain. 
The fires have left 5 firefighters dead and displaced 
thousands of residents.  The fires forced Spain's high speed 
train service, the AVE, to temporarily shut down service to 
Barcelona, though it has since been reestablished.  In 
response to the devastation, the GOS announced it will 
provide 25.1 million euros to the autonomous communities for 
fire prevention and firefighting (El Pais 7/23, Expansion 
7/23). 
 
Infrastructure Company INECO to Open Headquarters in 
Washington 
 
¶4. (U) Company representative Jose Angite told Econoff that 
INECO plans to open a new headquarters in Washington, D.C. in 
October or November of this year.  INECO currently has 
business with the World Bank, necessitating travel to the 
capital on a regular basis.  With the approval of the 
American Recovery and Reinvestment Act, INECO sees an opening 
in the US market and hopes to secure new contracts.  The 
company is particularly interested in high speed rail 
projects.  Angite says that they already have good contacts 
in railway sector in the US.  The public business entity 
under Spain's Ministry of Infrastructure oversees planning 
and execution of transportation and telecommunication 
infrastructure projects.  They are currently operating in 28 
countries.  (Cinco Dias, 7/24; Embassy) 
 
Passenger Airline and Bus Operators Speak Out Against the AVE 
¶5. (U) Airline and bus operators are complaining that RENFE, 
the operator of the AVE Spain,s high-speed rail service, is 
fixing its prices below cost.  They say it amounts to a 
government subsidy and is contributing to a 10-20% decline in 
passenger traffic by plane and bus.  Airlines and bus 
operators are considering petitioning national and European 
competition authorities.  They want more transparency in 
pricing and are recommending that the GOS privatize RENFE and 
other public transportation entities to promote fair and 
competitive pricing among all modes of travel. (All Media, 
7/22) 
CHACON