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Business Over Tapas  (October 2nd , 2014)

By Lenox Napier and Andrew Brociner

miércoles 22 de octubre de 2014, 11:21h

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:

Catalonia is the elephant in the Spanish foyer. Could they really move forward with their plans for a referendum of some sort on independence? Would Madrid ever allow this, however it was worded, presented or hidden? Would Catalonia go so far as to declare a unilateral declaration of independence? Would Madrid send in the army as a consequence?  We appear to be standing between a rock and a hard place.

Housing:

'Foreign demand for property in Spain increased by an annualised 12 per cent in the second quarter, according to the latest data from the General Council of Notaries. Foreigners now represent a record 20 per cent of home buyers in Spain, and the notaries describe them as the “principal motor of growth” for the Spanish property market...'. From Mark Stücklin's Spanish Property Insight. There is a similar report at Kyero.

We've seen it few times before, but here's another story of a Spanish village for sale, this time at El País in English.

Seseña is known in Spain as a giant and empty project built just as the Crisis started in 2008. Thousands of apartments built but never sold. According to an article in the Financial Times, those 33 giant blocks of apartment buildings in a small town south of Madrid are beginning to see some life, with hesitant sales and even banks prepared to lend to buyers. The article, which notes that sales are beginning to return across Spain and mortgages are up 30% over last year, ends with - '...Like the banks that took over most of the properties after the crash, (local resident) Ms Sanlazaro continues to live in hope. One day, if the broader economic recovery remains on track, Spain’s biggest ghost town may be filled with life'.

From La Voz de Almería: '...The impact on the economy of the thousands of residents of British origin in the Valle del Almanzora is evident. It is not difficult to imagine what this means for businesses taking into account that in some municipalities such as Arboleas, English-speaking residents exceed 50% of the population.

In many cases the spending from this community is a lifesaver such that, if it wasn't for the 'new' neighbours, many businesses would have closed down long ago. Now in Albox, local traders are preparing a collection of signatures against the threatened demolitions...'.

'ALBOX:LAS PALMARES CASE: In a judgement affecting seven properties purchased by British Families, the judged has ruled AGAINST demolition on the basis that the houses could be legalised and it would cause more damage than benefit to demolish them. The court also order compensation for MORAL DAMAGES to THREE of the affected home-owners amounting to 135,000 euros payable by the promoters and the town hall of Albox'.  AUAN quoting Europa Press. In the opinion of Maura Hillen, president of AUAN ‘It is a good result. For the British the issue of illegal houses is like an upside-down lottery, where they have the bad luck to buy an illegal house, they have to fight for it for 10 years, they might die in the process, that everything depends on the interpretation of the judge, that there is insufficient clarity in the Penal Code and that if they demolish they get a piece of paper that says don’t worry, you will be paid afterwards; a payment, that for certain will never materialize, as we know only too well in this area. After all that, if you don’t die first, you’re left out in the street with your bags, without money and without a house. A grim scenario which can be avoided by changing the law’. Reactions in El Mundo here.

'The bosses of crooked building firm the Mirador group, Enrique and Leopoldo Faura, have this week begun their four year prison sentences.

The brothers were found guilty of keeping €400,000 in deposits from prospective buyers in Velez-Malaga during 2004-5...'. From The Olive Press.

'Whether you’re considering buying a home from a private owner or a developer in Spain, there’s one piece of paper you should always check has been correctly issued by your soon-to-be local Town Hall, both to ensure the bank has no problem lending against the property and to avoid potential problems once you move in: the License of Initial Occupation (Licencia de Primera Ocupación)...'. Useful article from The Olive Press.

'The Consumers and Users Organisation (OCU) have reported that the cost of the Property Tax (IBI) has risen in several Spanish cities over the last five years, despite the fact that housing prices have fallen by more than 40% on average during this time.
The Organisation indicated in a statement, that the IBI has risen by 54% in Madrid since 2008, and by 33.8% in Barcelona. This tax has also increased by 23% in Seville and Valladolid, by 17% in A Coruña and by 7.9% in Bilbao and Valencia. The OCU believes that the IBI should only increase when property values rise, and that it should reduce when the price of housing falls, as has been the case in recent years...'. From Kyero.

Tourism:

From TGT Digital: 'Spain’s tourist board has a new 10-point marketing plan for the UK as it seeks to mature the market. Enrique Ruiz de Lera, north Europe area co-ordinator for the Spanish National Tourist Office (SNTO), said he will focus on the new trips as the board pushes the ideals of relaxation, discovery, enjoyment, learning and meetings ...“The biggest challenge we have is to attract and counsel the consumer. The UK market is a very immature market, it is not very well developed or as sophisticated as it could be. “There’s enormous potential for growth.” … Ruiz de Lera also spoke of the importance of the UK travel market, which accounts for 1% of Spain’s GDP.

Finance:

'...The economy minister Luis de Guindos revealed that the administration of Prime Minister Mariano Rajoy has revised GDP forecasts for 2015 up from 1.8% to 2%, and that 348,200 jobs would be created that same year. That would leave the unemployment rate at 22.9% in 2015, compared to its current level of 24.5%...'. From El País in English.

Interest: 'interest noun (MONEY). Money that is charged by a bank or other financial organization for borrowing money': thus the Cambridge Dictionary. 'The Government has paid 200,000 million euros just in interest re-payments since the crisis began' El Mundo reveals. Who have they been paying? Speculators, banks... Far more interest is paid by the Government than, for example, Social Security and Job Creation.

'A report by the Bank of Spain warns the Government that at the current pace, the emigration of Spaniards in search of jobs "can have a significant effect on the potential growth of the Spanish economy" and recommends measures in the labour market to facilitate the return of those who have left during the crisis...'. From Europa Press.

Mutiny within the Santander? The Wolf Street article begins amiably enough: 'Don Emilio Botín, for decades the undisputed Capo of Spanish banking, is dead. By contrast, the bank he leaves behind him, Grupo Santander, is both alive and kicking – at least to all outward appearances. It is now the largest bank by market capitalization in the Eurozone as well as one of the thirteen leading banks in the world – no mean feat given that when Botín III took the reins of the family business from his father, Santander was merely a mid-sized domestic bank with just a tiny smattering of overseas operations...'.

It's bad enough having to sell off the luxury car to pay off the bank overdraft, but what about selling the boat... or the plane? According to a report in Yahoo Finanzas, there are some 10,000 boats either for sale or simply abandoned in Spanish marinas. Maintenance costs are high, demand is low and prices are cheap. Around a hundred aeroplanes have also been abandoned, and are cluttering up the airports, according to AENA.

Corruption:

'The Mayoress of Alicante, Sonia Castedo, one of the black sheep of the PP in Valencia, has been charged for her alleged preferential treatment towards businessman Enrique Ortiz in the case investigating the alleged irregularities in the processing of the Plan Rabasa, the urban development project on the installation of Ikea in the Alicante area of Rabasa. She will declare in front of the judge on November 27. Castedo is already imputed, in addition, in the Brugal case. The permanence of the Mayoress makes a joke of the so-called code of good practice of the PP, which regulates the performance of their political leaders to avoid corruption'. Found at the radical site Hartos. A crowd of 400 people clamoured from outside the Alicante town hall for Ms Castedo's resignation for corruption charges, while a plenary session was being held within, as a point from Esquerra Unida asking for the Mayoress to resign was defeated by the PP majority. Story at Euro Mundo Global.

White Elephants:

El Mundo has some fun with 'The Bridge to Nowhere', a giant bridge in Talavera de la Reina, built at a cost of 74 million euros; a bridge which takes the motorist... nowhere.

Politics:

Spain is proposing that Europe should become a federation rather than a union. A 170 page report setting forth Spain's foreign policy and strategies ends with: 'The final goal of the construction of Europe is political union. Europe must be configured as a genuine federal union, not simply as a union of sovereign States. This process must be done in phases, but the goal must be defined clearly as soon as possible...'.

'The United States of Europe (sometimes abbreviated USE) or Federal Republic of Europe is a name given to several similar hypothetical scenarios of the unification of Europe as a single sovereign federation of states, similar to the United States of America, both as projected by writers of speculative fiction and science fiction, and by political scientists, politicians, geographers, historians, and futurologists (Wikipedia).

'The Spanish government revised up its economic growth forecast on Friday, saying the economy would grow by 1.3 percent in 2014 and two percent in 2015, while promising nearly 350,000 new jobs next year.

The finance ministry published forecasts of 1.3 percent growth for 2014 and two percent for 2015, raising earlier estimates of 1.2 percent for this year and 1.8 percent for next year. It said it expected Spain's unemployment rate to ease to 24.2 percent this year and to 22.2 percent in 2015...'. From The Local.

The ex-Minister of Justice Alberto Ruiz-Gallardón has got a new post: on the board of the Consultative Council of the Community of Madrid, a job that pays 8,500€ per month – sounds like a 'cushy' job. Indeed, here's El Diario's title: 'How to earn 8,500 euros a month by going to work for just one day a week'. 

El Confidencial discusses seven examples of how lobbies can affect our politics, quoting a study called 'Estudio Sobre los Lobbies en España' from Transparency International España (in English here). One of course is the Ley de Propiedad Intelectual with its clear favour towards the AEDE.

The PP and PSOE have both ordered their senior politicians not to join any televised debate with that pesky longhair Pablo Iglesias from Podemos. Vozpópuli is suitably amused...

The budget for Education has been reduced by the Government by 25% over the past four years, a loss of 730 million euros: Culture has lost 50% of its budget since 2011. Story here – other budgetary figures in comparison here.  

Catalonia:

'The president of Spain's powerful north-eastern region of Catalonia on Saturday has called an independence referendum, the latest secession push in Europe and one of the most serious challenges to the Spanish state in its history. The announcement came a week after Scotland voted against breaking away from Britain. Catalan leader Artur Mas signed the decree to call the referendum at a formal ceremony at the regional government headquarters. "Like all the nations of the world, Catalonia has the right to decide its political future," said Mas...'. From The Huff Post UK.

'Spain's Constitutional Court has temporarily halted an independence referendum called by the rich north-eastern region of Catalonia, a decision which the region's leaders vowed to ignore despite warnings by the central government.
The court's unanimous decision to hear the government's case automatically suspended the November 9 non-binding referendum from going forward until the court hears arguments and makes a decision, a process that could take months or years, a court spokeswoman said.
She spoke on condition of anonymity because of court rules preventing her from being named...'. From Aljazeera.

'Catalonia's regional government halted a publicity campaign to inform voters about a November independence referendum on Tuesday, a day after Spain's Constitutional Court suspended the vote. Catalan government spokesman Francesc Homs said the campaign was stopped to "not put the backs of (Catalan public workers) against the wall" but he stressed Catalonia was "determined" to hold the vote, despite the fierce opposition of Spain's central government...'. From The Local. An editorial on this situation, at El País in English here.

So, what would be the unemployment in Spain, if Catalonia were to leave? According to a rough calculation, the EPA in Catalonia is at 20.2% against Spain in general at 24.5% (here). Roughly 1/6 of Spaniards are Catalonians, so the Spanish unemployment figure would immediately rise by something under one point. Catalonia also provides about 20% of Spain's GNP. Some other useful information on the Catalonian economy is here.

Essay:

From a forceful criticism of Spain in El Diario called 'España, una, disoluta, corrupta y en venta', comes '...A Spain without cracks. A model democracy. A rule of law for framing. The funny thing is that we now know that prostitution, gambling and drugs have helped raise the Spanish GDP by more than 26,000 million euros*. It is not that there has been a sudden increase in these activities, but that the Government has let them out of the closet. We have applied to them a moral amnesty, so to speak. Purely for accounting purposes. The National Institute of Statistics (INE) considers them from now on as just another economic activity. Included here, of course, are the smuggling of illegal drugs, illegal gambling, the traffic of persons for sexual exploitation, the exchange of sex for money, criminal coercion and whatever else comes to mind. Just like that … It's quite a dilemma now for the judges and the police: arresting a trollop is now an attack on the very GDP of Spain!
And then there is lo otro ("the other thing"). Boxes of black money – donations from companies, that then subscribe to public contracts and the endless chain of scams that we see daily to anaesthetise a good part of the Spaniards. All subject to the law, after all, (as the Vice-president of Spain, Soraya Sáenz de Santamaría, says in her spirited defence against the Catalonian call for a referendum) 'without the law there is no democracy'...'.

The article continues, bewailing the selling-off of Spain's heritage: '...Investment funds, American, Chinese, Russian and Venezuelan vulture funds have found in Spain a Garden of Eden to arrive, buy and leave. Not much patriotism here, the possessions of Spain are spread fine and far. And they are not in the cleanest hands...'. The piece ends with a quote from Tacitus: 'the more corrupt the State, the more numerous the laws'. What a mess!

*El País in English says that the additional income from drugs and prostitution is estimated at 9,000 million, or 2.6% of the GDP. An earlier estimate (June) was almost double this at 4.5%. 'Any figure is random and subjective. There is no census for brothels, nor for prostitutes', says an expert here. A six-year old article in 20 Minutos claims there are (or were in 2008) 4,000 brothels across Spain, with anything between 80,000 and 300,000 professionals in the business. As for drugs... the estimate is made on the amount confiscated by the authorities. Of course, guesswork and accounting don't really mix...

Various:

El Mundo carries an interview with Anjem Choudary, a radical activist (the paper calls him 'a cleric') living in London, leading with the headline 'The IS will soon be knocking at the doors of Spain' (Andalucía in particular is claimed by the Islamic State). Scaremongering?

The idea of creating a jolly leisure centre outside Madrid with gambling à la Vegas may have taken a hit last year with the project for Sheldon Adelson's smoke-filled casinos being suddenly discarded by the Spanish authorities; but wait, now Mariano Rajoy has made some new friends in China, and a brand new mega-casino project appears to be gathering pace. This one, more Macao than Nevada, to be built under the orders of Wang Jianlin, the man who bought the emblematic Madrid skyscraper the Edificio España recently. More here.

The gota fría broke across Eastern Spain last week, with some heavy flooding. As usual. The ramblas, the dry river beds, are there to take the suddenly massive amounts of water out towards the sea, and to avoid sudden and sometimes catastrophic flooding. That's why one mustn't build in them... and why they need to be cleared every season.

Are you treated as a guiri? 'I believe that I’ve been treated unfairly as a foreigner by being short changed, served last at the greengrocers and at the bar, not allowed to join pompous swimming clubs, made to pay more rent, and laughed at for running in a vest. Someone even threw an orange through my window at school on Halloween, but I’m not sure whether that was because I was a foreigner or one of my ex-students getting their own back...'. From A Novel Spain. Once I was in Marbella with two rather atypical Spanish friends – one blond and the other a redhead. Vaya, said the waiter, looking us over carefully, you do speak pretty good Spanish for guiris...

Ten nitwits have been arrested for spray-painting graffiti on 168 train carriages, causing 600,000 euros in damages (to say nothing of their bad influence on the Young and Impressionable). Story here. Talking of 'canons', they should put one on cans of spray paint to help pay for the cleaning!

Over 3,000 immigrants have drowned so far this year attempting to cross the Mediterranean in search of a better life. El Mundo has the tragic story.

The terrible 'desastre del 98', when Spain lost the Philippines, Cuba, Guam and Puerto Rico in 1898 to the USA, together with (a few months later) the obscure Sibitú, Cagayán and Joló islands, left Spain without any possessions in the Far Yonder, except that no one remembered to pencil in the tiny archipelagos of Os Guedes, As Coroas, O-Cea and Os Pescadores – Portuguese islands ceded to the Spanish in 1840 which, together with the Islas de Ponape and Ascensión, never made it to the Treaty of Paris of 1898. Since Spain has never officially re-claimed these possessions, they are administered by Indonesia, Micronesia and the Republic of the Marshall Islands. The story here

The madness of the Canon Google – where bloggers are expected to pay the AEDE, the union of Spanish daily newspapers for any link they may use, from anywhere – is not bonkers enough, according to the PSOE, which wants to make the rules even more draconian, in an evident attempt to stifle any freedom of speech in this country. The Senate votes in the Ley de Propiedad Intelectual in late October. See here. Meanwhile, it appears that Spain has neglected to tell her European partners of her plans to change the law regarding the Information Society. European legislation requires member states to inform the European Commission of changes. This may result in the law being deemed illegal.

El País, aware that soon no one will be able to provide a blog or small news-site with links to other pages without paying a canon to the AEDE (of which El País is a member), introduces as part of a re-make, a blog called Verne aimed at the young with content including links with 'fragmentos no significativos' to other pages! ¡Ay, the hypocrisy!

Finally:

Let's fly through the Ruta del Cares in the Picos de Europa in a drone. Video here.

 

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