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Cablegate: Madrid Weekly Econ/Ag/Commercial Update Report

VZCZCXRO8937
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0510/01 0781144
ZNR UUUUU ZZH
R 191144Z MAR 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 2114
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2539

UNCLAS SECTION 01 OF 02 MADRID 000510

SIPDIS

SIPDIS

EUR/WE

E.O. 12958: N/A
TAGS: EAGR EIND ECON EFIN ETRD SENV TBIO SP EINV UK
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT


MADRID 00000510 001.2 OF 002


EIND: Tourism in Spain still going Strong
EAGR/TBIO: Negative Press for Biotechnology
ELTN: Spain to Morocco via rail link
SENV: Climate Change Ambassador soon to be named
EINV: Spaniard makes Forbes top 10 list
EINV: Breakfast with Latin America investors


TOURISM REMAINS STRONG

1. (U) Visits to Spain in January 2007, primarily from
Britain and Germany, but increasingly from France, Italy, and
Scandinavia, were up 4 percent over January 2006. According
to the Ministry of Industry, Trade, and Tourism, tourism
volume to the Canary Islands fell slightly, but increased in
Catalonia and the Basque Country. Spain is the world's
second-largest tourist destination, after France. (Ministry
of Industry, Trade and Tourism)

BAD NEWS FOR BIOTECHNOLOGY'S FUTURE

2. (U) During the last week of February, we noted an increase
in the number of negative press references regarding
agriculture biotechnology from representatives of the Spanish
Ministry of Agriculture (MOA), and many of them attributed to
MOA Minister Elena Espinosa. Given that Spain's coexistence
decree (Decree) is still being debated, we were concerned
that Minister Espinosa may have been "setting up" to announce
the Decree and that it might contain new provisions
(reportedly demanded by the Ministry of the Environment
(MOE)) that could greatly reduce or eliminate the use of
agriculture biotechnology in Spain. In our review of the
press articles, where Minister Epinosa responded negatively
to questions about biotechnology, it appears that her
objective was to promote the MOA's new 35.8 million Euro plan
for organic agriculture, and not to bash biotechnology. Our
contacts at the MOA continue to insist that while this
Government (and Minister Espinosa, in particular) is not
supportive of agriculture biotechnology, the MOA will not
cede to the demands of the MOE regarding the terms of the
Decree, which could preclude future agriculture biotechnology
use in Spain.

PM ZAPATERO ANNOUNCES RAIL LINK FROM SPAIN TO MOROCCO

3. (U) Spanish Prime Minister Jose Luis Rodriguez Zapatero
announced on March 6 an ambitious project to link Spain and
Morocco via a rail link under the Gibraltar Strait. Zapatero
has pledged to rally European Union support for the plan and
called it a "historic project" that would "change Africa and
Europe, and more particularly Morocco and Spain." The plan
calls for a 39 km rail tunnel to be dug under the seabed, at
an estimated cost of between seven and 17 billion USD.
Zapatero acknowledged that the project will require major
financial backing and EU support before it will proceed.
Other EU member states have already questioned the wisdom of
such a plan given the current flow of illegal immigrants into
the EU from Morocco via Spain.

SPAIN TO NAME CLIMATE CHANGE AMBASSADOR

4. (U) Foreign Minister Moratinos announced March 8 that the
Spanish Government would "soon" name a "Special Ambassador"
for Climate Change. Moratinos, noting that climate change
requires an "agile and committed multilateral response,"
admitted that Spain is "still far" from meetings it Kyoto
Protocol objectives. (Note: Kyoto called for Spain to have
greenhouse gas emissions levels in 2012 of no more than 15
percent above 1990 levels. In 2005, Spanish emissions levels
were 53 percent above 1990 levels. End Note.) Media has
speculated that one possible candidate for the position is
Spanish Ambassador to Mexico Cristina Barrios. (Note: Just
before this cable was transmitted, the Spanish cabinet
announced that Spanish Ambassador to Mexico Cristina Barrios
would indeed get the nod.)

SPANIARD MAKES FORBES TOP TEN RICHEST PEOPLE IN THE WORLD

5. (U) Amacio Ortega is ranked the number eight richest
person on the planet with an estimated fortune of USD 24
billion. He is the owner of the Galicia-based textile retail
group, Inditex. Ortega is pretty low profile in Spain,
although everybody knows who he is. Inditex's most
well-known brand is Zara, which is becoming more and more
popular around the world. It can now be found, for instance,
on the best streets of New York. Zara's basic business model
is to make affordable stylish clothing for women and men
(although women tend to be the most addicted Zara shoppers).
The company relies on repeat shoppers who come back for the
latest at a decent price. The group has a very sophisticated

MADRID 00000510 002.2 OF 002


information technology system that allows it to figure out
quickly what people are buying and then make it available.
There are 19 more Spaniards in the top 717 of the richest
people on earth, mostly in construction. (El Pais, 5/10/07)


AMBASSADOR HOSTS 5/9/07 BREAKFAST FOR SPANISH COMPANIES WITH
MAJOR INVESTMENTS IN LATIN AMERICA

6. (U) We thought it would be a good idea to solicit ideas
from Spanish businesses with major stakes in Latin America.
The date of the breakfast turned out to be timely given the
President's trip to Latin America. Repsol, BBVA, Santander,
FCC, OHL, ACS, Endesa and Iberdrola sent their CEO, deputy or
senior executives to the event. The executives were pleased
that the President was traveling to the region in order to
dispel the perception that after 9/11, the U.S. lost interest
in Latin America. Peru's Alan Garcia was something of a
pleasant surprise - that country was key in their opinion in
countering the region's populist trend. Spain could
contribute by showing how a modern state functions,
especially with respect to creating a modern tax collection
system. The development of a bigger middle class was
crucial. The U.S. needs to continue to push free trade.
Some Latin American leaders have made extraordinary efforts
to promote free trade, for instance Peru's Alan Garcia. The
executives all agreed that Mexico had been very lucky in
electing President Calderon. However, the Santander
representative, himself Mexican, said that this was the "last
chance" for a free market oriented government to deliver for
Mexico's poorer people. It if did not, Mexico would
definitely turn left in five and a half years. While Lopez
Obrador may be politically moribund, his ideas have not died.
(Comment: Perhaps the most striking thing about this
essentially conservative business group was that there was a
broad consensus that if free market economics in Latin
America are to continue to thrive, the region must get
governance issues right. The group was convinced that
Spain's successful transition over the last thirty years from
a country with a protectionist economic structure with a low
tax take to a country with open markets, a moderate (by OECD
standards) tax take and efficient government was a model
worth emulating.)
Aguirre

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