Weekly Report (26.10.12)

Strikes galore

A number of strikes are taking place or are expected.  Teachers are currently on strike, railway workers will strike on 13th and 14th December, and there will be another general strike on 14th November.

Bad loans reach 10.51%

On all of the loans, granted by banks, saving banks and credit companies to individuals and companies, the August repayments were not made on 10.51%;  a new record in the history of Spain.  The total volume of non-paid loans amounts to 178,579 million euros, an increase of 5,343 million over July.

Regional elections as predicted

The results of the elections in Galicia and the Basque Countries are as we predicted in our Report last week: A resounding victory for PP in Galicia, although the party did not achieve a clear majority of the votes, only in the Regional Parliament. In the Basque Country, the moderate nationalist PNV (also in favour of independence from Spain), was the winner, and may form a coalition with Bildu, the ETA supporters party, which took 25% of the vote.

In both regions, the socialists suffered humiliating defeats, clearly due to the disastrous policies of Rodriguez Zapatero.

Reyal Urbis bust

One of the last dinosaur in the Spanish property market, Reyal Urbis, has agreed to apply the 'pre-insolvency' of creditors process, by which it will have a maximum period of four months to renegotiate its debt.   It has debts of 3,654 million euros, and lost 211.3 million in the first half of this year.

Valencia drops 46 public companies

In a desperate effort to find a balance between expenses and income, the Valencia Government has decided to cut by 46 its public companies, to 25, meaning that forty percent of its 7,555 employees will be dismissed.   The Government hopes the move will save 315 million euros.

More than 50% of young people do not know Jesus

The Spanish Bishops Conference sounds the alarm, saying, “More than half of young Spaniards do not know who Jesus Christ was, do not go to mass nor receive the Holy Sacraments.”   A mission is proposed to instruct young people.

Big companies surviving on exports

The 35 biggest companies listed on the Ibex, the Spanish stock exchange, are surviving on exports. Of a total turnover of 263,897 million euros in the first quarter, 59.63% came from exports.  The telecommunication and construction companies depend for more than 70% of their income on foreign markets.

Rescue fund for regions almost expended

The Government fund, set up to pay the debts of those regions not able to pay their bills, has been almost totally spent.  After the Baleares last week asked for 355 million euros and Asturias requested 261 million, the 18,000 million fund is down to 16,700 million.

21.1% of citizens below poverty line

The Government’s statistical office reports that 21.1% of all citizens in Spain are now living below the poverty line, which is set at an income of 7,355 euros p.a.  It also reports that the average income of Spanish families was 24,609 euros in 2011, 1.9% down on 2010.  Last year 12.7% of Spanish families had difficulty ‘getting to the end of month’,  up from 9.8% in 2010.

Lack of equality between sexes

Spain has fallen 14 places, from 12th to 26th in the world, when it comes to the degree of social equality between the sexes.   Spain obtained 0.7266 on a scale where Iceland is the leader, with 0.8640, and Yemen last, with 0.5454 . After Iceland come Finland, Norway and Sweden.

The Spanish Property Market

The Spanish property market is going ‘from bad to worse.’  The Government itself places the number of unsold new dwellings, owned by property promoters or their silly bankers, at close to 700,000.  Moreover, there are a further 3 million dwellings for sale, owned privately or by companies.

Valencia the leader

Valencia region alone has 139,273 new unsold dwellings.  Nevertheless, in spite of the crisis, the number of finished new homes continues to increase, up by almost 50% over the 4 ‘crisis years’ from 92,254 in 2008.  These figures explain the desperate sales trips to other counties by the regional government and promoters, trying to off-load the unsold and unsalable properties onto foreign buyers.

Castellon Province breaks all records, with an increase of 92.8% in new unsold dwellings in the ‘crisis year’ 2009.

140,000 properties offered for sale

On the web pages of the banks which financed the follies, there are 140,000 properties at the moment. Banesto is offering 1,000 properties in Alicante, Valencia, Murcia and Cadiz with re-payments of less than 9 euro per day!  BBVA has properties in Madrid from 32,800 euros and NCG has almost 900 at prices from 33,700 euros.  Bankia is auctioning off 1,100 properties with reduction in prices between 30 and 60%.

Prices continues to drop

Prices for dwellings fell by a further 9.5% in the third quarter of the year, compared with the same time last year.  With this fall, the average price of dwellings in Spain is down to 1,554 euros per m2 constructed.

Have we now really reached the bottom?   Has the time come to invest?

No, not yet.  Shortly the ‘bad bank’ will start the sale of dwellings with major reductions in prices.

What do those with the rose-tinted glasses of yesterday say today?

New rental law coming

The Government has presented a project for a new law aiming at reinforcing the rights of the owners relative to tenants.  The proposal must first be passed in Parliament before it can become law.  However, in the presentation, the Minister of Development, Ana Pastor, stressed the need for increasing the letting market, which in Spain accounts for only 17% of all dwellings, compared with 30% in the rest of Europe. She also hoped that the reform would bring some of the 700,000 unsold dwellings into use, together with some of the 3 million privately owned homes not being used.

The Minister stressed the need for reducing rental prices, by guaranteeing the security of owners.  It is her intention to create fiscal advantages for owners wanting to let and a reduction in the time needed to evict non-paying tenants, to 10 days. Furthermore, a tenant will not be able to protest against the sale of a dwelling, unless the letting contract is registered in the property register. The so called ‘prorroga obligatoria’ (the enforced extension of a letting) shall be reduced from 5 to 3 years.

We will comment further when the proposal law has been approved by Parliament.

No Easy Business Set-ups in Spain

El País, Miguel Jiménez (translated by Lenox Napier)

Despite repeated announcements of reforms to facilitate business creation, Spain frustratingly remains one of the World's most difficult places to start up a new business. In fact, Spain is ranked 136th out of 185 countries surveyed by the just released 'World Bank's Doing Business 2013' report – three places down on last year - which includes data through June. It takes 10 procedures (Spain loves its paperwork) and an average 28 days, to say nothing of the high costs involved. Indeed, it is harder to create a company in Spain than in such places as Afghanistan, Albania, Burundi, Iran, Kosovo, Kenya, Morocco, Nepal, Nicaragua, Rwanda, Senegal, Tanzania, Yemen and Zambia, according to the report.
That is only one of the parameters that the World Bank report takes into account when assessing the position of the different countries in the 'ease of doing business'. This is a measure, in terms of flexibility and ease, to create a company and what the report shows is that there are many less developed countries than Spain where it is much easier to take that step.
Recently, the story of a entrepreneur from Seville appeared in the Spanish media, where he recounted the ordeal of three years and 10,000 € spent in paperwork in four different administrations (local, provincial, regional and national) to open a business in the town of Vejer, situated in a region with one of the highest unemployment rate of the whole of Europe.
The difficulty of starting a business is still the main drag on the overall ranking of 'ease of doing business', in which Spain is still placed at 44th, behind Peru and ahead of Colombia, in a list that is topped by Singapore, Hong Kong, New Zealand, the USA and Denmark, which repeat in the top five.

Theologians attacking the Church

The Juan XXIII Theologians' Association,  has denounced the bad Administrations of politicians as the principal reason for the present situation, and has accused the leaders of the Church of committing a ‘sin of omission’ by their silence. The powers have had the intention of creating ‘a society of inequality’.

The Association continue saying that ‘the crisis has been provoked not only by the economy, but in a large part by corruption. The disasters caused have been motivated by money and capital,  and more importantly, by a lack of ethics and shame.’

‘The bad Administration of many politicians and the corruption of some of them is causing serious damage to democracy. Some influential groups, without morals or ethics, are absolutely convinced that the most important thing in life is luxury and profit, without considering the corrupt means by which it has been obtained.

The outspoken Theologians' Association continues, “The culture, education and health services, in short time, are being converted into privileges for the rich, who intend to dominate the rest.”

The weekly crisis:

Mortgages approved for buying a dwelling were down 28.5% in August, over the same month of ‘the bad last year’ with just 21,106 agreements signed

Eurostat establishes the deficit for last year in Spain, relative to the Gross Domestic Product, at 9.4%, instead of the previous 8.5%. The increase comes from including the rescue of the deficit banks and unpaid bills of the Government, regions and town halls

Spain managed to sell a further 4,614 million euros worth of Bonds. Ten year Bonds were sold at an interest rate of 5.468%. But the regional government of Madrid had to withdraw a debt offer, due to lack of buyers, even with an offered interest rate of 7.8%

The Spanish economy shrunk a further 0.4% in the first quarter of the year on the preceding quarter and was down 1.7% compared with the same quarter last year

The country risk stands at 406 points, and investors expect Spain will soon be under the European rescue umbrella

A Rating Agency has reduced by between one and two levels the credit ratings of 5 regions.  Andalucia is down to the level of ‘rubbish’, together with Extremadura, Castilla-La Mancha, Catalonia and Murcia

Waiting for Rajoy…….

Margaret McCormick
reports on behalf of the Irish Property Owners Association, that Unfair Tax Treatment May Double Arrears on Buy to Let

The arrears statistics on buy to let investors are horrendous with one third of all investors in arrears over three months. This is causing fear, upset and financial devastation to families. Market forces resulted in rents being reduced which is a risk accepted by all investors, however the damage was increased as a result of the changes in the tax treatment of the private rental market since 2009. Expenses are now being treated as profit and are being taxed. This is the only sector where people are being taxed on a loss. Investors either have an inflated tax liability or have to pay tax on a loss which has resulted in them not being able to pay back the banks. 25% of the interest on monies paid to the bank is classed as a profit and tax is due on it. This is an expense. The buy to let sector houses 20% of people in Ireland (700,000,) of which 96,000 are on Rent Supplement. These are tenants who are rent assisted and are accommodated in the private sector at a fraction of the amount that it would cost the State to provide their accommodation.

There are moves afoot to charge PRSI on this sector which will result in more defaults. There seems to be a witch hunt on people who invested in property to help secure their future. Investors expect to pay tax on profit, but can’t pay tax on a loss and service their loans with the banks. They only expect fair treatment. These people contributed to the State by paying large Stamp Duty and will be able to continue their fair contribution if the tax treatment of the private rental sector is fair like every other sector. If the current tax treatment continues, expect to see the 30% of investors in arrears doubling to 60% and unable to pay their taxes. Stephen Faughnan, IPOA Chairman, stated that “Instead of applying unmanageable burdens on property owners, the State should be extending the hand of friendship to the suppliers of rental accommodation, much needed for the growing population.”

Irish Property Owners Association

Ashtown Business Centre,

Navan Road.

Dublin 15.

Tel:  01-8276000     www.ipoa.ie   

Málaga: Not one home legalized nine months after the decree
Susana Villaverde, El Mundo (Translated by Lenox Napier)

Municipalities must submit an inventory of disseminated homes
The houses that are not regularized by January will not be entitled to services
The Junta de Andalucía may have announced it back in March 2011 and approved it in January 2012, but the decree regulating buildings and settlements on undeveloped ('non-urbanisable') land across Andalucía has not yet borne any fruit in the province of Málaga, where there's a large number of so-called 'illegal homes'. As of today, the number of houses regularized so as to obtain legal services and licenses – stands at zero. The requirements directly involving the town halls themselves, some very small and with limited resources, is helping to further slow down the process.
Just in the Axarquia area of Eastern Málaga, the Andalusian government has identified 12,760 illegal homes in 22 municipalities, of which more than 11,000 are eligible, according to the decree, for regularization. There are 976 households less than four years old, so the offence has not been prescribed, thus the town hall should identify and request case by case reports to regularise their condition. In addition, a further 859 homes are on protected land and are under threat of possible demolition, since they are unable to put their situation into legal order.
The decree dictates that municipalities must establish either in their 'General Plan' or by enacting specific by-laws "minimum conditions of habitability" and to draft detailed plans to identify isolated buildings on undeveloped land.
Sources from the Association of Municipalities of the Eastern Costa del Sol/Axarquía say that just a few municipalities have sent the required documentation to the Junta de Andalucía for final approval and to begin the process of regularization as well, including the town of Alcaucín, which has large numbers of houses without proper planning or paperwork.
According to the mayor Domingo Lozano (PP), there are 39 settlements in urban or undeveloped rural land in Alcaucín, of which 16 (a total of 586 homes) have been included in the forward planning for settlement, as approved in a recent town hall plenary session. The documentation has been transferred to the Junta de Andalucía, which should ideally complete the process.
"Many of these houses are very old and now can not obtain a license for renovation or even maintenance. Thus it is necessary to regularize even though they remain theoretically 'illegal'," said the Mayor.
In fact, according to the Málaga provincial council (the PP controlled diputación), which advises and works with 22 municipalities in the province on this particular subject – 'irregular' homes built before 1975 are legal, "because they were built before any of the rules were drafted, yet they are nevertheless outside of the current understanding; having less value, since they can not be enlarged or, indeed, demolished: just kept as they are'.

Nevertheless, they will also have to pay fees for processing their cases for regularization.
Of most concern at this point is that houses which are still not regularized a year after the decree was approved continue to not be eligible for garbage collection, the supply of electricity, gas or water or for municipal licenses of occupation or for maintenance.
This article appeared at Reuter:

Spain's regional crisis hammers firms and families

By Tracy Rucinski and Clare Kane

(Reuters) - Overdue bills are piling up at Spain's regional governments and town halls, only months after Madrid staged a rescue that was meant to end the shame of unpaid workers and suppliers.

Financial crisis in the layers of administration below national level is hurting everyone from Spain's biggest corporations to local staff who would be among the lowest-paid workers - but for the fact they often aren't being paid at all.

Inma Martinez, a separated mother of four, is one such victim of attempts by regional and local governments to finance their budget deficits by delaying payments.

Like her fellow municipal employees in the southern town of La Linea de la Concepcion, she is owed eight months of unpaid wages. Nevertheless, she turns up every day to clean the bus station, fearing that if she stays at home the town hall will fire her, probably ending any chance of recovering her wages.

Martinez, 47, has been reduced to begging for food with other local families at a shopping center in La Linea, which nestles next to the British territory of Gibraltar.

"We just want help with food ... it's very hard for the church to help everyone at the moment," said Martinez, who has worked as a cleaner in the Andalucian coastal town for 14 years.

Now Martinez, whose children are aged from 12 to 27, says she is suffering from depression because of the uncertainty over her job. "People have lost everything - their cars, their houses. The situation is really, really bad and they won't give us any concrete information," she said.

This should not be happening. Earlier this year Prime Minister Mariano Rajoy offered a 30 billion euro ($39 billion)bailout to cover months, or even years, of unpaid bills for services ranging from health care to waste management.

The credit line was supposed to be a one-off deal for municipalities and the 17 autonomous regions such as Catalonia and Andalucia, whose problems lie at the heart of concerns that the central government itself will need a euro zone rescue.

Regional and municipal governments badly missed targets for cutting their budget deficits last year. This year they are under huge pressure from Madrid to lower their deficits to a total of 1.5 percent of Spain's annual economic output from 3.3 percent last year. This implies 18 billion euros of savings.

Rajoy's original bailout was designed to settle unpaid bills and wages run up before the end of 2011.

But Spain is in recession and the resulting fall in tax revenue is cancelling out the regions' cost-cutting, so they have resumed trying to meet this year's deficit targets by letting the bills pile up once again.

Already the central government has had to step in with a second bailout worth 18 billion euros, this time to help the regions to meet their obligations on bond borrowings.

Business groups want Madrid to let the local and regional governments use funds from the second bailout - the regional liquidity fund - for paying suppliers as well as making debt payments, said sources representing major Spanish companies.

"The sector is in talks with the government to first use 2.5 billion euros left over from the original credit line to cover debt to June 30, and then resort to the regional liquidity fund," a business source with knowledge of the talks said.

Building and services firm FCC (FCC.MC) and the city cleaning or services subsidiaries of listed infrastructure firms such as ACS (ACS.MC), Ferrovial (FER.MC) and Sacyr (SVO.MC) have all been affected by unpaid bills.

So have pharmaceutical and health care companies such as Roche (ROG.VX) and Sanofi (SASY.PA). Their lobby group Farmaindustria said the regions seemed to be stacking up unpaid bills at a faster pace this year than in the past, having accumulated 1.5 billion euros of debt to its members by June.

"The government has enough ammunition right now to solve the current situation. The issue is ensuring that the bad behavior doesn't repeat itself," the business source said.

The regions are responsible for administering health care and other services. For years Spain's property boom yielded fat tax revenues and they adjusted their spending accordingly.

However, the real estate market crashed four years ago and tax revenue has consequently also dived. Poor management on all levels of government has worsened the problem.

"Spain based its spending on a property bubble, as if it was going to be getting those revenues forever," said J. Ignacio Conde-Ruiz, an economist at the Fedea think tank.

Rajoy's last round of austerity measures, worth 65 billion euros, includes reforms to streamline local administrations and cancel town hall services that cannot be financed.

FAMILY DRAMA

La Linea typifies the plight of citizens whose livelihood depends on public budgets. The local government, the town's biggest employer, has simply stopped paying its 800 workers their regular wages. Staff did get last year's Christmas bonus, but only two weeks ago.

Government employees

have little chance of finding any other work in the town if they leave their posts. Martinez said one colleague who decided to quit is now out of a job.

La Linea has no industry and little tourism, despite lying next to the visitor magnet of Gibraltar. Unemployment is close to 40 percent, far above the national rate of 25 percent which along with Greece is already the highest in the European Union.

Residents say Mayor Gemma Araujo, a Socialist, should negotiate a better deal for the town in paying off its debts and prioritize paying staff.

Araujo admitted that municipal workers were owed a total of eight months' back wages. However, she denied they had gone eight consecutive months without getting anything, saying some payments had been made in June.

She blamed the mess on the town's previous administration, which was run by Rajoy's conservative People's Party. "When we took over a year and a half ago, we discovered the situation was totally chaotic at the town hall. There was 132 million euros of debt to providers," she told Reuters.

Now 70 percent of municipal income is being used to pay off the debts, leaving little to run services or pay staff.

Araujo and her senior staff are still drawing their own, albeit sharply reduced, salaries. "The salaries of the mayor and other top officials have been cut by 70 percent." she said. "Now we need to stabilize the pay situation."

Already her workforce is demoralized. Mercedes Corbacho, who restores religious art and directs a museum in the town, said there was little stomach for a fight over the unpaid wages. "There are no strikes, there's no pressure. The last protest I went to there were five people there," she said.

Corbacho said she has started to fall behind on mortgage payments for the family home, though at least her school teacher husband is still being paid.

"I have to pay for my resources myself now ... We don't have internet (at the museum), I don't even have a computer," she said. Her husband has suggested they move elsewhere with their two children aged 3 and 5, but they are reluctant to leave.

"Things are bad all over Spain, but we can't work without being paid," she said. ($1 = 0.7621 euros) (editing by David Stamp).

At the web page

CONVERSATION:

The Mondragon model: how a Basque cooperative defied Spain’s economic crisis

Back in the early 1980s, the former Secretary of State for Education in Harold Wilson’s Labour government, Shirley Williams, alerted me to a remarkable instance of regional economic development through employee empowerment, centred on Mondragon in the Basque region of Spain.

Taking an early opportunity to see for myself, it was impossible not to be impressed by what was already the world’s largest grouping of worker co-operatives, and my admiration has grown over subsequent visits, most recently late last year.

My 1999 PhD thesis and Mondragon book,Jobs of Our Own: Building a Stakeholder Society, set out in detail the origins of the co-operatives, how they work and the outcomes that have been achieved.

Noteworthy in particular is their commitment to manufacturing excellence and export growth, through cutting edge technological innovation.

At the time of my first visit in 1985, their R&D priorities were already industrial robotics, computer assisted design and control systems, artificial intelligence and sustainable energy sources.

Faced in the aftermath of the global financial crisis with circumstances — where unemployment nationally is in excess of 25% and 53% among young people — Mondragon has demonstrated impressive resilience in helping keep jobless levels in the Basque region to under half the national average.

Even so, the ongoing economic crisis has not left the co-operatives unscathed, and their return to growth has only recently gained momentum.

For the first time since its inception in 1959, Mondragon’s Eroski worker/consumer cooperative — until now Spain’s largest and fastest growing chain of supermarkets, hypermarkets and shopping malls — experienced losses consequent on reduced consumer demand, and only in the current financial year anticipates a return to profitability.

Fagor, Spain’s largest manufacturer of domestic appliances (and also part of the Mondragon cooperative), has successfully managed down production by 30 to 40% in the face of a precipitous contraction of the consumer durables market.

The cooperative group’s Caja Laboral credit union — effectively Spain’s ninth largest bank — is recovering from a 75% reduction in its profitability.

The essentials of the Mondragon story are simple. What arose in 1956 as a handful of workers in a disused factory, using hand tools and sheet metal to make oil-fired heating and cooking stoves is today a massive conglomerate of some 260 manufacturing, retail, financial, agricultural, civil engineering and support co-operatives and associated entities, with jobs for 83,800 workers, and annual sales in excess of $US20 billion.

Mondragon co-operatives now own or joint venture some 114 local and overseas subsidiaries, and are committed to their conversion to employee ownership on a case-by-case basis, consistent with local laws, customs and other cultural and economic considerations.

As equal co-owners of their workplaces, members enjoy job security together with individual capital holdings, equal sharing of profits on a proportionate basis and an equal ‘one-member one vote’ say in their governance. Remuneration within the cooperatives is egalitarian, with the highest rates payable other than in exceptional circumstances being no greater than six and a half times the lowest.

And members share at one remove in ownership of a unique system of secondary support co-operatives, from which the primary or frontline co-operatives draw resources including financial services, social insurance, education and training and research and development.

For example, capital for expanding existing businesses and establishing new ones is drawn in part from the group’s bank and social insurance funds and workers are skilled to high levels at a university of technology, which is itself structured as a co-operative and attracts students in disciplines such as engineering and metallurgy throughout Spain.

Reflective of the high priority attached by the primary co-operatives to the competitive advantage of intensive research and development is the augmenting of the original Ikerlan research and development support co-operative with thirteen sister bodies, specialising in the needs of particular aspects of manufacturing activity and product development.

Faced repeatedly over their 50-year lifespan with cyclical economic downturns, the co-operatives have been able to avail themselves of significant flexibilities. For example, non-members employed on a temporary basis can be put off until conditions improve.

Members can agree to forfeit or postpone entitlements such as one or more of their fourteen per annum pay packets or the payment of interest on their individual capital accounts, or in extreme circumstances authorise individual capital account draw-downs.

Co-operatives experiencing reduced demand are able to transfer members to ones where it is increasing, without detriment to their rights or entitlements. And supplementary capital can be accessed from centrally held inter-co-operative solidarity funds.

One wonders what lessons for productivity, workplace wellbeing and industrial harmony might Australia learn from the Mondragon model of business.

SUR in English

Sun, sea and surgery

A new foundation aims to attract patients from all over the world to the Costa del Sol for treatment in private hospitals and clinics

12.10.12 - 22:04 -

ANGEL ESCALERA |

MALAGA

.Southern Spain is already well known for its climate, beaches and culture that bring thousands of holidaymakers every year. However the tourism industry is always looking for new markets, and now a group of experts has come up with using the Costa del Sol’s wide offer of private health care as an extra tourist attraction.

“We are sitting on a gold mine without realising it”, said cardiovascular surgeon Miguel Such, one of the five founding members of the ‘Malaga Health’ foundation, set up this week. The aim of the initiative is to turn the province of Malaga into an international reference for health, where wealthy patients from all over the world will choose to come for treatment.

“Our objective is to attract foreign patients to Malaga’s many good private health centres”, explains Dr Such, who is head of cardiovascular surgery at Malaga’s Clínico Universitario hospital.

The group calculates that private health tourism could bring the area some 250 million euros in three years’ time, once the foundation is operating at full potential. This calculation works on the assumption that the area could account for 0.5 per cent of the total volume generated by health tourism in the world: some 70 billion euros a year. The foundation is expected to start operating at the beginning of 2013.

The idea is that local hospitals, clinics and rehabilitation centres, along with health foods and pharmaceutical firms and even prestigious hydrotherapy centres such as the Carratraca spa, will all join forces under the Malaga Health umbrella. The end result will be a wide choice of private health establishments which share a guarantee of the quality of their care.

So far the Xanit International hospital in Benalmádena has joined the scheme, as have the Parque San Antonio in Malaga, the Premium clinics in Marbella and Estepona, the Miramar Medical Institute and City Travel, an agency specialising in business, conference and events trips. It is expected that the Quirón and USP hospitals will join up once they have finished their merger process, and conversations are ongoing with the CHIP private hospital and the Santa Elena clinic.

Guarantee of excellence

The most important requirement to join the foundation will be a proven excellence of health services provided. A maximum of 30 establishments will join as patrons, contributing an annual fee of 10,000 euros. Then there will be the category of associate centre, with a monthly fee of between 300 and 800 euros, according to the services provided.

The idea for the Malaga Health foundation was forged a year ago by Miguel Such, along with four other professionals: the director of the heart management clinic and the Hospital Clínico, Juan José Gómez Doblas; the head of the Oncology service at the Clínico, Emilio Alba; the head of the Malaga Law Association, Manuel Camas; and engineer José Alba.

“None of us is interested in making money. We are embarking on this project out of a desire to benefit Malaga. We are doing it out of pure ‘malagueñismo’,” stresses Dr Such, who will be president of the foundation once is formally established.

“We want to associate the brand Malaga Health with the prestige of Spanish medicine in general and more specifically that of the medical services in Malaga, with the added value of a magnificent climate and a wide variety of leisure facilities. All this is an extraordinary attraction that we must take advantage of”, stressed Dr Such.

While it will be private centres that charge for the services provided, the scheme has been promised support from institutions such as Malaga City Hall, the School of Physicians and Unicaja. An agreement is to be signed with Malaga University and talks will be held with the Tourist Board and the Junta de Andalucía.

At first Malaga Health will target European patients bearing in mind the good air links with Malaga and the prestige enjoyed by Spanish medicine in Europe. Private patients from other parts of Spain will also be a target market, stressing that private health facilities in Malaga are behind only those of Madrid and Barcelona in importance. The third stage will be to focus on potential patients from North Africa and Arab countries followed by the American and Asian markets.

The Ottowa Citizen 

Europe’s financial crisis: EU reaches bank supervision deal

Details over single supervisory body – when it will be up and running – have yet to be ironed out but it’s a big step toward a banking union

BRUSSELS, Belgium — European leaders have taken a step toward the creation of a single supervisor for banks in countries that use the euro but details over when it will be up and running have yet to be ironed out.

Though the leaders said their decision represented a step forward in the ambition of forging a banking union, many observers are struggling to figure out exactly what has been achieved.

But the question remains whether the agreement will allow Europe’s bailout funds to recapitalize struggling banks directly — and how quickly — thereby breaking one of the damaging links between indebted governments and the banking system.

Leaders move into discussions on foreign policy on Friday.

The deal, reached at a summit of EU leaders in Brussels, represented a shaky compromise between the Germans and French, who had been tussling over how to shore up the eurozone’s stricken banking system — one of the main causes of Europe’s debt crisis.

France has been pushing to get all 6,000 banks in the 17 euro countries under the supervision of one European body by the end of this year. Leaders agreed in June that, once a supervisor is in place, struggling financial institutions would be able to tap Europe’s emergency bailout fund, the European Stability Mechanism, directly.

At the moment, money to help put banks has to go through a country’s government — placing more strain on state finances. In Ireland’s case, the government’s attempts to rescue failing banks forced it into a bailout. Some fear Spain could face that fate, too.

But Germany’s Chancellor Angela Merkel, wary of using taxpayers’ money to prop up other countries’ banks, had tried to put the brakes on the plan, insisting that creating the supervisor should be done slowly and that “quality must come before speed.”

“We need an efficient supervisor because otherwise the markets won’t take us seriously,” she said after the agreement was reached.

The compromise included something for both — all 6,000 banks will be included, as France had wanted. But there is no firm deadline for the single supervisor to be up and running — other than to say that the “objective” is to finish the legal framework by Jan. 1, and that work on its operational implementation “will take place during the course of 2013.”

“It is not because you vote on a law that you have the whole logistic framework in place the day after,” said Van Rompuy.

Despite the lack of a deadline, French President Francois Hollande declared victory and presented a much more ambitious timeline than his colleagues, claiming the supervisor could be up and running within weeks or months of Jan. 1.

Hollande hailed the steps as pushing the eurozone toward a “banking union” — which would allow eurozone countries to share the burden of their wobbly banks — that he said would protect “all countries touched by the virus of bank failures.”

The debate over the supervisor was especially intense because countries belong to the EU but don’t use the euro are nervous that the new system could make banks in the eurozone look so safe that investors will pour into them. They are also concerned that the eurozone countries will vote as a group on regulations that affect all EU members.

Still, Hollande struck a note of optimism, saying “the worst is over.”

However, many challenges remain.

Unemployment in the region is at a record 10.5 per cent and, growth is grinding to a halt around the continent. There are still concerns Greece might default on its loans — even after two bailouts — and be forced to leave the eurozone.

Leaders praised the progress it said Greece had made toward reforming its economy and balancing its budget, though, without a new report by international lenders, no decision could be taken on badly needed continued aid for country.

On Thursday, rioters in Athens pelted police with Molotov cocktails and chunks of marble to protest the stringent budget cuts the country has had to implement to secure its rescue loans.

Greece’s bailout creditors — the EU, the International Monetary Fund and the European Central Bank — have been engaged in tough negotiations in recent weeks over more budget cuts. The group of creditors, known collectively as the troika, has said it won’t release the next batch of loans until more savings are made. Without those loans, Greece will default and probably be forced to leave the eurozone.

In addition, the question of whether Spain will ask for a bailout itself looms. The government in Madrid said this week that it would decide in the coming weeks — although it is still hoping it can avoid asking for any kind of aid.

But the political pressure on Spain is great because should investors become convinced that Madrid will not request aid, they may once again sell off the country’s bonds, causing its borrowing rates to rise. If Spain were to be locked out of bond markets because of excessively high rates, the 17 countries that make up the eurozone would have to rescue it at huge financial cost.

“It would be helpful ... if Spain asked for ESM aid,” said Van Rompuy. “But it is up to Spain to make up its mind.”

Spain Earthquake, Drilling Wells Linked In New Study Of Lorca Tragedy

AP | By JORGE SAINZ

MADRID (AP) — Farmers drilling ever deeper wells over decades to water their crops likely contributed to a deadly earthquake in southern Spain last year, a new study suggests. The findings may add to concerns about the effects of new energy extraction and waste disposal technologies.

Nine people died and nearly 300 were injured when an unusually shallow magnitude-5.1 quake hit the town of Lorca on May 11, 2011. It was the country's worst quake in more than 50 years, causing millions of euros in damage to a region with an already fragile economy.

Using satellite images, scientists from Canada, Italy and Spain found the quake ruptured a fault running near a basin that had been weakened by 50 years of groundwater extraction in the area.

During this period, the water table dropped by 250 meters (274 yards) as farmers bored ever deeper wells to help produce the fruit, vegetables and meat that are exported from Lorca to the rest of Europe. In other words, the industry that propped up the local economy in southern Spain may have undermined the very ground on which Lorca is built.

The researchers noted that even without the strain caused by water extraction, a quake would likely have occurred at some point.

But the extra stress of pumping vast amounts of water from a nearby aquifer may have been enough to trigger a quake at that particular time and place, said lead researcher Pablo J. Gonzalez of the University of Western Ontario, Canada.

Miguel de las Doblas Lavigne, a geologist with Spain's National Natural Science Museum who has worked on the same theory but was not involved in the study, said the Lorca quake was in the cards. 

"This has been going on for years in the Mediterranean areas, all very famous for their agriculture and plastic greenhouses. They are just sucking all the water out of the aquifers, drying them out," he told The Associated Press in a telephone interview. "From Lorca to (the regional capital of) Murcia you can find a very depleted water level."

De las Doblas said it was "no coincidence that all the aftershocks were located on the exact position of maximum depletion."

"The reason is clearly related to the farming, it's like a sponge you drain the water from; the weight of the rocks makes the terrain subside and any small variation near a very active fault like the Alhama de Murcia may be the straw that breaks the camel’s back, which is what happened," he said.

He said excess water extraction was common in Spain.

"Everybody digs their own well, they don't care about anything," he said. "I think in Lorca you may find that some 80 percent of wells are illegal."

Lorca town hall environment chief Melchor Morales said the problem dates back to the 1960s when the region opted to step up its agriculture production and when underground water was considered private property. A 1986 law has reduced the amount of well pumping, he said.

Not everyone agreed with the conclusion of the study, which was published online Sunday in Nature Geoscience.

"There have been earthquakes of similar intensity and similar damage caused in the 17th, 18th and 19th centuries when there was no excess water extraction," said Jose Martinez Diez, a professor in geodynamics at Madrid's Complutense University who has also published a paper on the quake.

Still, it isn't the first time that earthquakes have been blamed on human activity, and scientists say the incident points to the need to investigate more closely how such quakes are triggered and how to prevent them.

The biggest man-made quakes are associated with the construction of large dams, which trap massive amounts of water that put heavy pressure on surrounding rock.

The 1967 Koynanagar earthquake in India, which killed more than 150 people, is one such case, said Marco Bohnhoff, a geologist at the German Research Centre for Geosciences in Potsdam who wasn't involved in the Lorca study.

Bohnhoff said smaller man-made quakes can also occur when liquid is pumped into the ground.

A pioneering geothermal power project in the Swiss city of Basel was abandoned in 2009 after it caused a series of earthquakes. Nobody was injured, but the tremors caused by injecting cold water into hot rocks to produce steam resulted in millions of Swiss francs (dollars) damage to buildings.

Earlier this year, a report by the National Research Council in the United States found the controversial practice of hydraulic fracturing to extract natural gas was not a huge source of man-made earthquakes. However, the related practice of shooting large amounts of wastewater from "fracking" or other drilling activities into deep underground storage wells has been linked with some small earthquakes.

In an editorial accompanying the Lorca study, geologist Jean-Philippe Avouac of the California Institute of Technology said it was unclear whether human activity merely induces quakes that would have happened anyway at a later date. He noted that the strength of the quake appeared to have been greater than the stress caused by removing the groundwater.

"The earthquake therefore cannot have been caused entirely by water extraction," wrote Avouac. "Instead, it must have built up over several centuries."

Still, pumping out the water may have affected how the stress was released, and similar processes such as fracking or injecting carbon dioxide into the ground — an idea that has been suggested to reduce the greenhouse effect — could theoretically do the same, he said.

Once the process is fully understood, "we might dream of one day being able to tame natural faults with geo-engineering," Avouac said.