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Weekly Report - (October 31th, 2014)

Business Over Tapas

By Lenox Napier and Andrew Brociner

sábado 01 de noviembre de 2014, 01:01h

A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners: with Lenox Napier and Andrew Brociner - For subscriptions and other information about this site, go to businessovertapas.com - email: [email protected] - ***Now with Facebook Page (Like!)*** Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access.

Editorial:

While Rajoy talks of a few regrettable bad apples offering an unfavourable and skewed light on Spanish politics – and then getting into an embarrassing 'y tú mas' (you fellows are even more corrupt than we) fight with the leader of the PSOE in Parliament on Wednesday – a few brave judges have been busy this week, with arrests following upon arrests. The Financial Times is particularly scathing on the situation here.

Housing:

'Last year Madrid's city and regional governments sold almost 5,000 rent-controlled flats to private equity investors including Goldman Sachs and Blackstone. At the time, the tenants were told their rental conditions would remain the same. But as old contracts expire, dozens of people have received demands for higher rent, been told their rents will increase dramatically, been threatened with eviction or moved out to escape the insecurity. Thousands of Spain's poor now depend for their homes on the generosity of private equity...' The story comes from The World Post.

'The tax reform that is going through parliamentary procedure in the Senate will penalize the sale of 'second hand' real estate from January 2015, which in turn has led to a flurry of sales of this type of home in recent months. Tax rises in these cases will come thanks to the elimination of two coefficients to do with monetary correction, two tax credits which reduce the invoice in income tax capital gains or profits from the sale of assets, such as homes and stocks, purchased years ago. A measure that the Government is now considering softening, so there is a chance that it could introduce a last-minute amendment on the Senate floor mitigating the tax hikes...'. The ABC discusses new tax hikes for 2015 (particularly for houses bought before 1995), which might explain a recent rise in house-sales. More here.

'After months of negotiations, NH Hotels has closed the sale of the bellwether Sotogrande development in Cadiz to two private equity funds for an announced price of €225 million.
Cerberus Capital Management and Orion Capital will buy a 97 percent stake in Sotogrande S.A. NH will maintain control of projects in Mexico, the Dominican Republic and Italy, which were part of the Sotogrande portfolio...'. From Mark Stücklin's Spanish Property Insight.

'Got a non resident bank account? If you do, you MUST ensure your bank has a digital copy of your ID before the 15th of December, or your account will be suspended, meaning your bills will bounce and no transactions will take place. Depending on the bank, utility bills and standing direct debits will probably continue to be honoured, but you won’t be able to transfer cash out of the account. The warning comes as banks remind their customers that under the Ley 10/2010, de Prevencion de Blanqueo de Capitales, the deadline is fast approaching...'. From David Jackson. A note from Spectrum Radio goes even further: 'the update of bank accounts applies to everyone. Residents, non residents, business and personal accounts. You must provide a copy of your passport (photographic evidence) for your bank to take a digitised copy to keep on record by the 15th December or your account risks being frozen. If you opened an account in the last two years the bank probably has your information but it is best to double check. Any older accounts almost certainly will not have the required information'.

Tourism:

'After posting a 7.4 percent increase in visitors in the first nine months of 2014, reaching 52.4 million visitors, Spain tourism is on track to set a record for the year, according to the Industry and Tourism ministry. In August alone, more than 9 million people visited Spain, the most ever for a single month and an 8.8 percent increase from a year earlier. In many ways, tourism is a leading indicator for the property market, especially with foreign buyers playing such a key role. In high-end markets in Barcelona and Marbella, international buyers are accounting for more than 80 percent of sales, estate agents say...'. From Mark Stücklin's Spanish Property Insight.

Finance:

The Europe-wide 'Stress Tests' show that Spanish banks are the most solvent in Europe, says El Mundo, adding: 'After 61,000 million euros in public aid and more than five years down the line, we can now consider the sanitation of the Spanish financial sector to be concluded. The results of the Stress Test, published yesterday by the ECB, places the Spanish banks as the most sound in Europe following the review of the quality of their balance sheets, carried out over the past few months...'.

The New York Times is impressed too: 'How did they do it? Two years ago, Spanish banks were in crisis, in such bad shape that they put the euro- zone at risk and required a lifeline of 41 billion euros, or $52 billion, to stay afloat.
Now, the slimmed-down Spanish banking sector, bolstered by significant provisions against bad mortgage loans and fresh capital injections from private investors, can take comfort in the results of stress tests by the European Central Bank...' (European bank failures of the 'Stress Test' here).

An article in The Telegraph discusses what might be described as 'Spain's race to the bottom', noting that the car industry here is booming, thanks to a drastic lowering of wages: '...The pro-business government of Mariano Rajoy and its allies point to this remarkable surge as a vindication of their policies, proof that it is possible to claw back competitiveness within the Euro-zone by means of an “internal devaluation”, a euphemism for deflationary wage cuts. “Spain shows what reforms can do. We have become the export champions of Europe,” said Ana Botín, the chairperson of Santander...'.

'Dubious lending by regional Spanish savings banks in the boom years before the collapse of a property bubble in 2008 generated huge losses in the billions of euros, Spain's Economy Minister Luis de Guindos said on Tuesday. Spain's bank restructuring fund FROB has identified 42 suspect operations carried out between 2005 and 2008 by regional lenders that needed to be bailed out by the government, he said. "According to preliminary estimates... the losses from these 42 potentially irregular operations are estimated to total around 2.6 billion euros," he told parliament's economic affairs committee...'. From The Local.

Facua, the citizens protection agency, warns of a number of bucket shops ('chiringuitos financieros') operating in Spain out of Jersey and the UK which are not licenced by the Comisión Nacional del Mercado de Valores (CNMV) to trade in Spain. These include Mr Wayne Garraway who is not registered in Jersey and may therefore not legally offer investment services. The same is true of Ava Capital Management (www.avacapitalmanagement.com), Fast Line Legal Services (www.fastlinelegal.com), Gilmoore Financial (www.gilmoore-finance.com), International Mergers and Acquisitions Board of Japan (www.imabjp.org) and Smith and Jacobs (www.smithandjacobs.com) all based in the UK.
Furthermore, the CNMV warns that Red Level Enterprises Limited (Clon), is not connected with www.redlevelenterprises.co.uk, and similarly, Schwarz Oliver Thomas has no relationship with www.schwarzoliverthomas.com.

Politics:

Admitting that there has been '...a few situations we don't like...' in reference to the current spate of stories of corruption, the President carried on the theme at a recent meeting held in Murcia: El Huff Post picks up the story: '...Rajoy has stressed that this type of behaviour does not reflect the reality of Spain. "'A few situations' are not 46 million Spaniards and neither the reality of Spain as a whole. I, certainly, won't accept such a claim even though others might like the sound of that sort of thing". Rajoy earned himself a round of applause from his audience. Later, on Tuesday, Rajoy told a reporter 'In the name of the PP, I would like to apologise to all Spaniards for my having placed in situations of responsibility some people who appear to have not been worthy...' Found at Libertad Digital (the pro-Government radio mentioned below). An editorial in El País in English is titled 'Not enough. The prime minister’s apology over party corruption must be followed by more action to regenerate Spain’s political system'.

Elsewhere, El Huff Post continues, the PP has had a particularly difficult week, with the crusading judge Pablo Ruz opening an inquiry into the ex-Secretary General of the PP Ángel Acebes for his part in the alleged acquisition of shares in a right-wing radio with party 'B' funds; the temporary suspension in the party of ex-Minister of the Economy Rodrigo Rato thanks to the 'Black Cards' from the Caja Madrid... and the discovery of a second payment in black (of 750,000€) to gussie-up the head office of the Party in down-town Madrid (reaching a total, in 'black', of 1.7m euros). Meanwhile, Vozpópuli reckons that Luis Bárcenas will be out of jail soon, where he has been since June last year. Surprise?

A survey from Sigma Dos puts Podemos in front of the PSOE in intention of vote. The PP stands at 28.3%, Podemos at 24.1% and the PSOE at 23.7%. The IU has fallen to just 5.2%. Yesterday, Wednesday, another survey, this time from the CIS, puts Podemos in first place!

Corruption:

Público begins the entertainment with the headline: '75% of Aznar's last Government are now either accused, took back-handers or are in prison'. The news-site helpfully produces the entire list of the 'President and eleven of his fifteen ministers'...

Around fifty people were arrested on Monday in León, Madrid, Valencia and Murcia, charged with various acts of corruption, including the President of the diputación (County council) for León, Marcos Martínez and, in Madrid, the ex-number three for Esperanza Aguirre, the Senator Francisco Granados. In all, including several mayors, businessmen and other catches, the sum of 250 million euros in commissions on public projects has been quoted. More on Granados here and 'Granados and his partner hold 5.8m in three Swiss accounts' from El País here.

The inquiry into the activities of the ex-mayor of Toledo José Manuel Molina may be more far-reaching than originally thought, with Público suggesting that it could also touch on the activities of the senior PP leader, the General Secretary for the party María Dolores de Cospedal for improper campaign finance.

The PP and the PSOE were to sign a joint pact against corruption this week, but now, alas. No longer. '...The Secretary of Organization of the Socialist Party, César Luena, left it very clear on Monday: "there has never been, there is not nor will there ever be agreements or pacts with the PP to fight corruption", because "the whole point is to say and do" which is "impossible" to agree "with a President, like Rajoy, who goes around saying that corruption is just a little thing"...'. From an article on how the Government has now dropped its proposals regarding the 'first past the post' mayoral elections, found at Cuarto Poder.

Andalucía has its share of investigations into corruption, the larger ones being led by a judge (who is always photographed in a way to accent her youth and frailty) called Mercedes Alaya. An inquiry into fraud in Government training courses is currently proving troublesome to the Junta which has asked for the investigation to be dropped.

Trouble for the head of the diputación in Almería and alcalde of Roquetas de Mar. This long-time PP leader is Gabriel Amat, now under investigation for 'urban corruption' following his granting a concession for building ten homes for employees of a large farming company in 2007.

The mayor of Montroi (Valencia) has been processed with nineteen others (including a lawyer and two notaries) for urban corruption in the case of the illegal homes in Las Palomas and other nearby estates. Around 200 mainly foreign 'victims' have been alerted.

The mayor of Barcelona Xavier Trias doesn't have a bank account in Switzerland and is threatening anyone who says different. A helpful report in Periodista Digital disagrees and has published the account number... Another report – from El Mundo – suggests that there is almost 13 million euros in this non-existent account.

An amusing story about an unknown fellow who has somehow appeared in every recent press photo, comes from The New York Times: 'How is it that a baby-faced, 20-year-old university student skates his way into the coronation celebration of the new king, passes himself off as a government adviser to reportedly broker a lucrative business deal, and avoids traffic jams by flashing a fake police light? That is the question members of Spain’s security services are asking themselves after the student, Francisco Nicolás Gómez Iglesias, was arrested last week and quickly gained prominence as the country’s most notorious gate-crasher...'. He got everywhere. There is even a drawing going around on Facebook of Homer Simpson and his family, with Nicolás there in the corner, smiling happily.

More scandal. Here's La Prensa (a newspaper that comes from Texas): 'Spanish police Thursday arrested Oleguer Pujol Ferrusola, the son of Jordi Pujol, the former president of the north-eastern Spanish region of Catalonia, for alleged corruption, justice officials said.
Pujol Ferrusola was detained to facilitate the police search of his home on instructions of a judge investigating money laundering related to the purchase of 1,152 bank offices for 2 billion euros.
Judge Santiago Pedraz also ordered searches relating to the purchase of a hotel in the Spanish Canary Islands with money of unknown provenance transferred from the Virgin Islands...'. Deloitte, auditors for Pujol Jr's company, say there are no irregularities and have released the accounts to the investigating judge.

Then there's the story of the PP councillor from Arrecife, Lanzarote, who tried to get a job for his mother in the Town Hall as a translator to help all the English-speaking public. Problem was, she didn't speak a word of the language... A funnier version (in English) here.

'Public contracts don't go to the most efficient, but to the most competent at placing bribes', says a senior figure from Hacienda – see the article at El Diario here. 'In the cases we have been following', says the professor, 'no one returns the money and the worst that can happen to them is a short jail term and then home'.

An editorial in Euro Mundo Global says that corruption has been a major feature of Spanish life for the past thirty years, since the days of Felipe González.

Catalonia:

'Spain’s Divide and Unconquer of Catalonia. The policy of the Spanish government has been to threaten Catalonia and sow seeds of discord in its fragile coalition government. Now it’s reaping the spoils'. An important article from Wolf Street on the current situation.

'After scuppering a referendum, Spain risks intensifying Catalonia's push for independence unless it negotiates over transferring more powers, the region's economy minister said.
Spain's government asked the constitutional court last month to declare a referendum planned for Nov. 9 illegal on the grounds it breached the constitution. The court suspended the vote until it ruled on the case, which could take years...'. From Reuters.

The Catalan president Artur Mas is apparently preparing for regional elections for January 25th, perhaps even leading a new formation, according to a report at El Confidencial.

Tax:

To the Petitions Committee of the European Parliament: 'A request for an urgent review of Spain's new requirement for the reporting of assets held outside Spain and the compatibility of that requirement (as set out in Law 7/2012 and Decreto Real 1558/2012) with EU Treaties and Laws, particularly those relating to non-discrimination, privacy and free movement of persons and capital'. More at 'Review Spain's Asset Declaration Laws' here.

Essay:

PODEMOS (YES WE CAN): A new and different political party

By Per Svensson

In January of this year a group of people, many of them connected with the greatest university in Spain, the Complutense in Madrid, signed and published a manifest calling on indignant citizens to present candidates in the European elections to be held in May. A young professor by the name of Pablo Iglesias, well known from many television program and debates, was elected to head the initiative. As a condition for taking part in the elections the promoters established the need to receive the support over the internet of at least 50,000 citizens.

24 hours after presenting the invitation the objective had been reached. With an election budget of only 150,000 Euros, Podemos could present a candidate list for the European Parliament that got 1,253,837 votes: 7.98% of the total. Almost overnight the new party had become the fourth political force in the country, with five seats in the European Parliament.

In the end of July the party had come so far that supporters could ask to become members. 32,000 joined in the first 48 hours. After 20 days the membership reached 100,000. Before the constituting Citizens Assembly that was held last week, the membership passed 131,000 and during the assembly it rocketed to 150,000……

A different party

Podemos is a different kind of party. There are no obligatory membership fees, you pay what you like, but with a maximum limit of 600 Euros. The financial accounts of the party is published with all details. The Euro deputies are taking a salary of only 1.935 Euros, the rest is donated to the party. New members entering are invited to join one of the 400 circles established, from feminism, arts, culture, philosophy, disabilities, public health, etc. Much of the discussions take place on internet. As a matter of fact, the decisions on program and leadership during the Citizens Assembly last week were not only taken by the 7,000 personal attendants, but also by tens of thousands voting over the internet.

The Citizens Assembly of last week also defined more clearly the program:

- the renegotiation of the debt the Rajoy-government accrued to save a number of greedy, corrupt and mismanaged banks

- the establishment of a basic salary for all families

- the reform of the public educational system

- stronger punishment over cases of corruption

- stop evictions from own dwellings

- no privatization of public health system

- higher taxes on greater income

- the nationalization of strategic companies

- the closing of nuclear centrals

Podemos is a protest party, in the sense that it has built on the strong, nation-wide protests that shook Spain over the last years, has given the protesters a stronger voice, a more coherent program and an organizational platform. The party is not a one issue movement, it goes to the roots of the problems in denouncing the two party system that was established in Spain some 40 years ago, when a plethora of corrupt leaders from the two big parties established themselves as perennial governors of the country, using the state on all levels for their own personal benefit.

The established parties are afraid of Podemos. No wonder, PP and PSOE got all together only 49% of the votes in the May elections, down from 80.9% in the previous European elections.

Podemos is now focusing all energy on the general elections next year, and Pablo Iglesias declared on the Citizens Assembly:

“We did not come into politics to have a symbolic role. We are here to win, and to form a government.”

Pablo Iglesias has said that Podemos will not present candidates for the local elections of May 24th 2015, but may work together with 'candidates of popular unity' under the loose 'municipalist' umbrella of 'Ganemos'. Here, here, and here.

Various:

That picture of the Africans climbing over the fence and onto a golf course in Melilla is powerful enough. See it here. The golf course itself seems to have cost five million euros in public funds since 2009.

The President of UNICEF España says that one out of every four children in Spain is living under the shadow of poverty. Story at Europa Press. More on this with El Huff Post, quoting figures of 'one in three', here.

The Canon Google affair – where the Government imposes a canon on all links with content in their jurisdiction – has suffered a blow in Germany where a similar (if simpler) law had been under consideration (promoted heavily by Axel Springer). Google simply threatened to close down its Google News service (with its enormous number of visitors to the news-pages in question – and their advertisers). The German newspapers have now dropped their support and have asked for the promotion of 'snippits' to again become a feature of daily life. Now, as Malavida reports, '...it only remains to be seen if a similar threat in Spain will force the AEDE editors to make a similar decision or, if in this case, the Spanish stubbornness outperforms that of the Germans'. In Spain, the 'Ley de Propiedad Intelectual' was passed by the Senate on October 16th, including the article 32.2 (the Google tax) which will be law from January 1st, but for one year only (presumably so that the Government can rely on the Press Barons to ease them safely through the upcoming elections).

A theatre company, indignant at the 21% IVA charged on 'la cultura', is selling rather overpriced porn magazines (reduced IVA 4%) with the right to a free seat at the theatre to see their production of 'El mágico prodigioso', by Calderón de la Barca, in Madrid. Such times we live in.

'Inside Spain's Civil Guard' – an article at El País in English here.

An article on Spain's far-right politicians from 2012, and why there really aren't any of note. The article lists Spanish far-right parties and associations.

A petition to the European Parliament regarding discriminatory voting rights for Britons living in Spain. The EP recommends that the British Government to allow nationals 'who have exercised their free movement rights to retain their right to vote in national elections – if they demonstrate a continuing interest in the political life of their country'. (Silly – we should, as Europeans resident in Spain, be allowed to vote in Spanish national elections)!

'Health, care and financial challenges facing vulnerable, older British Migrants in Spain.
Research has largely ignored the increasing number of British people in Spain who are frail and vulnerable and now require additional support and care. This paper therefore focuses on this vulnerable group and identifies the main difficulties faced and the type of support available to them, in particular support with health, care, and financial issues...'. From Kelly Hall, University of Birmingham. Found at Observatorio Europeo de Gerontomigraciones

'Anyone involved in a fraud case in Spain will agree with top judge Carlos Lesmes when he says that the current Criminal Procedural Act is only fit for ‘chicken thieves’.
He is right. Spain is, and will be for a long time, the conman’s paradise … Admittedly, the criminal system is inadequately equipped to deal with major fraudsters, conmen and corrupt politicians. But so are judges, given the selection process that churns out inexperienced 25-year-old judges faced, on arrival in their court, with anything from a rape case to a complex financial dispute...', from an editorial at The Olive Press.

The Canary Islands now have a new member. Where there were 'seven', there are now 'eight'. This is not because of a seismic upheaval, but because the Island of La Graciosa has now become 'independent', with its own 'council', from Teguise.

'The giant stone pillars rise up out of the breathtaking gorge, forming one of the most famous – and photographed – sights in Spain. But the Puento Nuevo (New Bridge) of Ronda is anything but ‘new’, as it turns out… It has been the centrepiece of this stunning town for more than 200 years. And there is nothing that prepares you for the moment that you first approach it from above and witness the view and 390 foot drop down to the river below...'. An introduction to Ronda from The Olive Press.

'It became a World Heritage site in 1986, but the world is hardly aware it exists, compared to the attention it gives similarly historic, beautiful cities such as Toledo and Compostela. As you walk around these narrow streets which Renaissance palaces are squeezed into, you may begin to wonder if you are still in the 21st century, as the old part of the city has been almost untouched by the new. Caceres is a city well worth visiting not just for its history but also its cuisine. In 2015 it will substitute Vitoria as Spain Gastronomic capital...'. Article about Cacares, Spain's food capital for 2015, found at Max Abroad.

With the lowest population density in Spain – and one of the lowest in Europe, at just eight persons per sq km – the Serranía Celtiberica is twice the size of Belgium. It comprises the province of Teruel, and parts of Cuenca, Soria, Burgos, Zaragoza, Guadalajara and Castellón. The town of Calamocha in Teruel holds the Spanish record for low temperature with -30ºC sometime back in 1965. A blog compares it to Lapland (for some reason) here.

Are you on the padrón? You may not be. It's better to check. The Town Halls have been told that Europeans need to re-register every five years; non-Europeans every two years. Lenox checked this week (47 years resident in Spain) and found his name had been removed! Some communications regarding voting rights for residents have been sent by the INE – but only (one assumes) to those who's names remain on the Town Hall's books.

Letters

Hi, I saw in BoT 86 that Spain, Norway and Luxembourg together have donated less to the global fight against Ebola than Ikea, i.e. less than 3.2 million euros as compared to 5.3 million from Ikea. Please note the following press release from the Norwegian Ministry of Foreign Affairs, dated 11 days ago. (The amount of 329 million NOK allocated so far this year corresponds to approx. 39.6 million euros).
Nice if you could refer this in the next BoT.
Kind regards, Per-Erik (avid reader of BoT)

Norwegian Foreign Minister in Liberia: '...“The Ebola outbreak in West Africa is the worst the world has ever seen, and is a serious threat to health, security and development both in the region and globally. Unless the international community, and particularly the UN and WHO, scale up and speed up the response, the situation will continue to deteriorate,” said Minister of Foreign Affairs Børge Brende...'. From Norwegian Ministry of Foreign Affairs. The note continues, '...Norway is now allocating a further NOK 75 million to these efforts, bringing the total to NOK 329 million so far this year...'.

Finally:

Antonio Machin was a Cuban singer who spent most of his professional life in Spain. Here he sings the beautiful 'Dos Gardenias Para Tí'.

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