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Cablegate: Scenesetter: Spain Welcomes Secretary Peters

VZCZCXYZ0000
PP RUEHWEB

DE RUEHMD #2150/01 3271818
ZNR UUUUU ZZH
P 231818Z NOV 07
FM AMEMBASSY MADRID
TO RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 3843
INFO RUEHRL/AMEMBASSY BERLIN 0630
RUEHLO/AMEMBASSY LONDON 1014
RUEHFR/AMEMBASSY PARIS 1459

UNCLAS MADRID 002150

SIPDIS

SIPDIS

FOR SECRETARY PETERS AND DELEGATION

E.O. 12958: N/A
TAGS: SP ECON OREP PREL
SUBJECT: SCENESETTER: SPAIN WELCOMES SECRETARY PETERS


1. (SBU) I welcome you to Spain on behalf of our 362 American
and Spanish colleagues serving the United States at Mission
Spain. Your visit comes just three months before the general
elections, an exciting time for the country in what appears
will be a very close race between incumbent President
Zapatero and opposition party leader Mariano Rajoy. The U.S.
relationship with Spain is an important one, and we
frequently partner with Spain on issues of counter-terrorism,
law enforcement and multilateral policy. Fueled by a growing
economy as well as by support from the EU, Spain has
undergone a rapid infrastructure modernization process over
the past two decades. Now the ninth largest economy in the
world, Spain's ties to the U.S. continue to grow particularly
as more Spanish businesses "rediscover" America. Your visit
is an important one and will help to promote our bilateral
relationship. I hope you and your delegation will enjoy your
visit.

-------------------------
THE POLITICAL ENVIRONMENT
-------------------------

2. (SBU) We currently enjoy a strong relationship with Spain,
partnering on various transformational diplomacy objectives
despite some differences in policies (such as on Cuba). This
strong institutional relationship has resulted from sustained
efforts to reinforce ties that were temporarily strained in
2004 when Spain abruptly removed its troops from Iraq. We
enjoy excellent cooperation in areas such as
counter-terrorism, counter-narcotics, military and defense
programs, Latin America, North Africa, and many others.
Spain is an important NATO ally, a key player in the European
Union and currently holds the rotating presidency of the
Organization for Security and Cooperation in Europe (OSCE).
It is involved in long-term commitments to NATO's mission in
Afghanistan, to Lebanon where it leads a multi-national
brigade of UN peacekeeping forces (UNIFIL), and to Iraq where
it continues to support efforts through significant financial
contributions. Spain further demonstrates itself to be an
important partner to the U.S. by allowing the U.S to share
the Spanish bases of Rota and Moron, strategic hubs for
moving men and materiel into Iraq and Afghanistan.

---------
ELECTIONS
---------

3. (SBU) President Zapatero will face reelection in March,
2008. His governing Spanish Socialist Workers' Party (PSOE)
currently holds control of the Parliament and several local
and regional governments. The opposition conservative
People's Party (PP) holds several municipal and regional
governments, including those of the city and region of
Madrid. Many local pundits are predicting the re-election by
a small margin of Zapatero over PP candidate Mariano Rajoy,
though Spanish voters often make up their minds just before
elections. Should Zapatero win re-election, he will remain
the leader with the most seniority among the EU's big five
(UK, France, Germany, Italy, Spain).

---------------------
ECONOMIC ENVIRONMENT
---------------------

4. (U) The economy has grown in each of the last 15 years,
and the Spanish are blessed with the world's ninth largest
economy and per capita income levels have reached the EU
average. Structural reforms, EU aid, and membership in the
Euro zone have greatly contributed to this growth. A recent
housing boom has further boosted Spain's economic position,
but as elections approach, housing prices are stagnating,
construction is slowing, and unemployment and inflation are
starting to creep up.

5. (U) U.S. investment has long been important to the Spanish
economy (more so than bilateral trade). U.S. subsidiaries in
Spain generate approximately 7 percent of the country's GDP
and U.S. portfolio investment may account for up to 20
percent of large companies' market capitalization. The
tables have recently turned as Spanish investors are
"rediscovering" America. So far this year Spain has been the
fourth largest foreign investor in the U.S., with particular
emphasis in banking, construction and renewable energy.
Spanish construction companies have won important contracts
in the U.S., though U.S. firms have not been as successful
here.

-----------------------------
TRANSPORTATION INFRASTRUCTURE
-----------------------------

6. (U) Spain boasts a robust transportation infrastructure
with over 50 international maritime ports, 47 airports, and
an extensive road and highway system. Subway systems exist
in five Spanish cities: Madrid, Barcelona, Bilbao, Valencia,
and Palma de Mallorca, and are also being constructed in
Alicante, Seville, Malaga, and Granada.

7. (U) Transportation infrastructure investments are largely
guided by Spain's "Infrastructure and Transport Plan
2005-2020" which foresees a total public and private
investment of 250 billion euros (about $370 million) over 15
years. The plan anticipates that by 2020 94 percent of the
country's population will be within 30 kilometers of a
highway and that 90 percent will have access to a high-speed
rail connection within 50 kilometers of their homes. The
central, regional, and local governments all invest in
Spain's transportation network and often contract out highway
or subway expansions to private firms who subsequently charge
user fees.

8. (U) The government places a large focus on expanding its
railway network, particularly its high-speed AVE train
network. This emphasis has been partially fueled by Spain's
desire to reduce high levels of CO2 emissions caused by
private vehicles and to improve Spain's transport
competitiveness within the EU. Each year the GOS slates
roughly 50 percent of its infrastructure funding to the
railways for a net amount of over 8 billion euros per year.
High speed AVE lines connect Madrid to Toledo, Madrid to
Seville and Madrid to Tarragon. Future AVE projects are
slated to link a number of cities, and to eventually link
Spain with Portugal and France.

9. (SBU) The long-delayed construction of an AVE line from
Madrid to Barcelona has become a contentious issue in the
current political arena. As a culmination to various
problems, three of Barcelona's six local commuter lines were
shut down in October as a result of recurring landslides
caused by the AVE's construction, greatly inconveniencing
over 150,000 local commuters. President Zapatero eventually
acknowledged that the arrival of the AVE to Barcelona, which
he had repeatedly confirmed would happen by December 21,
would not be finished before the March 2008 general
elections. Catalan regional anger over the AVE and other
infrastructure problems may complicate the Socialists
prospects in Catalonia for the national elections. On
November 16, the regional Catalan regional legislature voted
for the resignation of Minister of Infrastructure and Public
Works Magdalena Alvarez.

---------------
BIO INFORMATION
---------------

10. (SBU) During your visit, you will be meeting with the
Minister of Infrastructure and Public Works Magdalena Alvarez
and Madrid Mayor Alberto Ruiz-Gallardon.

-(SBU) Minister Magdalena Alvarez: Minister Magdalena Alvarez
was appointed Minister of Infrastructure and Public Works by
President Zapatero in April, 2004 when President Zapatero
took office. Minister Alvarez obtained a Bachelor's degree
and a doctorate in Economic and Business sciences from the
prestigious Complutense University in Madrid. She spent a
large portion of her career teaching in higher education and
served for a period of time as an economics and finance
advisor for the regional government of Andalusia. In 2000,
Minister Alvarez was elected to the regional legislature of
Andalusia representing the province of Malaga. She headed
the Socialists' list for Malaga province in the 2004 general
election and was subsequently elected to the Spanish national
legislature in March 2004. She was selected to be Minister
of Infrastructure and Public Works soon after, with purview
over road, air, and sea transport as well as postal and
telegraph services and the national geographic institute.
Although Minister Alvarez understands English, she feels more
comfortable using an interpreter.

-(SBU) Mayor Alberto Ruiz-Gallardon: Hailing from a prominent
family with historical political ties, Mayor Alberto
Ruiz-Gallardon is a leading figure in the conservative
People's Party. He was elected mayor of Madrid in 2003 after
holding various other political positions including as the
spokesperson for his party (1987-1995) and the President of
the Autonomous Community of Madrid (1995-2003).
Ruiz-Gallardon is viewed as potential future presidential
candidate. His public aspirations for this position at times
have been the cause for tensions within his party and with
current PP presidential candidate, Mariano Rajoy.
Ruiz-Gallardon holds a degree in law. He speaks some English
but prefers to use an interpreter.

-------------------
Security Assessment
-------------------

11. (U) In general, Spain is safe. However, Madrid and other
large cities attract a large number of criminals and
pickpockets and frequent incidents of crime of opportunity
against the unwary do occur. It is best to carry only
essential items, including a photocopy of your passport's
photo page. Visitors can protect themselves by being
street-smart, alert, and aware of their surroundings.
Additional information regarding safety and security is
available on the U.S. Department of State's website
(www.embusa.gov).


LLORENS

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