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Cablegate: Madrid Economic Weekly, Oct. 20-24

VZCZCXRO3590
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #1123/01 2981538
ZNR UUUUU ZZH
R 241538Z OCT 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 5483
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3617
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 MADRID 001123

SENSITIVE
SIPDIS

STATE FOR EUR/WE, EEB/IFD/OMA
COMMERCE FOR 4212/DON CALVERT
TREASURY FOR IA/OEE: W.LINDQUIST

E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV PREL TSPA SP
SUBJECT: MADRID ECONOMIC WEEKLY, OCT. 20-24

REF: A. MADRID 1105
B. MADRID 1101
C. MADRID 1080

MADRID 00001123 001.2 OF 002


CONTENTS:

ECON/PGOV:GOS Pulling Out All Stops for invitation to Global
Financial Summit

ECON/PGOV: GOS Sidesteps Attempts by Opposition Partido
Popular to Derail its 2009 Budget Proposal

EINV/EFIN: Argentine Plan to Nationalize Private Pensions
Causes Madrid Stock Market to Plunge

EFIN/EINV: GOS Intends to Support Bank Asset Purchase Program
Via Gulf States SWFs

TSPA: NASA and Spanish Space Agency Celebrate Cooperation at
Madrid Deep Space Tracking Station


GOS Pulling Out All Stops for Invitation to Global Financial
Summit

1. (SBU) The hot topic for much of this week has been
President Zapatero's failure to be invited to the upcoming
global financial summit and GOS efforts to secure an
invitation (ref A). Media reported October 24 that the
government is reaching out "in every direction to the entire
world at all levels." Coverage has included versions of
Ambassador Dezcallar's meeting with Deputy Treasury Secretary
Kimmit and FM Moratinos's telcon with the Secretary.
Zapatero, during a last-minute visit to China, reportedly
pressed his case with the GOC, and there is talk of overtures
to Brazil as current president of the G-20. According to
some reports, King Juan Carlos is also trying to use his
prestige to ensure Spain's inclusion. The opposition Partido
Popular (PP) supports Spain's participation in the summit,
but also blames the failure to invite Spain on international
perceptions that Zapatero is not a serious leader. Some
press reports suggest that the relationship between President
Bush and Zapatero is not helping Spain's chances. (All
media, October 22-24)

GOS Sidesteps Attempts by Opposition Partido Popular to
Derail its 2009 Budget Proposal

2. (U) On October 22, the ruling PSOE successfully blocked
attempts by the opposition Partido Popular to secure
legislative rejection of the 2009 proposed budget. During
the Parliament's budget debates, opposing parties proposed a
total of five "rejection amendments" which would have forced
the GOS to completely reformulate the budget. With 169
parliamentarians, the ruling Socialist Party (PSOE) was seven
votes short of a majority needed to block these amendments.
However, with offers to improve infrastructure investment in
Galicia and the Basque region, the PSOE was able to gain
eight supporting votes from the National Galician Bloc (BNG)
and National Basque Party (PNV), traditional allies in the
budget process. The proposed 2009 budget envisions a 2
percent increase over 2008 with a deficit projected at 1.5
percent of GDP. It places particular emphasis on social
spending and investment in infrastructure and research and
development. Having avoided being sent back to the drawing
board, the bill will now be subject to piecemeal amendment
proposals. It is expected to be approved in its entirety and
signed in the last week of December in time to take effect
January 1, 2009.

Argentine Plans to Nationalize Private Pensions Causes Madrid
Stocks to Plunge

3. (U) The Madrid Ibex 35 Index fell by more than 8 percent
October 22, its second-worst day of the year, followed by an
additional 2 percent decline October 23 and another 7 percent
fall through mid-afternoon of the 24th, after news that
Argentina planned to nationalize private pension funds. Spain
is the largest foreign investor in Argentina. Its
second-largest bank, Bilbao Vizcaya Argentaria (BBVA), is
running one of the pension funds to be nationalized. Based
on fears that the GOA might engage in further
nationalization, stocks of energy giant Repsol fell by 15
percent, BBVA and Banco Santander by 8 percent, and
Telefonica by 9 percent. Another large Spanish investor,

MADRID 00001123 002.2 OF 002


Grupo Marsans, continues to negotiate with the government
over the re-nationalization of Aerolineas Argentinas. (All
media, October 23-24)

GOS Intends to Support Bank Asset Purchase Program Via Gulf
States SWFs

4. (U) On October 20, the Parliament approved the GOS bank
support package (ref C), under which the GOS initially will
spend between 10 and 20 billion euros, beginning in November,
to buy high-quality bank assets. The GOS will finance the
purchases, which could eventually total 50 billion euros, by
offering public debt to sovereign wealth funds from Gulf
Cooperation Council member states, according to Minister of
Industry, Tourism, and Trade Miguel Sebastian. (All media,
October 21)

NASA and Spanish Agency Celebrate Cooperation at Madrid Deep
Space Tracking Station

5. (U) On October 21, officials of NASA and its Jet
Propulsion Laboratory (JPL) traveled to Robledo de Chavela,
located in the mountains about an hour northwest of Madrid,
to visit the Madrid Deep Space Communications Complex (MDSCC)
as guests of the Spanish National Institute of Aerospace
Technology (INTA). One of three such stations in the world -
the others are in Canberra, Australia and Goldstone,
California - MSDCC provides critical tracking and
communications support for NASA's deep space missions, as
well as training for communications professionals. Its four
large satellite dishes, of which the largest is 70 meters in
diameter, send and receive transmissions to and from
satellites orbiting the earth and space vehicles on a variety
of missions. The ceremony marked the station's transition
from outmoded gas generators to commercial power and was
attended by representatives ofthe Madrid regional government
and the Mayors of several nearby towns. The NASA-INTA
partnership offers an excellent example of constructive
bilateral cooperation. (Embassy Madrid)

AGUIRRE

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