VZCZCXRO2544
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHMD #0820/01 2261124
ZNR UUUUU ZZH
R 141124Z AUG 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1087
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MADRID 000820 
 
SIPDIS 
 
STATE FOR EUR/WE, EEB/IFD/OMA 
COMMERCE FOR 4212/D.CALVERT 
TREASURY FOR OIA/OEE/T.O'KEEFE, D.WRIGHT 
 
E.O. 12958: N/A 
TAGS: ECON ELAB EFIN ECPS KIPR
SUBJECT: MADRID ECONOMIC BI-WEEKLY, AUGUST 3-14 
 
REF: A. MADRID 773 
     ¶B. MADRID 725 
 
 Contents: 
 
ECON, ELAB: Government Extends Unemployment Benefits 
ECON: Housing Sales Increase Slightly in June but Remain Well 
Below Last Year 
ECON: Consumer Price Index Continues to Fall 
ECPS: Telefonica Loses Ground to Alternative Internet Service 
Providers 
KIPR: 60 Arrested for Cable Signal Piracy 
 
Government Extends Unemploymwent Benefits 
 
¶1. (U) On August 13, the Council of Ministers in special 
session approved a royal decree/law providing additional 
assistance of 420 euros (about $605) per month for six months 
to the long-term unemployed whose benefits have run out and 
who lack other sources of income.  This supplemental 
assistance could be extended for another six months if the 
economy reamins weak and unemployment remains high.  The 
Labor Ministry estimates that some 340,000 unemployed will 
qualify for the new assistance.  Though job loss has begun to 
slow, unemployment remains over 18 percent, and Spain is 
expected to lag behind other European countries in recovering 
from the downturn.  The new measures are expected to cost 
about between 640 and 760 million euros, and the government 
is expected to pay some 33 billion euros in total 
unemployment assistance and relief in CY 2009.  Relief for 
the long-term unemployed was a component of the tripartite 
"social dialogue" negotiations that broke down in late July. 
Now that the government has implemented it unilaterally, 
labor unions and the opposition Popular Party have denounced 
the government's action as inadequate.  (Council of Ministers 
press release, 8/13, All media, 8/13-14) 
 
Housing Sales Increase Slightly in June but Remain Well Below 
Last Year 
 
¶2. (U) Sales and purchases of housing rose  by 4 percent in 
June over May but were still 25.5 percent less than in the 
same month in 2008, according to the National Institute of 
Statistics (INE).  Housing transactions fell by a total of 
34.9 percent over the first six months of 2009.  The June 
figures appear to indicate that the contraction in sales of 
new homes may be moderating slightly.  (Europa Press, 8/12) 
 
Consumer Price Index Continues to Fall 
 
¶3. (U) INE also reported that inflation for July was -0.9 
percent compared to June and -1.4 percent year-on-year. 
Since July 2008, when the Consumer Price Index (CPI) was at 
5.3 percent, it has fallen for twelve consecutive months. 
The CPI entered negative territory in March.  Despite the 
past five months of negative numbers, the government 
continues to downplay talk of deflation.  The sharp decline 
since last year in the price of oil and fallen prices for 
food and housing are believed to be driving the CPI figures. 
(Europa Press, 8/12, El Pais, 8/13) 
 
Telefonica Loses Ground to Alternative Internet Service 
Providers 
 
¶4. (U) During the second quarter of 2009, Jazztel and 
Vodafone bested Telefonica in capturing more new internet 
subscribers.  Together they signed up over 65% of new clients 
compared to Telefonica,s 30%.  While former monopoly 
Telefonica still controls a larger share of the market, with 
56% of all internet subscribers, its competition is gaining 
ground. Jazztel,s client base grew by 47% over the past 
year.  The increased competition stems from improvements in 
customer service and installation. Since the GOS privatized 
Telefonica in 1997, it has been able to satisfy a minimum 
standard of service that alternative providers are only 
recently able to match or beat.  Internet service in Spain is 
still slower and more expensive than in most European 
countries.  It costs 24% more than the European average, and 
only 10% of ih speed lines in Spain operate at higher than 
10 Mbps. (El Pais, 8/10) 
 
60 Arrested for Cable Signal Piracy 
 
¶5. (U)  The Spanish National Police announced the arrest of 
some 60 individuals in five sourthern cities and the Canary 
Islands on charges of pirating cable TV signals.  Two of the 
accused are administrators of an internet portal where 
 
MADRID 00000820  002 OF 002 
 
 
content, especially soccer games, was uploaded and 
rebroadcast via streaming.  Others arrested include heads of 
neighborhood associations and managers of hotels who are 
alleged to have been making the pirated material available to 
their members and clients.  A broadcast center in Sevilla was 
dismantled, and 851 decoders,1,321 smart cards, and a variety 
of computers, telephones, and other equipment used in 
distributing the pirated content were confiscated.  Police 
say the fraud netted several million euros.  (El Pais, 8/4) 
DUNCAN