Cablegate: Scenesetter for Codel Gordon, March 5-9, Spain

VZCZCXYZ0000
RR RUEHWEB

DE RUEHMD #0218/01 0571642
ZNR UUUUU ZZH
R 261642Z FEB 10
FM AMEMBASSY MADRID
TO SECSTATE WASHDC 2014

UNCLAS MADRID 000218

SENSITIVE
SIPDIS

STATE/H PASS HCFA FOR CODEL GORDON

E.O. 12958: N/A
TAGS: OREP PREL SP
SUBJECT: SCENESETTER FOR CODEL GORDON, MARCH 5-9, SPAIN

Summary
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1. (U) Embassy Madrid welcomes your visit. U.S.-Spain
relations are strong and based on shared global interests,
including our association in NATO, the fight against
terrorism, and growing economic ties. Spaniards are
enthusiastic about President Obama, and the GOS is optimistic
about the prospect for closer bilateral relations and
enhanced engagement. Spain is the European Council president
for the first six months of 2010. End summary.

Bilateral Relations
-------------------

2. (SBU) We value Spanish cooperation on security issues and
in the fights against terrorism and narcotics. Spain is a
strong bilateral defense partner, despite differences in the
past over its sudden withdrawal from Iraq in 2004 and its
poorly coordinated withdrawal in 2009 from the NATO force in
Kosovo. Spain operates a Provincial Reconstruction Team in
Afghanistan with about 1,000 troops participating in ISAF,
and the Spanish congress approved deployment of 500-plus
additional troops on February 17 and authorized 40 civil
guard police trainers. Spain also allows us the use of two
military bases that are crucial transit points between the
U.S. and Afghanistan and Iraq. Counter-terrorism and law
enforcement cooperation is strong, as are business ties.

Political Context
-----------------

3. (SBU) President Zapatero won re-election to a second term
in 2008. His center-left Spanish Socialist Workers Party
(PSOE) is seven seats shy of a Congressional majority and
fared poorly in regional and European Parliament elections in
2009. Zapatero's popularity has suffered because of the long
recession and what are viewed as the government's ineffective
efforts to address it. The conservative opposition Popular
Party (PP) has not capitalized on Zapatero's unpopularity, as
it has suffered internal divisions and has been dogged by
corruption accusations. That said, recent polls suggest that
the PP could win an election over the Socialists if the vote
was held today. Zapatero has sought to show that he is
taking a leading international role in the response to the
economic crisis, and the EU Presidency gives the GOS an
opportunity to play up its international role.

Economic Context
----------------

4. (U) Spain grew much faster than the EU average over the 15
years through 2007 and now has the world's 9th largest
economy. The rapid growth was driven by a housing boom that
ended in 2007, after which the world economic crisis
aggravated the economy's woes. Spain has been in recession
for almost two years. It will be the last large economy to
begin to recover, and the eventual recovery is expected to be
sluggish. Unemployment, now over 19 percent, is expected to
pass 20 percent this year. The GOS has responded with a
major fiscal stimulus. This has boosted the budget deficit
above 11 percent of GDP, and the GOS will have to limit
spending significantly between now and 2013 to meet EU
deficit requirements. Research spending is expected to see
significant cuts. Last month, markets and commentators
expressed concern that the government's budget troubles would
put it in a situation like Greece's, but concern seems to
have receded, and the government successfully issued new debt
the week of February 15.

5. (U) The bilateral economic relationship is strong. The
U.S. is the largest investor in Spin though the flow of new
investment has slowed in recent year. Spain is the tenth
largest foreign investor in the U.S., and Spanish firms are
especially active in wind and solar power, banking, and road
construction. The GOS and Spanish companies see the USG as
providing Spanish companies opportunities in these areas and
others through the stimulus package, climate change
legislation, and efforts to sell troubled banks, and the GOS
portrays close bilateral relations as helping Spain's
economic interests.

Renewable Energy
----------------

6. (U) Renewable energy is an increasingly important part of
the Spanish economy, and of our bilateral relationship. The
Zapatero government is working to reorient Spain's economy
towards more sustainable sectors. Renewable energy is a key
part of Zapatero's vision, in fighting climate change as well
as in promoting energy security and developing new
industries. Generous (and costly) feed-in tariffs have
helped make Spain a world leader in wind and solar power:
Iberdrola is the world's largest producer of wind power, and
Acciona is the second largest. Gamesa, partially owned by
Iberdrola, is one of the world's largest manufacturers of
wind turbines as well as operating wind farms. Spain is also
the world's third largest generator of solar power, and many
firms are seeking approval to build photovoltaic and
concentrated solar projects. While U.S. companies are
investing in (AES, FPL) and supplying (GE, First Solar)
renewables projects in Spain, Spanish investment in
renewables in the U.S. is much greater.

7.(U) Spanish companies own wind farms in about 20 U.S.
states and continue to expand. Iberdrola plans to invest
another six billion dollars in U.S. renewable projects by
2012. Iberdrola-owned wind projects have received over
USD500 million in stimulus funds in grants it took in place
of production tax credits, and Acciona expects to receive
significant amounts as well. Gamesa and Acciona own four wind
turbine manufacturing plants in Iowa and Pennsylvania.
Acciona owns the world's third largest solar plant, the 64-MW
Nevada Solar One concentrated solar (parabolic trough)
project. Abengoa Solar plans to build a 280-MW concentrated
solar plant in Arizona that will be the world's largest.
Abengoa Biofuels has several ethanol plants in the U.S. In
addition to the many investments mentioned above, Spanish
companies and government bodies collaborate with DOE's
National Renewable Energy Laboratory on research. Abengoa
Solar has received five DOE or NREL contracts to develop
parabolic trough and power tower technology. Abengoa has won
DOE grants for second-generation ethanol projects.

Science Policy
--------------

8. (SBU) GOS science policy falls largely under the Ministry
of Science and Innovation, a new ministry created by
President Zapatero. Minister Cristina Garmendia is not
affiliated with the PSOE and comes from a business
background. She was reportedly recommended for the position
by Minister of Industry, Tourism and Commerce Miguel
Sebastian (for whom she had previously worked). However, her
ministry and Sebastian's have had turf battles over
responsibility for energy research and space policy in which
Sebastian has generally prevailed. In addition, Garmendia's
ministry has suffered budget cuts for R & D recently and lost
some responsibility for university education. Congress also
has a say on science policy through the Commission on Science
and Innovation (CSI) which is responsible for legislation
that promotes science and innovation policies. CSI is headed
by Chairperson Teresa Rodriguez who first entered congress in
1987. CSI was created as a permanent legislative body in
2008: it does not have a defined set of issues but works on
matters referred from the Congressional Standing Committee.
CSI is currently reviewing the relationship between the
private sector and government in R and D.

EU Presidency
-------------

9. (SBU) The GOS has named a wide range of issues as
priorities for its presidency. Its most frequently mentioned
priorities are coordinating economic recovery and reform
measures, coordinating implementation of the Lisbon Treaty
(including adjusting to the new roles of President Van Rompuy
and High Representative Ashton), and promoting gender
equality. Foreign Ministry officials have also acknowledged
that during Spain's presidency, the EU will face important
decisions on Iran sanctions. President Zapatero and other
GOS officials often cite strengthening transatlantic
relations as another top priority and were disappointed that
President Obama will not visit Spain for a U.S.-EU summit
during Spain's tenure as EU president.

Personal Security
-----------------

10. (U) In general, Spain is safe. However, Madrid and other
large cities attract a large number of criminals and
pickpockets, and frequent crimes 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 against crime by being street-smart,
alert, and aware of their surroundings. Travelers are
encouraged to review the most recent Worldwide Caution issues
by the Department of State. As the Department of State
continues to develop information on any potential security
threats to Americans overseas, it shares credible threat
information through its Consular Information Program,
available on the Internet at http://travel/state.gov.
Additional information regarding safety and security in Spain
is available on the U.S. Department of State's website
(www.embusa.es).
SOLOMONT

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