Editorial: You will have read Per Svensson's final Report about Spain, with its gloomy prognosis for the coming year. Things will be bad for those of us who live here, and property owners must expect house-prices to fall even further. There are 'killings' to be made, perhaps, but you will need to have impeccable connections with those in power. Thanks to the social networks - Facebook, Twitter, forums and blogs - our politicians are receiving more criticism than ever. I have just received an angry email about '127 active politicians charged with corruption, who continue with their political activities'. Another, on Facebook, about 22 ex-ministers now enjoying board-membership on various giant companies (ejem: Rodrigo Rato, ex Finance Minister who sold off Telefonica to the Private Sector, now on the board of the very same – and no doubt very grateful – Telefonica). An email about a new society of lawyers who are against corruption (Abogados Contra la Corrupción) (!!) and so on. The Government is fighting back with a novel form of censorship – where any call to protest, if considered as 'violent', will meet with a minimum of two years jail. Furthermore, the Government is to a launch a campaign in May to improve the image of politicians. Since both the national and regional governments spend a whopping amount on institutional advertising every day, plus their own broadcasting services in TV and radio, this may prove useful, if as ever dishonest.
Spanish Government owned Parador hotels have been in the news recently, with some minor strike action after the Ministry of Tourism announced plans to fire 640 workers and to close down the Parador in Puerto Lumbreras (Murcia) and six others: Albacete, Manzanares (Ciudad Real), Ayamonte (Huelva), Ferrol (La Coruña), Teruel y Verín (Orense). Finally, the unions and Management have reached a compromise: just the Puerto Lumbreras hotel will be closed and 350 workers across the chain will be let go. Another 27 Parador hotels have been temporarily or partially closed for three or four months, plus thirteen hotel restaurants, and visitors should check their schedules this winter. The Government admitted last week that, if these measures aren't successful, it may consider privatization of the entire Parador chain.
Over a million smokers are said to have given up cigarettes in the past two years thanks to Spain's smoking laws.
The 2012 reported road deaths are down to 1960 levels, according to the DGT, at just 1,304. This after a number of traffic laws, new driving licence rules and strict policing. In 1960 there were just one million cars on Spanish roads, compared to the current 31 million vehicles registered by Tráfico.
Spanish public workers have lost their Christmas Benefit (the so-called fourteenth month) following orders from the Government. However, to get around this inconvenience, funcionarios from Navarra, The Basque Country and Extremadura will be paid next summer's extra month now in January.
Despite reports that the Spanish Royal Family is as popular as ever and that last April's 'Botswana Incident' (where King Juan Carlos potted an elephant – the incident only coming to light after he broke his hip in the process) had been forgiven, a new report says that the Royals have fallen in public estimation from 76% a year ago to just 50% in favour today.
House prices continue to fall, according to official figures, with Madrid homes falling back to early 2003 prices (a drop of 33% over their highest 'boom' prices). The average price of a 90m2 apartment in the capital now stands at 268,380€, while the average city price for the same size dwelling is 199,100€ (San Sebastian, Madrid, Barcelona and Bilbao are the most expensive, while smaller provincial cities report average prices at 142,700€). Coastal resorts fell an average of 7% in 2012. Benidorm and Torremolinos both showed smaller falls at around 4%. A reduced number of homes were completed in 2012 at 118,000 - just half as many as in 2010.
The Spanish CCOO trade union is of the opinion that jobs will continue to be destroyed in 2013, and reckon that we shall reach six million unemployed. Ignacio Fernández Toxois the General Secretary of the union and he says that the Government's employment policies are 'a big fat zero'. Meanwhile, as Spanish figures are apparently manipulated (the Ministerio de Empleo y Seguridad Social claims 4,849,000 are without work), the European statistics office Eurostat says that the country has already reached the six million mark with unemployment at 26.6%. Either way, it's an untenable number.
Over 300 politicians are under investigation for corruption, according to a report in the Nueva Tribuna. Politicians from the Balearics, Valencia, Galicia and Catalonia appear to lead the pack. Investigations into the boards of several banks – the CAM and Bankía – are also underway. The King of Spain's son-in-law Iñaki Urdangarin is in trouble with the law and, in Andalucía, investigations into the ERE scandal netted around 70 people. Around 30 mayors and fifty ex-mayors are also in trouble, including the mayors of Orense, Lugo and Santiago de Compostela.
El Mundo asks the question on Wednesday 9th January if politicians under investigation for corruption get an easier time from the courts than common delinquents. 99% say 'yes'.
According to a clause within the agreement over the fusion of Iberia and British Airways, Iberia could disappear in three year time. The majority shareholder of the holding company IAG is British Airways with a 50.1% stake, enough to eliminate the Iberia brand from the skies after January 16th 2016.
SPAIN is to scrap tax on property purchased by foreign companies, the government has announced.The move, which comes into force this year, is seen as the latest attempt to encourage foreigners to invest in Spain’s struggling property sector. Property tax can be a large expense for home owners in Spain, with the government raking in €30,000 a year on houses worth €1 million. The reforms also include a plan to end taxation on the Spanish equivalent of real estate investment trusts, which is expected to go down well with foreign investors. (The Olive Press)
Spain's judges have come in for a bit of a beating recently after the magistrate Santiago Vidal noted that around one third of them are active members of Opus Dei, the powerful Catholic organisation. Nevertheless, things are changing. Judges and magistrates meeting in Madrid recently at the 1st Congreso Internacional contra la Represión complained that they were commonly being used merely as a collection agency by the banks and they asked for changes in the draconian mortgage laws in Spain.
The Minister of Justice, another hard-liner called Alberto Ruiz-Gallardón, wants to reduce the holidays given to the judiciary - since the courts are overflowing with cases - and to charge citizens in certain cases for going to court. The judges, magistrates and prosecutors are threatening a full-blown strike next month, claiming that the new rules, called the Ley Orgánica del Poder Judicial, are an attack against the 'Administration of Justice as a public service'.
While the conservative wing of the judiciary may not be joining in, it must nevertheless be concerned about Ruiz-Gallardón's removal of their Christmas Extra and their reduction in 'days off' from 18 to 12. 'Judges', says the Minister 'are not merely civil servants, they also wield the Power of the State - they have, in short, obligations to the Public rather than rights to themselves'.
Regions
Andalucía: The vicepresident of the Asociation of Self-employed Workers in Andalucía (ATA-Andalucía), Rafael Amor, said last week, after announcing the closure in 2012 of over 5,000 small businesses in the region - 'If we focus on the global data of the year 2012, then the loss of 5,199 independent businesses is a mortal blow to the productive fabric of our community'. Autonomous workers complain that they are often paid late, while having to meet their tax obligations on time. With 1,083,829 officially unemployed in Andalucía, Sr Amor noted that 'the data shows that things are not going well at all and that figures like these sow distrust and confusion – which in turn fuels an alarming fall in local consumption'.
Andalucía: A group of British pensioners have decided to take on the might of the Spanish State in the European Court of Human Rights
Having exhausted all hope of a preventing the demolition of their home via the Spanish courts a retired British couple from Albox, Andalucía, are now taking their case directly to the European Court of Human Rights. This move is backed by AUAN and SOHA, two organisations representing hundreds of home-owners in similar circumstances in Spain.
The case echoes that of Len and Helen Prior whose home in Vera, Andalucía, was demolished five years ago on the 9th of January 2008 as the result of a planning dispute between the local council and the regional government. In both cases the properties had full building licences.
“We feel there is no other option” said AUAN president, Maura Hillen. “In the case of Helen and Len Prior the Spanish Constitutional Court, the highest court in Spain, deliberated for two years over whether or not their property should be demolished by which time the house had already been flattened. And even if compensation is actually awarded by the Spanish courts, it can take up to fifteen years to receive any money. There must be no more demolitions without prior compensation’.
Philip Smalley, President of SOHA said, “While the problems that we face in the Axarquia are, in many ways, very different to those faced in Albox we all feel a shared wrong which must be righted. If only one of us can establish this fundamental right to live in peace in a home bought in good faith then surely this will help to shift the intransigence of the Spanish legal system and will be money well spent”.
The case will focus on Article 1 of Protocol Number 1 of the European Convention of Human Rights which guarantees the right to property. This is a fundamental right, which according to AUAN “holds little sway in the Spanish judicial system”.
“This is a David and Goliath struggle. This couple were on the brink of giving up when members of AUAN and SOHA put their hands in their pockets to fund the submission of this case. We cannot afford to fund this case any further but we intend to try to raise enough funds to see it through. We believe that this is not just about one couple or one case. It is about the fundamental principle that a person who acted in good faith should not be deprived of their home without prior compensation as a result of the action or inaction of the Spanish state. We feel that if this couple wins, we all win”.
Murcia: One of the largest excesses of the property bubble was the planned Marina Cope to be built between Aguilas and Lorca. The project was the usual madness: six golf courses; 22,000 hotel beds; 9,000 residences and a gigantic sports marina. The Vera/Cartagena toll-route, built at a ruinous cost of 732 million euros, was planned to serve this monster, rivaling in size the Junta de Andalucía's absurd Llano Central in northern Almería which remains, unnervingly, on a back-burner somewhere in the parliament building in Seville.
The Constitutional Court in Madrid has now ordered the Murcian Government to cancel the plans for Marina Cope.
Press Cuttings
ZeroHedge http://www.zerohedge.com/news/2013-01-03/spain-plunders-90-social-security-fund-buy-its-own-debt
With Spanish 10Y yields hovering at a 'relatively' healthy 5%, having been driven inexorably lower on the promise of ECB assistance at some time in the future, the market has become increasingly unsure of just who it is that keeps bidding for this stuff. Well, wonder no longer. As the WSJ notes, Spain has been quietly tapping the country's richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds - with at least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt...
Der Spiegel has an interesting take on the Mayoress of Madrid, Ana Botella (link in English).
A quote: Ana Botella, 58, the wife of former conservative Prime Minister José María Aznar, has been Madrid's mayor since the end of December. Before that, she had served eight years as a city councilor, initially for family and social affairs and, most recently, for transportation and the environment. Rather than being elected to the office, Botella inherited it from her predecessor after he was brought into the administration of Mariano Rajoy, a fellow party member who became Spain's prime minister in November.
Botella inherited not only the office with the best view, a room larger than the Oval Office in Washington, in a 1917 palace that was converted into the city hall at a cost of €500 million, but also the services of a butler whose sole duty is to serve coffee to her and her guests. But she has also inherited close to €6.4 billion in debts.
By the end of March, Botella had to present the Finance Ministry with an austerity plan demonstrating that the city's future expenditures would no longer exceed its revenues. She had to draft this plan because the government of conservative Prime Minister Mariano Rajoy enacted a law last week that will impose sanctions on public administrations that continue to incur new debts...
Guy Hedgecoe at Iberosphere considers the new challenges for Spain and her president Mariano Rajoy: http://iberosphere.com/2013/01/spain-news-2013-another-rough-ride-for-spain/7674 2013 : Mariano Rajoy faces multiple challenges in the coming months, but his preferred ploy of buying time isn’t going to work for long.
Last year presented probably the toughest baptism of fire for any Spanish prime minister since the transition to democracy, but Mariano Rajoy knows that this year will be just as challenging.
The big problems facing his government in the coming months are, for the most part, those that dominated 2012: the markets and a pending bailout; rising unemployment; lack of growth; social unrest; and Catalonia’s push for independence.
The bailout presents perhaps the most vexing problem for Rajoy, because it demands decisiveness from a notoriously equivocal politician.
Although Spain’s borrowing costs have dropped from their alarming levels last summer following Mario Draghi’s assurances about the ECB’s willingness to buy the sovereign debt of struggling nations, they are still high. Spain’s private sector is frustrated at the cost of credit and several of the country’s EU neighbours – Germany being an exception – cannot understand Rajoy’s dallying. While the Spanish leader has sought to frame his refusal to ask for a full rescue as a show of national sovereignty, if, or when, he does eventually make the request, there is a risk the delay will simply be seen as time wasted.
Time is also a key factor as the government hopes to see its labour reform show some benefits. Its introduction in the first quarter of 2012 coincided with a continuing rise in unemployment to a current level of over 25 percent. To the man in the street, it looks suspiciously as if a reform that aims to make hiring and firing easier is merely doing the latter. Some analysts cite cases where jobs continue to be destroyed for up to 18 months after the introduction of such legislation before it has any discernible positive impact. But of course, economic growth is a crucial ingredient in that equation and none is expected at least until the very end of 2013.
The social unrest that has been an almost non-stop feature of Rajoy’s tenure so far will continue this year, but a lot depends on its exact nature. Constant protests by different groups across the country against cuts are inconvenient and bad press for the government, but so far there have been few actions that cause it real concern.
One exception was the series of “Surround Congress” protests in September and it seems that those kinds of actions, rather than the more predictable labour union-led strikes, have the greatest potential to harness public anger.
Defusing Catalan tensions
One issue where sitting tight and waiting definitely will not pay off for the Spanish government is that of Catalonia. The region’s move towards independence has to be taken seriously, however insurmountable the financial and technical hurdles ahead of that goal seem.
The coming months will see Catalan premier Artur Mas negotiate with the ERC party in an effort to agree on a 2014 referendum on independence. Those talks are likely to be bumpy, given the two sides’ approach to economic and social issues, and so Madrid has the chance to reach out to the northeast and defuse an increasingly tense situation.
But that would require the kind of boldness and resistance to Madrid-centric pressures that we haven’t yet seen from Spain’s prime minister. His biggest challenge of all in 2013 will be to confound expectations of him.
The Independent (UK) follows the story of the threatened pull-out from the EU by the United Kingdom (it would certainly be a bad thing for British residents living in Spain). January 10 2013. http://www.independent.co.uk/news/uk/home-news/obama-administration-warns-britain-to-stay-in-the-european-union-8444789.html
'Obama administration warns Britain to stay in the European Union'
Britain risks damaging its relationship with America and being sidelined in the international community if it leaves the European Union, the Obama administration publicly warned today.
“We value a strong UK voice in a strong European Union,” the US State Department’s Philip H Gordon, the Assistant Secretary for European and Eurasian Affairs, said starkly during a visit to London to meet ministers yesterday.
“We have a growing relationship with the EU as an institution, which has an increasing voice in the world, and we want to see a strong British voice in that EU. That is in America’s interests. We welcome an outward-looking EU with Britain in it.”
A British exit from the EU would not enhance the “special relationship” in any way, he said. America would continue to forge stronger links with member countries of the EU which it sees as having “a growing voice in the world and a critical partner on global issues”...
Note: The referendum will probably be held in 2018.
Thoughts from Galicia http://colindavies.blogspot.com - Sensible thoughts about why things are 'so quiet' in Spain, despite the agony of the current crisis!
'Only 77 years ago, this country was so politicised, it broke out in a civil war notable for its medieval ferocity and cruelty. Now, despite 4 years of deprivation and in the face of at least another year of the same it's so depoliticised that no one expects serious protest, let alone violence. With employment heading for 27%, why is this? I have to confess I don't know. What I observe is that there's a ubiquitous sense of resignation. And perhaps a fear that, when it's all over and things slowly start to get a little better, the shine will not only have been taken off the phoney boom years but several before that as well. Spain, in other words, will have gone backwards. By some way. And no amount of gloss will hide this.
As one searches for reasons why the Spanish haven't mobilised against their corrupt politicians and their thieving bankers and businessmen, one also senses they are held back by a feeling they were complicit in the madness of the euro-driven boom. Yes, the bankers offered them mortgages of 140,000 on properties costing only 80,000 but it wasn't obligatory to join in the feeding frenzy that was the lending boom. No one really needs two flats, let along three or four. Or an Audi instead of a Ford. There was a lot of greed. As in any Ponzi scheme. And now it's time to confess and seek absolution through the Calvary of the recession-cum-depression. With patience and, as I say, fatalistic resignation...'
TAX LAW IN SPAIN: New Obligation to inform the Spanish Tax Authorities regarding assets and rights abroad.
(Thanks to White and Baos: www.white-baos.com Denia, Alicante)
The Spanish authorities are stepping up the fight against tax fraud, especially against undeclared assets for which no tax is paid. Recently new Laws 7/2012 and Royal Decree 1558/2012, have been passed in this regard.
Thus, under this new legislation, readers have to consider that there are new obligations to report and inform the Spanish tax authorities regarding assets, goods and rights held outside of Spain.
- Accounts located abroad, this includes savings accounts, deposits, credit accounts, etc.
- Shares, rights, insurance policies and annuities deposited, managed or obtained abroad. This includes trusts, pools of assets without legal personality, interests in collective investment institutions, (investment funds), life insurance policies, etc.
- The real estate property and real rights on them, located abroad.
Note: The above info is provided with no endorsement, but it appears correct. Further, the new OECD agreements will facilitate information exchanges regarding assets held outside Spain and in some cases make them obligatory (so-called fiscal paradises are no exception). Double taxation agreements may provide some protection, should Spanish citizens resident in other contracting states not face similar requirements as the nationals of the other contracting states encounter here in Spain (non discrimination clauses). Consult the relevant bilateral treaty and tax advisors as required. Detailed rules regarding reporting are not yet available. Bear in mind anyone present in Spain for more than six months in a calendar year is considered a fiscal resident for Spanish taxation purposes even when residency is also held in another country)
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