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Cablegate: Madrid Weekly Econ/Ag/Commercial Update Report

VZCZCXRO6372
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0564/02 0861219
ZNR UUUUU ZZH
R 271219Z MAR 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 2164
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2571

UNCLAS SECTION 02 OF 02 MADRID 000564

SIPDIS

SENSITIVE
SIPDIS

EUR/WE

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

MADRID 00000564 001.4 OF 002


EAGR/TBIO: The Political divide of biothtechnology
ENRG: Renewables only at El Hierro Island
ENRG/KNNP: Zapatero says NO to Nukes
EINV/BEXP: Customer Focus Puts Spanish Banks in the lead
SOCI/SMIG: Foreigners in Spain 1 out of 6 ratio
EAID: Iraq Reconstruction Monies-Where Are They?
EAIR: Boeing business boom in Spain


//BT CORN MISUNDERSTOOD

1 (U) The European Commission's (EC) de facto
agriculture-biotechnology approval moratorium has
precipitated a political divide among corn farmers in Spain
regarding the desirability of agriculture biotechnology. By
1997, the first year of the moratorium, the EC had approved
only one line of biotechnology (bt) corn events, corn-borer
resistant seed varieties. In Spanish regions where
corn-borer infestations are important, Spanish farmers have
embraced bt corn, planting almost all of the infested area
(60,000 hectares) with bt seed. On the remaining 340,000
hectares planted with corn in Spain, weeds are a problem, but
since weed-killer-resistant (Roundup Ready) corn has not been
approved (the moratorium) Spanish corn farmers don't
understand its benefit. Hence the political divide in Spain
where farmers who have access to, and can benefit from bt
corn, embrace it, while many of the farmers who do not have
access to bt corn seed developed to facilitate the
elimination of weeds (Roundup Ready), oppose the continued
deployment of agriculture biotechnology in Spain.

SPAIN PLANS FIRST RENEWABLES ONLY ISLAND

2. (U) The Spanish Government announced March 20 that "El
Hierro," one of the islands that makes up the Canary Island
chain, would become the first island in the world where 100
percent of electricity used would come from renewable energy
sources. The 278 square hectare, 10,500 inhabitant island,
which is a UN World Biosphere reserve, will receive a 54
million euro investment to construct a mini-hydro and wind
power complex that will generate 20 megawatts of power. 35
million euros of the 54 million euro cost will be provided by
Spain's Industry Ministry. The renewable systems will save
6,000 tons of diesel fuel annually (which is the equivalent
of 40,000 barrels of oil and which costs two million euros a
year) and will prevent the annual emission of 18,700 tons of
CO2, 100 tons of sulfur dioxide, and 400 tons of nitrogen.
The systems are planned to come on line in 2009.

ZAPATERO REITERATES ANTI-NUCLEAR ENERGY STANCE

3. (SBU) Prime Minister Zapatero is widely viewed as the most
anti-nuclear member of the Spanish cabinet. A few times each
year during the three years of his government, Zapatero has
felt compelled to reiterate his support for the Socialist
Party's 2004 campaign promise to gradually close down Spain's
remaining nuclear reactors. He feels compelled to do so
because leading figures from across the political spectrum
continue to voice support for nuclear energy as a way to
reduce dependence on foreign energy sources and to attack
climate change. Zapatero also must be aware that many
leading members of his government voice private support for
reconsidering the PSOE's anti-nuclear stance. Zapatero's
most recent restatement of his anti-nuclear views came on 14
March, when he told the Spanish Congress that his government
would present, by the end of its term (no later than March
2008), a plan to implement its campaign promise to close down
all Spanish reactors. In his remarks, Zapatero also
reiterated his support for increasing the amount of Spanish
energy coming from renewable sources. No one appears to have
pointed out to the Prime Minister that his anti-nuclear
stance will help guarantee that Spain's rate of dependence on
foreign energy sources will continue to be one of the highest
in Europe (it is currently over 80 percent) for the
foreseeable future.

SPANISH BANKS AMONG THE MOST EFFICIENT IN THE WORLD

4. (U) The average cost/income ratio for the largest three
Spanish banks was 43% in 2006. That compared with an average
of 58% for three of the U.S.,s biggest banks. The lower
the cost/income ratio the better as it costs less to produce
income. Why is Spanish banking so efficient? Forced
restructuring in the 1970s led to enormous efficiency gains.
The Spaniards have invested heavily in technology. The
bigger banks, market shares allows for economies of scale.
Cost controls and emphasis on sales are intense. The Spanish
emphasis on the customer, as opposed to the Anglo-Saxon

MADRID 00000564 002.2 OF 002


product-centered approach, seems to have worked for the
Spaniards. (IHT, March 20, 2007)

ONE MILLION MADRID AREA RESIDENTS ARE FOREIGN BORN

5. (U) The Madrid regional government reported March 14 that
foreigners represent almost one out of six residents of the
Madrid region. The report said that the Madrid region
population reached 6.3 million in 2006 and that just over one
million of these residents was foreign born. The foreign
population grew 25 percent during the course of 2006 (from
just over 800,000 to just over one million). Ecuadorians
represented the largest foreign group (16.6 percent) followed
by Romanians (15.5 percent), Moroccans (8.3 percent),
Colombians (7.7 percent) and Bolivians (5.3 percent). As for
demographics, almost one half of the one million foreign born
residents of the Madrid region are between the ages of 25-35.


MADRID DONOR'S CONFERENCE PLEDGE ANNOUNCEMENT

6. (U) The Spanish Agency for International Cooperation
(AECI) recently released information regarding the status of
Spain's 300 million USD pledge to Iraq made at the October
2003 Madrid Donors' Conference. According to AECI, 148.5
million USD out of the 300 million pledge was obligated by
the Aznar Government in 2003 and 2004. The Zapatero
Government obligated an additional 48 million between 2005
and 2007. 39.6 million of the 48 million was routed through
UNDP/IRFFI (22.2 million to the infrastructure account and
17.4 million to the governability account), seven million was
obligated directly by AECI (4.2 million in 2005, 1.9 million
in 2006 and 900,000 in 2007), one million was obligated via
NATO (for training Iraqi police), and 400,000 was spent for
non-NATO training. According to AECI figures, 103.3 million
USD of the original 300 million pledge remains unobligated.
Media quotes AECI sources as saying that the remaining monies
have not been obligated because ongoing sectarian violence
makes effective reconstruction efforts impossible. Media
also reports that the remaining 103.3 million dollars will be
spent via further contributions to UNDP/IRFFI (28.3 million)
and soft loans (75 million). It is worth noting that these
figures do not include either the 764 million USD worth of
Iraqi Government debt written off by Spain or the 2.5 million
USD in development assistance provided to Iraq by Spanish
autonomous regions.

BOEING PROJECTS 36 BILLION USD MARKET FOR NEW PLANES IN SPAIN

7. (U) According to the recently released Boeing Current
Market Outlook, Spain will order 410 new Boeing airplanes
over the next 20 years. Boeing's annual forecast estimated
that the airplanes will amount to approximately 36 billion
USD in commercial sales. Boeing estimates that the Boeing
737 range will account for 70 percent of all jetliners
delivered to Spanish airlines. Fifteen to sixteen percent
will be twin-aisle airplanes such as the Boeing 777 and 787.
Eleven percent will be smaller regional jets, and the
remaining three to four percent will be of the Boeing 747
size range. Boeing projections assume an annual 4.5 percent
increase in traffic on transatlantic routes between Europe
and North America.
Aguirre

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