VZCZCXRO9342
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHMD #0936/01 2611644
ZNR UUUUU ZZH
R 181644Z SEP 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1238
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4127
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 03 MADRID 000936 
 
SIPDIS 
 
STATE FOR EUR/WE, EEB/IFD/OMA 
COMMERCE FOR 4212/D.CALVERT 
TREASURY FOR OIA/OEE: R.JOHNSTON 
ENERGY FOR PIA:K.BALLOU 
 
E.O. 12958: N/A 
TAGS: ECON EIND EINV ELAB ENRG EPET KIPR SP
SUBJECT: MADRID ECONOMIC WEEKLY, SEPTEMBER 14-18 
 
REF: A. CARACAS 01208 
     ¶B. MADRID 913 
     ¶C. MADRID 901 
 
MADRID 00000936  001.2 OF 003 
 
 
Contents: 
 
EPET: Chavez Plays Up Repsol's Major Natural Gas Find 
EIND/EINV/ELAB: Industry Minister Blasts Opel Deal 
KIPR: Internet Piracy Blamed for Music Sales Decline 
KIPR: Judge Temporarily Shuts Down Alleged Pirate Website 
ECON: Balearic Government Proposes Cumbersome New Business 
Rules 
ENRG: GOS Urges Electric Companies to Keep Buying Spanish Coal 
EPET: Spain and France Move Forward with Gas Interconnection 
Project 
EINV: Spain is Sixth-Largest Recipient of FDI Worldwide 
 
Chavez Plays Up Repsol's Major Natural Gas Find 
 
1.(U) Venezuelan President Hugo Chavez played up Repsol's 
major natural gas discovery off the coast of Venezuela during 
his one-day trip to Spain on September 11 (ref A).  The 
deposit, estimated at 7 to 8 trillion cubic feet, could 
convert Venezuela into the fourth- or fifth-largest gas 
supplier in the world.  Repsol said further testing was 
required to confirm the extent of the natural gas find, which 
would be the energy company's largest.  Repsol's President 
Antonio Brufau prominently accompanied Chavez throughout his 
visit to Spain. During an informal interview with El Pais, 
Chavez asked Brufau, "What are we going to do with so much 
gas?"  Repsol and Italian company ENI have invested 50% of 
the exploration costs, and each stands to earn 32.5% of the 
proceeds from the find.  (El Pais, 9/11; Repsol Press 
Release) 
 
Industry Minister Blasts Opel Deal 
 
2.(U) After a meeting in Berlin, Ministry of Industry, 
Tourism, and Trade Miguel Sebastian criticized GM's decision 
to sell a controlling stake in Opel to the Canadian/Russian 
consortium led by Magna (ref B).  The GOS is unhappy with 
Magna's announcement of planned layoffs, which include 1,642 
of the 7,500 workers at the Opel plant in Figueruelas near 
Zaragoza.  While decrying the lack of transparency 
surrounding the transaction and the fact that the GOS still 
had not been apprised of the details of the deal and the 
company's plans for its Spanish operation, Sebastian 
complained that "the more we know about the Magna choice, the 
less we like it."  Labor union leaders, after meeting with 
Sebastian and representatives of the Aragon regional 
government, announced a series of demonstrations against the 
deal to begin September 19 in Zaragoza.  (All Media, 9/16-17) 
 
Internet Piracy Blamed for Music Sales Decline 
 
3.(U) The Music Producers of Spain association Promusicae 
released a study showing that music sales fell 30.5% in the 
first six months of 2009 compared to the same period in 2008. 
 According to the industry group, sales declined in each of 
the eight previous years for a cumulative revenue loss of 
64%.  While an impressive 68% increase in legal music 
downloads this year is seen as an encouraging trend, it is 
from such a small base that it is still dwarfed by the sharp 
decline in CD and DVD sales.  Promusicae has had to lower its 
sales thresholds for awarding gold and platinum records to 
reflect the new reality.  The group's president, Antonio 
Guisasola, blamed unchecked Internet piracy for the trend, 
noting that while other EU countries had taken measures to 
prevent the Internet from being ruled by "the law of the wild 
west," Promusicae had spent the past six years warning the 
government about digital piracy and witnessing "the 
systematic and unpunished destruction of the entire system of 
cultural creation in our country."  (El Pais, 9/17) 
 
Judge Temporarily Shuts Down Alleged Pirate Website 
 
4.(U) In a possibly unprecedented act, an investigating judge 
in Malaga has ordered the provisional closure of website 
mundofutboll.com, which has been accused by cable TV company 
Sogecable of violating its intellectual property rights by 
uploading the signals of two of Sogecable,s subsidiaries and 
broadcasting soccer games via streaming.  Mundofutboll.com 
allegedly profited from the pirate broadcasts by selling 
advertising on its site.  The judge ruled that the risk that 
 
MADRID 00000936  002.2 OF 003 
 
 
the website would continue to violate the cable channels' 
rights justified a temporary shutdown while the court 
investigates further.  Comment: While Spanish law provides 
for blocking or shutting down websites with a judicial order, 
it is exceedingly rare for Spanish judges to issue such 
orders in IPR cases.  While Internet piracy of movies, music, 
and video games in Spain gets most of the attention, cable 
signal piracy is also gaining some prominence due in part to 
Sogecable's strategy of aggressively denouncing such 
activity.  End Comment.  (El Pais, 9/17) 
 
Balearics Government Proposes Cumbersome New Business Rules 
 
5.(U) The Government of the Balearic Islands (one of Spain,s 
17 autonomous communities) has proposed a draft law that 
would make it more difficult to open new small businesses and 
to expand existing ones.  The President of the Balearics 
(which comprise Mallorca, Menorca, Ibiza, and several smaller 
islands), Francesc Antich, views the EU Directive on Services 
as a threat to the &Mediterranean business model.8   In 
contrast to deregulation efforts proposed by Spanish Minister 
of Industry Miguel Sebastian to stimulate competition, the 
proposed Balearic law would impose new regulations limiting 
the size of stores and would require start-ups to provide 
copious paperwork and run a bureaucratic obstacle course to 
obtain permits and licenses from municipal and autonomous 
community governments.  Comment: The Balearic draft law is 
illustrative of the kind of disputes that arise in the 
economic sphere between Spain,s central government and the 
autonomous communities.  In the interest of protecting 
existing companies, the community government is attempting to 
buck the EU-backed trend of making it easier to do business. 
End Comment.  (Expansion, 9/16) 
 
GOS Urges Electric Companies to Keep Buying Spanish Coal 
 
6.(U) The Ministry of Industry, Tourism and Commerce met with 
electric company officials to urge them to continue 
purchasing Spanish coal.  Declining electricity demand 
because of the recession, displacement by renewables, the low 
quality of nationally produced coal, and rising costs -- from 
70 to 220 dollars per ton over the last year -- are 
threatening Spain's traditionally important coal industry. 
The sector currently employs around 4,000 workers, and the 
GOS is concerned about labor unrest as unemployment 
approaches 20%.  Through September 15 of this year, 
electricity production using coal decreased by 19% from the 
2008 level, on top of a nearly 40% drop in 2008.  Between 
January and August 2009, renewables had risen to 26% of the 
electricity mix compared to 16% for coal.  Before the summer 
holidays, the GOS had proposed a plan to buy exces$@YQQyffline and 
companies have considerable stockpiles -- up to 18 months' 
worth for Endesa -- they have decided to stop buying.  They 
considered the Ministry's demand to continue purchasing coal 
inconsistent with the current energy situation and the 
government's emphatic support of renewables.  (Expansion, 
9/15, 9/18; Europa Press, 9/17) 
 
Spain and France Move Forward with Gas Interconnection 
Project 
 
7.(U) The National Energy Commission (CNE) began an open 
season to allocate capacity from a planned increase in gas 
interconnection with France.  The neighboring countries aim 
to enable the flow of up to 7 billion cubic meters (bcm) of 
gas per year in both directions by 2013.  This would mark an 
increase in capacity of 4,400% for Spain (which currently has 
negligible exports to France) and 125% for France (currently 
3bcm).  The plan calls for infrastructure investments of over 
3.3 billion euros (1.8 from France and 1.3 from Spain) and 
would augment the existing connection points at Larrau and 
Biriatou in the Basque region.  The CNE has already received 
considerable interest from shippers, despite the economic 
crisis.  A second phase of the project calls for an 
additional 7 bcm of capacity to be on line by 2015 via a new 
point in the Catalan region.  The plan is part of an 
initiative of the European Group of Gas and Electricity 
Regulators (Ergeg) to form a single energy market in Europe. 
(Finanzas.com, 9/16; Cinco Dias, 9/18) 
 
 
MADRID 00000936  003.2 OF 003 
 
 
Spain is Sixth-Largest Recipient of FDI Worldwide 
 
8.(U) According to UNCTAD,s World Investment Report 2009, 
Spain received $65.5 billion in foreign direct investment 
(FDI) in 2008, placing it 6th in the world and 3rd in the 
European Union.  FDI in Spain rose by 2% despite a 14% 
worldwide contraction in investment flows and significant 
declines in France and the UK.  Two large transactions -- the 
purchase of Altadis by Imperial Tobacco and Enel,s initial 
investment in Endesa -- contributed to the increase.  Almost 
half the new investment was in the commercial sector, with 
energy (including renewables) also showing impressive gains. 
The report also showed Spain as the world's eighth largest 
foreign investor in 2008.  (Moncloa Press Release, 9/18) 
CHACON