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Cablegate: Madrid Economic Bi-Weekly, August 3-14

VZCZCXRO2544
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHMD #0820/01 2261124
ZNR UUUUU ZZH
R 141124Z AUG 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1087
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MADRID 000820

SIPDIS

STATE FOR EUR/WE, EEB/IFD/OMA
COMMERCE FOR 4212/D.CALVERT
TREASURY FOR OIA/OEE/T.O'KEEFE, D.WRIGHT

E.O. 12958: N/A
TAGS: ECON ELAB EFIN ECPS KIPR
SUBJECT: MADRID ECONOMIC BI-WEEKLY, AUGUST 3-14

REF: A. MADRID 773
B. MADRID 725

Contents:

ECON, ELAB: Government Extends Unemployment Benefits
ECON: Housing Sales Increase Slightly in June but Remain Well
Below Last Year
ECON: Consumer Price Index Continues to Fall
ECPS: Telefonica Loses Ground to Alternative Internet Service
Providers
KIPR: 60 Arrested for Cable Signal Piracy

Government Extends Unemploymwent Benefits

1. (U) On August 13, the Council of Ministers in special
session approved a royal decree/law providing additional
assistance of 420 euros (about $605) per month for six months
to the long-term unemployed whose benefits have run out and
who lack other sources of income. This supplemental
assistance could be extended for another six months if the
economy reamins weak and unemployment remains high. The
Labor Ministry estimates that some 340,000 unemployed will
qualify for the new assistance. Though job loss has begun to
slow, unemployment remains over 18 percent, and Spain is
expected to lag behind other European countries in recovering
from the downturn. The new measures are expected to cost
about between 640 and 760 million euros, and the government
is expected to pay some 33 billion euros in total
unemployment assistance and relief in CY 2009. Relief for
the long-term unemployed was a component of the tripartite
"social dialogue" negotiations that broke down in late July.
Now that the government has implemented it unilaterally,
labor unions and the opposition Popular Party have denounced
the government's action as inadequate. (Council of Ministers
press release, 8/13, All media, 8/13-14)

Housing Sales Increase Slightly in June but Remain Well Below
Last Year

2. (U) Sales and purchases of housing rose by 4 percent in
June over May but were still 25.5 percent less than in the
same month in 2008, according to the National Institute of
Statistics (INE). Housing transactions fell by a total of
34.9 percent over the first six months of 2009. The June
figures appear to indicate that the contraction in sales of
new homes may be moderating slightly. (Europa Press, 8/12)

Consumer Price Index Continues to Fall

3. (U) INE also reported that inflation for July was -0.9
percent compared to June and -1.4 percent year-on-year.
Since July 2008, when the Consumer Price Index (CPI) was at
5.3 percent, it has fallen for twelve consecutive months.
The CPI entered negative territory in March. Despite the
past five months of negative numbers, the government
continues to downplay talk of deflation. The sharp decline
since last year in the price of oil and fallen prices for
food and housing are believed to be driving the CPI figures.
(Europa Press, 8/12, El Pais, 8/13)

Telefonica Loses Ground to Alternative Internet Service
Providers

4. (U) During the second quarter of 2009, Jazztel and
Vodafone bested Telefonica in capturing more new internet
subscribers. Together they signed up over 65% of new clients
compared to Telefonica,s 30%. While former monopoly
Telefonica still controls a larger share of the market, with
56% of all internet subscribers, its competition is gaining
ground. Jazztel,s client base grew by 47% over the past
year. The increased competition stems from improvements in
customer service and installation. Since the GOS privatized
Telefonica in 1997, it has been able to satisfy a minimum
standard of service that alternative providers are only
recently able to match or beat. Internet service in Spain is
still slower and more expensive than in most European
countries. It costs 24% more than the European average, and
only 10% of ih speed lines in Spain operate at higher than
10 Mbps. (El Pais, 8/10)

60 Arrested for Cable Signal Piracy

5. (U) The Spanish National Police announced the arrest of
some 60 individuals in five sourthern cities and the Canary
Islands on charges of pirating cable TV signals. Two of the
accused are administrators of an internet portal where

MADRID 00000820 002 OF 002


content, especially soccer games, was uploaded and
rebroadcast via streaming. Others arrested include heads of
neighborhood associations and managers of hotels who are
alleged to have been making the pirated material available to
their members and clients. A broadcast center in Sevilla was
dismantled, and 851 decoders,1,321 smart cards, and a variety
of computers, telephones, and other equipment used in
distributing the pirated content were confiscated. Police
say the fraud netted several million euros. (El Pais, 8/4)
DUNCAN

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