VZCZCXRO1250
RR RUEHLA
DE RUEHMD #1088/01 3101314
ZNR UUUUU ZZH
R 061314Z NOV 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1432
INFO RUEHLA/AMCONSUL BARCELONA 4199
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MADRID 001088 
 
SIPDIS 
 
STATE FOR EUR/WE, EEB/IFD/OMA 
COMMERCE FOR 4212/DON CALVERT 
TREASURY FOR OAI/OEE R.JOHNSTON 
ENERGY FOR PIA:K.BALLOU 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ELAB KIPR SP
SUBJECT: MADRID ECONOMIC WEEKLY, NOV. 2-6 
 
REF: MADRID 1061 
 
Contents: 
 
ELAB: More Negative News on Unemployment 
EFIN: Failed Caja CCM to be Taken Over by Cajastur 
ECON: 400-Euro Tax Deduction May Be Retained 
KIPR: Culture Minister Rules Out Punishing Internet Users for 
IPR Violations 
EFIN: Taxation of Foreigners: "Rolando Law" to replace 
"Backham Law" 
 
More Negative News on Unemployment 
 
1.(U) Eurostat reported that Spanish unemployment rose to 
19.3% in September from 18.8% in August.  Separately, the 
Labor Ministry reported that the number of people seeking 
unemployment benefits rose for the third consecutive month in 
October, this time by 98,000.  Job losses from the service 
sector accounted for almost two-thirds of all new unemployed. 
 Secretary General of Employment Maravillas Rojo commented 
that the 2.6% increase was in line with expectations and half 
the 192,000 increase of October 2008.  The European 
Commission predicted that unemployment will average 20% in 
2010 and 20.5% in 2011.  Comment: Many analysts expect that 
the unemployment rate will continue to rise for several 
months after total production stops falling, so the political 
trouble for the GOS is likely to continue even after the 
expected official end of the recession sometime next year. 
(Eurostat, 11/2; Ministry of Labor, 11/3; All Media, 11/4;) 
 
 
Failed Caja CCM to be Taken Over by Cajastur 
 
2.(U) The Bank of Spain has approved the bid of Cajastur, an 
Asturias-based savings bank ("caja"), to take control of the 
banking operations of Caja Castilla La Mancha, the only 
financial institution in which the GOS has intervened during 
the financial crisis.  The cost of the bailout will be borne 
by the caja-financed deposit guarantee fund, which has agreed 
to cover up to 2.5 billion euros of CCM's future loan losses 
and provide additional aid.  Cajastur is the 20th largest of 
Spain's 40-plus cajas, and CCM was the 12th largest, so the 
combined caja will still be relatively small -- the country's 
eighth largest.  The socialist-controlled regional 
governments of Asturias and Castilla-La Mancha have 
informally agreed to the transaction, which still needs 
formal approval by the two cajas' boards and the two regional 
governments.  Final approval is epxected by year-end. 
(Expansion, 11/3; El Pais, 11/4-5) 
 
400-Euro Tax Deduction May Be Retained 
 
3.(U) Parliamentary spokespeople for the United Left (IU) and 
Galician Nationalist Bloc (BNG) parties announced that they 
had reached agreement with the governing Socialists to retain 
for low-income taxpayers the 400-euro income tax deduction 
that the GOS budget proposal would eliminate.  The agreement 
calls for taxpayers with annual incomes below 8,000 euros to 
get the full deduction, which would be phased out for those 
earning between 8,000 and 12,000 euros. (Expansion, 11/3) 
 
Culture Minister Rules Out Punishing Internet Users for IPR 
Violations 
 
¶4. (U) Minister of Culture Angeles Gonzalez-Sinde told a 
television interviewer that the Spanish government is not 
planning to introduce punishment, such as suspension of 
Internet access, for users engaged in unauthorized 
downloading or file-sharing of copyright-protected content. 
Rather, Spain proposes to attack the problem at its source by 
going after pirate websites and the people who make money off 
them, she said.  The Minister made her comments in the 
context of media reports that the the European Parliament and 
Council had reached an agreement whereby member state 
governments would be able to cut off offenders' Internet 
access without a court order.  Gonzalez-Sinde pointed to the 
establishment last month by Spain's Council of Ministers of 
an Inter-Ministerial Commission to address the phenomenon of 
IPR violations on Internet websites.  She said the goal is to 
find mechanisms to promote broad distribution of culture via 
the Internet without damaging this interests of content 
providers or service providers.  (ABC, Cinco Dias, 11/6) 
 
Taxation of Foreigners: "Rolando Law" to Replace "Beckham Law" 
 
MADRID 00001088  002 OF 002 
 
 
 
¶5. (U) The Spanish government proposes to raise taxes in 2010 
for foreigners working in Spain from 24% to 43% on income in 
excess of 600,000 euros per year.  The new plan, dubbed the 
"Rolando Law," would replace the so-called "Beckham Law," 
which reduced the maximum taxation to 24% for highly skilled 
foreign professionals in an effort to attract them to Spain. 
It will especially affect elite foreign soccer players, 
though the clubs are expected to bear the burden since such 
players usually negotiate their salaries in after-tax terms. 
The new law will not affect players already signed to 
contracts in Spain.  According to the ruling Socialist Party, 
the initiative is part of a move towards tax neutrality.  The 
Professional Football League is reported considering a 
strike, arguing that the government's action will deter 
talented soccer players from coming to Spain.  (Cinco Dias, 
11/6; Embassy) 
CHACON