VZCZCXRO5360
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0317/01 0741504
ZNR UUUUU ZZH
P 141504Z MAR 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 4489
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3364
UNCLAS SECTION 01 OF 02 MADRID 000317
SIPDIS
SIPDIS
EUR/WE, EEB/IFD/OMA
E.O. 12958: N/A
TAGS: ECON EINV ELAB ENRG KIPR SENV SP
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL UPDATE MARCH 10-14
MADRID 00000317 001.2 OF 002
Table of Contents:
ECON: Lower forecasts for GDP
ECON/ELAB: Unemployment continues to rise
ECON: Inflation reaches twelve-year high of 4.4 percent
ENRG/EINV: Iberdrola takeover maneuvering update
KIPR: Police shut down big CD/DVD copying operation, arrest
six
KIPR: Largest-ever seizure of counterfeit goods
KIPR: Judge rules selling modified PlayStations not illegal
SENV: More Spanish consumers willing to pay premium for
environmentally-friendly electronics
LOWER FORECASTS FOR GDP
1. (U) Two days after the elections, Second Vice President
and Finance Minister Solbes told reporters that (GOS)
analysts were now predicting 2008 GDP growth of between 2.5
and 2.7 percent. This is well below the 3.1 percent figure
Solbes had cited earlier and much closer to other forecasts.
The German bank Commerzbank on March 10 repeated its earlier
forecast that 2008 growth would only be 1.5 percent, adding
that 2009 growth would be around 1 percent. (Comment: 1.5
percent growth this year would almost certainly result in a
recession; the Central Bank has said that if output were to
maintain the level of 2007's fourth quarter through 2008,
growth for the year would be 1.9 percent. Commerzbank had
made the same 2008 forecast last August, but it may get more
attention now that other forecasts have dropped.) (Expansion
3/11/08, EFE 3/10/08)
UNEMPLOYMENT CONTINUES TO RISE
2. (U) Unemployment increased by 50,000 for the month of
February, according to Ministry of Labor statistics. While
this was less than the January increase of 132,000, experts
are convinced that this trend will continue throughout the
year, with immigrants and others in the construction field
being disproportionately affected. Although Spain continues
to experience job growth, its growing labor force is
outpacing the economy's ability to generate a sufficient
number of jobs. The unemployment rate appears to be between
8.6 and 8.8 percent (sources differ), which is still low
compared with prior years in Spain when double-digit
unemployment rates were common. Nonetheless, continuous
press coverage about increasing unemployment coupled with
Spain's relatively high rate vis a vis other European
countries has affected consumer confidence. The Ministry of
Labor is working with labor unions and business associations
to develop an employment stimulus plan. (Ministry of Labor
statistics, INEM, El Pais).
INFLATION REACHES TWELVE-YEAR HIGH OF 4.4 PERCENT
3. (U) Consumer price inflation during the twelve months
ending in February was 4.4 percent, up from 4.2 percent in
the January-to-January period. This is the highest rate
since November 1995. The rate of underlying inflation (not
counting food or energy) also rose 0.2 percent, to 3.3
percent. Comment: The government has said for some time that
it expects the rate to fall in the second quarter of 2008.
(EFE, 03/14/08)
IBERDROLA TAKEOVER MANEUVERING UPDATE
4. (U) Press reports indicate that President Zapatero and
French President Sarkozy have agreed on a deal that the GOS
would not oppose in which GOF-owned electricity firm EDF
would purchase between 15 and 18 percent of the Spanish firm
Iberdrola in return for giving Iberdrola nuclear power plants
located in France. Press reports say that the deal would end
the possibility of a hostile EDF bid for Iberdrola shares.
They do not indicate that Iberdrola's management and
controlling owner have lifted their opposition to EDF.
Separately, an El Pais lead editorial laments that Spain does
not have an "efficient" way to protect Spanish energy
companies from foreign takeovers. The editorial notes that
French, German and Italian companies are effectively and
legally protected from takeovers, whereas the Spanish
government's measures to prevent the takeover of Endesa by
Germany's E.ON have been struck down by the European Court of
Justice. It suggests that the GOS insist on reciprocity with
the French government, i.e. the possibility that a Spanish
company could buy a major French energy company. (ABC
3/14/08, El Pais 3/13/08)
POLICE SHUT DOWN BIG CD/DVD COPYING OPERATION, ARREST SIX
5. (U) In what is believed to be Spain's largest operation
ever against audiovisual piracy, the Spanish National
MADRID 00000317 002.2 OF 002
Police's IPR Crimes Group and its Judicial Police dismantled
on March 12 a Madrid province piracy operation and
confiscated 240 CD/DVD burners. This was not a minor league
operation - the machines had the capacity to produce over
half a million copies a week. Some of the movies copied have
not yet opened in Spain. All the individuals involved were
of Chinese origin. Unlike most operations these individuals
were producing, preparing, packaging and distributing the
items themselves. The operation was the result of a
three-month investigation. (El Pais 3/13/08, Europa Press
3/13/08)
LARGEST-EVER SEIZURE OF COUNTERFEIT GOODS
6. (U) In the largest operation of its kind in Spanish
history, the Guardia Civil and the tax agency have
confiscated in the port of Algeciras more than 230,000
counterfeit articles worth over 200 million euros. The
operation took place in late February and early March and was
announced March 14. The six 40-foot containers on two boats
included counterfeit goods with 45 different brands of
clothes, accessories, and watches. There have been no
arrests yet. (EFE 3/14/08)
JUDGE RULES SELLING MODIFIED PLAYSTATIONS NOT ILLEGAL
7. (U) A Valencia provincial judge ruled that it was not
illegal for a Valencia store to stock and sell Sony
PlayStations that had been modified in a way that would allow
them to use and reproduce pirated games. The penal code
prohibits possessing or selling merchandise specifically
aimed at facilitating the suppression of anti-copying
features. The judge reportedly ruled that because the
modified machines could also play legitimate games from other
parts of the world, the store's actions were not criminal.
The AntiPiracy Federation noted that at least eight times
since 2000 Spanish courts had ruled that such actions were
crimes. (El Mundo 3/12/08, Metro 3/12/08)
MORE SPANISH CONSUMERS WILLING TO PAY PREMIUM FOR
ENVIRONMENTALLY-FRIENDLY ELECTRONICS
8. (U) Two-thirds of Spanish consumers - the highest among
the five European nationalities measured - say they would pay
up to ten percent more for electronic products manufactured
so as to reduce the impact on the environment, according to a
recent study by the Canalys consulting firm. The
corresponding figures for consumers in Italy, Germany, and
France were 55 percent, and for the UK 40 percent. A
separate study found that 12 percent of Americans were
willing to pay more for technology that consumes less energy
or for brands that respect the environment. However, not
everyone is convinced; a Sony spokesperson noted that
actually paying more for products was different than
answering a survey. (El Pais 3/13/08)
AGUIRRE