VZCZCXRO4335
RR RUEHIK
DE RUEHMD #1115/01 3241622
ZNR UUUUU ZZH
R 201622Z NOV 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1456
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4211
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 MADRID 001115 
 
SIPDIS 
 
STATE FOR EUR/WE, EEB/TPP/IPE, EEB/CIP, EEB/IFD/OMA 
STATE PASS USTR FOR D.WEINER AND J.GROVES 
STATE PASS U.S. COPYRIGHT OFFICE FOR M.WOODS AND M.PALLANTE 
COMMERCE FOR 4212/DON CALVERT AND 6990/R.LAYTON 
COMMERCE ALSO FOR USPTO 
TREASURY FOR OAI/OEE R.JOHNSTON 
ENERGY FOR PIA:K.BALLOU 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EFIN EIND EINV ENRG KIPR PGOV SP
SUBJECT: MADRID ECONOMIC WEEKLY, NOVEMBER 16-20 
 
REF: A. MADRID 1095 
     ¶B. MADRID 1052 
     ¶C. MADRID 434 
 
MADRID 00001115  001.3 OF 003 
 
 
Contents: 
 
EFIN: Central Bank Governor Says At Least 15 Cajas Should 
Disappear 
ENRG/EINV: GOS Approves Several Years of Renewable 
Electricity Projects 
ENRG: Electricity Commission Says 18% Rate Hike Needed 
ECPS: Industry Minister Announces Right to Broadband Internet 
Access 
KIPR: Intellectual Property Rights-Holders Win Two Court Cases 
EIND/ENRG: Industry Minister Hosts Electric Vehicle Summit 
PGOV: TI Public Sector Corruption Ranking Worse Again 
 
Central Bank Governor Says At Least 15 Cajas Should Disappear 
 
1.(U) Bank of Spain Governor Miguel Angel Fernandez Ordonez 
told the Financial Times that he believed at least 15 of 
Spain,s 45 savings bank ("cajas") should merge with others 
and disappear as independent entities.  He said the central 
bank was discussing many such mergers, and he expressed hope 
that by spring the restructuring would be complete. 
Separately, EC Competition Commissioner Neelie Kroes urged 
Spain to explain the plans for operation of the Orderly 
Banking Restructuring Fund (FROB) and said that as soon as 
the GOS decided and informed the EC, the EC would act as 
quickly as possible.  The Commission has indicated that it 
will want to approve each operation on a case-by-case basis 
unless the FROB framework is changed to give authorities less 
discretion.  The GOS would prefer to receive a single blanket 
approval beforehand.  (Financial Times, 11/16; El Pais, 11/19) 
 
GOS Approves Several Years of Renewable Electricity Projects 
 
2.(U) On November 13, the Council of Ministers approved a 
calendar of corporate projects to generate electricity using 
wind and solar thermal technology.  These projects will be 
eligible for generous feed-in tariffs (guaranteed prices) for 
the life of the projects.  The tariffs will eventually be 
added to consumers, bills; solar thermal tariffs are 
significantly higher than those for wind power.  Counting 
2009 projects, the calendar will add over 7,000 megawatts 
(MW) of wind capacity by the end of 2012 and about 2,400 MW 
of solar thermal capacity by the end of 2013.  Wind power 
capacity will grow a little less rapidly than it has averaged 
over the last several years, while the solar thermal industry 
is new, with only one project having been in place before 
this year.  Of the 55 solar thermal plants approved, Abengoa 
will build 13, ACS 6, and Acciona 5.  The U.S. firm NextEra 
received approval for two solar thermal projects totaling 100 
MW, and two other projects totaling 70 MW use the technology 
of U.S. company Infiniasolar.  The GOS also envisions almost 
2,000 MW of solar photovoltaic projects being added from 2009 
to 2012.  Wind power has generated almost 13% of Spain,s 
electricity this year, while the percentage of both forms of 
solar power combined remains in the low single digits but 
will rise as the approved projects are built.  (Comment: 
Although the GOS action gives certainty to the companies 
whose projects were approved, it also appears to make it more 
difficult for companies to start any other new wind or solar 
thermal projects in the next few years, even projects that 
might be less costly if technology improves between now and 
then.)  (Cinco Dias, 11/14, Ministry of Industry, Tourism, 
and Commerce, 11/13, Embassy) 
 
Electricity Commission Says 18% Rate Hike Needed 
 
3.(U) The National Electricity Commission (CNE) has told the 
Ministry of Industry, Tourism, and Commerce that it will need 
to raise electricity rates by over 18% in January if it is to 
pay for planned incentives for the use of domestic coal and 
keep the 2010 increase in the accumulated "tariff deficit" to 
the 3 billion euros called for in a June decree.  The GOS has 
been holding retail electricity prices below the cost of 
production for several years, and its resulting tariff 
deficit owed to electricity generators is over 16 billion 
euros.  A June decree codified an agreement with producers 
(Ref C) by which the GOS will gradually raise rates in order 
 
MADRID 00001115  002.3 OF 003 
 
 
to eventually stop adding to the deficit.  (Comment:  The 
Ministry is not expected to raise rates by 18%, especially in 
the current economic situation.  The coal incentives are 
politically important to President Zapatero, so it seems 
likely that holding the line on the tariff deficit increase 
will have to give.  This discrepancy between costs and rates 
may be aggravated in future years as more high-tariff solar 
projects begin operation.)  (El Pais, 11/17 and 11/19) 
 
Industry Minister Announces Right to Broadband Internet Access 
 
4.(U) Speaking at the opening ceremony of the third annual 
International Forum on Digital Content (FICOD)(septel), 
Minister of Industry, Tourism, and Commerce Miguel Sebastian 
announced that as of January 1, 2011, the universal 
telecommunications services package to which all citizens are 
entitled will include Internet access with minimum speed of 1 
megabyte per second (mbps).  To effect this new entitlement, 
the government will need to pursue legislative or regulatory 
changes.  While the vast majority of Spaniards already have 
access faster than 1 mbps, the new rule will require telecoms 
to provide services in underserved (and unprofitable) rural 
areas.  For this reason, ISP association Redtel has expressed 
strong opposition to the measure.  The government hopes that 
the change will stimulate ISPs to upgrade their networks and 
offer more broadband at lower prices.  Only 11% of Internet 
users in Spain have more than 10 mbps service, much lower 
than in most other European countries, and prices are among 
the highest in Europe.  (El Pais, 11/18; Embassy) 
 
Intellectual Property Rights-Holders Win Two Court Cases 
 
5.(U) On November 12, an appellate court in Barcelona ruled 
against the operators of a website that was making video 
games available without authorization via peer-to-peer 
platforms.  The operators were seeking to have the case 
thrown out on the grounds that they were only providing 
links.  The Barcelona Provincial Court cited the 2006 
Intellectual Property Law, which states that copies of 
protected works may be made only so long as they are not for 
collective or profitable use, and found that the website was 
earning advertising revenues.  This ruling comes on the heels 
of a similar decision handed down in September by the Murcia 
Provincial Court (Ref B).  In related news, a judge in 
Pamplona (Navarra) sentenced a man to 15 months in prison for 
selling pirated copies of video games from his website and 
altering Play Station 2 consoles to enable them to play 
pirated games.  Content industry representatives see in these 
cases signs of hope that Spanish courts may be beginning to 
appreciate the economic harm perpetrated by Internet pirates. 
 (El Pais, 11/14 and 11/17) 
 
Industry Minister Hosts Electric Vehicle Summit 
 
6.(U) Industry and Commerce Minister Sebastian and leaders 
from several government bodies and companies agreed to 
prepare in the first quarter of 2010 a comprehensive plan for 
the development of electric and hybrid plug-in vehicles. 
Sebastian's "Electric Vehicle Summit" included 
representatives from his ministry, the economy ministry, 
provincial and municipal governments, leading energy, 
information technology, communication, and auto companies 
(including Ford and Opel/GM), and the European Commission. 
The plan will initially focus on the development of the 
electric car in urban centers, with future plans for 
large-scale production.  The national government will provide 
incentives to promote investment and spur demand, while 
regional and local governments will contribute to the 
development and installation of charging infrastructure. 
Companies, efforts will include standardization of systems 
to facilitate the development of the sector. (Presidency 
Statement, 11/18; ABC, 11/19) 
 
TI Public Sector Corruption Ranking Worse Again 
 
7.(U) Spain tied for the 32nd best score out of 180 countries 
in Transparency International's annual ranking of perceptions 
of public sector corruption, released this week.  The 
country's ranking has declined each year since 2006, when it 
was perceived as the 23rd best.  (Comment: Because TI relies 
on other surveys released during the past two years, the 
 
MADRID 00001115  003.3 OF 003 
 
 
ranking likely does not reflect the impact of recent 
revelations of corruption by regional and local governments.) 
 (www.transparency.org, 11/17) 
CHACON