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Cablegate: Madrid Weekly Econ/Ag/Commercial Update Report -

VZCZCXRO7024
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #1341/01 1901406
ZNR UUUUU ZZH
R 091406Z JUL 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 2959
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2892

UNCLAS SECTION 01 OF 02 MADRID 001341

SIPDIS

SIPDIS

EUR/WE

E.O. 12958: N/A
TAGS: EAGR ECON EFIN EIND ELAB ETRD KIPR TBIO SP
EINV, UK, SMIG
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT -
JULY 2


MADRID 00001341 001.2 OF 002


KIPR: Counterfeit ring taken down
SOCI: 2,500 euros per newborn baby - to promote birth rate
ENRG/EINV: Renewable Energy investments heating up
ETRD: Vehicle sales down
SOCI/ELAB: IBERO American countries to sign a social security
agreement with Spain
ELTN/EAIR: Low cost airlines see a 25% increase
EAGR: Biothechnology corn growing despite lack of coexistence
decree

LARGEST COUNTERFEIT LUXURY CLOTHING RING TAKEN DOWN

1. (U) Operation Glamour, a major police operation against
pirating in Spain netted 334,095 name brand articles made in
Asia with an estimated value of 25 million euros, according
to Pedro Calvo, delegate of Community Security & Mobility.
Operation Glamour was successful in dismantling an
international sales ring of pirated clothing operating
primarily from Leganes and in several of the capital's
industrial premises.

2. (U) The items were made in Asia and introduced to Spain
through Italy, Portugal and the Port of Valencia. There are
three Spaniards, four Moroccans, two Senegalese and one
Bangladeshi among the detained.

PRESIDENT ZAPATERO PROMISES 2,500 EUROS FOR EACH NEW BABY

3. (U) President Zapatero made a commitment to give families
euros 2,500 per newborn during the State of the Nation debate
on July 3. Once implemented, it will cost the GOS euros 1.2
billion a year. The President specifically justified the
measure by saying Spain needs more children given the
country's low birth rate. The birth rate is currently about
1.4 births per female. The replacement rate is 2.1 children
per female. The money will go to Spaniards and legal
immigrants to forestall attracting more illegal immigrants.
(Comment: Interestingly, despite low birth rates, Spain's
population has grown from 40 million to 45 million in the
last five years, all of this attributable to immigration.
Zapatero's gambit should, at least in part, be seen as an
election sweetener as parliamentary elections must be called
by March 2008 at the latest. In fact, this initiative was
originally an idea from the opposition conservative PP party.
During the debate, however, opposition leader Mariano Rajoy
sarcastically complimented Zapatero, although he said the
amount should be euros 3,000. The normally
government-leaning El Pais criticized the planned aid, saying
there should be a more comprehensive plan to increase
fertility rates, and that not all families needed the money.)
(Expansion, July 4; El Pais July 5)

INVESTMENT BANKS INCREASE FINANCING FOR RENEWABLES

5. (U) Investment banks in Spain financed USD 2.5 billion in
wind power investments in 2006 and nearly USD 1.7 billion in
biofuel projects in 2006. Investments in these areas are
likely to increase given the government's increased focus on
renewable energy sources. Spanish companies will be the
largest beneficiaries of these investments, but there will be
opportunities for American companies as well. General
Electric, for instance, manufactures wind turbines in Spain.
(Expansion, July 4)

VEHICLE SALES CONTINUE TO SLOW DOWN

6. (U) According to Spain's vehicle manufacturer's
federation, ANFAC, total vehicle sales in Spain fell by 1.6
percent in the first semester of 2007. Despite this overall
decline, sales in luxury vehicles -- particularly luxury
all-terrain vehicles -- increased dramatically during the
same period. Local experts blame increasing interest rates
as well as increased personal debt levels for the decrease,
explaining that moderate and lower-income consumers are
purchasing fewer cars. Citroen continues to hold its
leadership position in the Spanish market, followed by
Renault, Ford, Seat, Peugot, Opel, Volkswagon, and Toyota
respectively. Of these companies, only Citroen, Peugot, and
Toyota increased sales in Spain this past June.

SPAIN AND 20 OTHER COUNTRIES AGREE TO MUTUAL SOCIAL SECURITY

7. (U) According to sources within the Ibero-American Social
Security Organization (OISS), Spain will soon sign a "mutual"
social security agreement with 20 other Ibero-American
countries that could benefit over 4 million migrant workers.
These migrant workers, who might otherwise not accumulate
minimum working periods in any one country to qualify for

MADRID 00001341 002.2 OF 002


social security pensions, would be able to combine work
periods in the various countries in which they work. Under
the agreement, each signatory country would contribute the
pro-rated social security pension amount corresponding to the
time worked in that particular country. According to the
OISS, Spain has more than a million workers from
Ibero-American countries.

LOW-COST AIRLINES INCREASE TO 25 PERCENT OF SPANISH MARKET

8. (U) Director General Victor Aguado of the European
Association for the Safety of Air Navigation (Eurocontrol)
indicated this past week that the low cost airlines in Spain
had grown by 36 percent in the first semester of 2007,
increasing its sector share to 25 percent. Conventional
aviation companies in comparison grew by only 15 percent
during this same time period. Spain is the EU country with
the second largest share of low-cost airlines (after Great
Britain). Eurocontrol estimates that air traffic will
increase to higher levels in Spain than in the rest of the EU
in the upcoming year.

BIOTECHNOLOGY CORN STILL GROWING WITHOUT COEXISTENCE DECREE

9. (U) After more than a decade of growing biotechnology
corn, and three years of Government of Spain ministries
trying to agree on a coexistence decree to control that
production, Spanish corn farmers continue growing
biotechnology corn without environmental incident, and
without a decree to "protect" the environment, organic
farmers, and/or consumers, as demanded by the
anti-biotechnology lobby. And, with each successive
successful year, the "case" for a Government-imposed decree
becomes increasingly more difficult to justify, unless forced
politically via an internal domestic Government
decision/agreement or an unequivocal European
Commission-mandated requirement. Within the EU, Spain has
the largest number of hectares used for biotech cultivation.
AGUIRRE

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