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Business Over Tapas (18th  October 2013)

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]  

Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access.

Editorial:

On Monday, goons from the Junta de Andalucía once again put Almería's chances of recovery back by another decade or so, by demolishing two British-owned homes in the small inland town of Cantoria. It's slow, this demolition lark. With 13,000 homes in Almería declared 'ilegal' by the Junta and its zealous ecologists in far-off Seville, almost all British owned, they are only managing to knock down a pathetic few every now and again in what might be described as an example of Andalucian institutional inefficiency.

Why not knock down a few dwellings owned by the banks for a change? There are 2,500,000 of them across Spain. Either these bank-owned homes are all 'legal' (Oh Wondrous Surprise!), or the politicians would rather pick on the weaklings. They insist that there are 300,000 'ilegal' homes in Andalucía, presumably all in private hands (that's more than the homes in the entire City of Málaga). It is nevertheless claimed that no one noticed in this anal society as this legion of illegal homes was being planned, promoted, built and sold. Now the Junta wants to be seen to be acting to clear the coast of the concrete jungle of too many homes (Cantoria is about fifty kilometres inland, but, What the Hey!). If Andalucía is famous for ripping off retired foreigners and forcing them to live in misery, without water and electric and with the knowledge that their homes, whether 'legal', 'alegal' or 'ilegal', are worth nothing, over in the Valencian region, the insidious institution of the 'land-grab' is evidently returning, so it's not safe there either. Our ludicrous politicians are certainly catching the news across the whole of Europe and making a firm statement to potential foreign investors and settlers: don't buy in Spain.

A Spaniard reading this might think that I hate Spain, but I don't. Like most foreigners who live here, I love this country and I wish her well.

Housing:

'Most property investors have an image of Spain and the Balearic Isles as recession-wrecked countries, where bargains are plentiful. However, this certainly isn't the case in Mallorca and Ibiza, according to Sotheby's International Realty. The average price per square metre for real estate sold by the company in both isles is €9,000 (£7,600) - in the same price bracket as certain parts of highly priced London.
This paints a very different picture of Balearic property and shows that in some areas real estate can still give other nation's a run for their money. In fact, Sotheby's claim that the situation in London – where demand from overseas markets has helped to push prices upwards –  is the same as in Mallorca and Ibiza. He even goes so far as to say that the effects of the financial crisis are no longer being felt within these markets'... From Property Showrooms

'Never one to make a small mess when a big one will do, the Junta de Andalucía, under the orders of the ecologists, have just demolished two British owned houses in Cantoria, inland Almería. Why? In a province of 40% unemployment, where the small villages are dying, where people are leaving for work elsewhere, where there is practically no other income than that which comes from retired Northern Europeans – why are they doing this? Criminal stupidity perhaps?'...  From The Entertainer Online. 

'The Vice President of the Provincial deputation of Almería, Javier Aureliano García (PP), criticized on Tuesday the "damage" that will be done to the image of the province following the demolition of two homes in Cantoria based on the court order carried out by the Junta de Andalucía “to restore urban 'legality' of the area”.

In statements to journalists after a press conference, the General Secretary of the PP in Almería also noted that this type of image "does not benefit the province" among the British population, since "this image may cause much damage as did the demolition of the Prior's home in Vera"... From El Ideal.

'Those who chose to live in Almería for the quality of life that can be enjoyed here have reasons to fear that the picture may be darker in the near future. The same is true for the local people who fear for their business (from real estate to construction companies through cafeterias, sports facilities or entertainment). Gerardo Vázquez, the AUAN lawyer, does not remember "homes being demolished in Almería belonging to citizens who are not of British origin"... La Voz de Almería has more to say, quoting another threatened home-owner from Cantoria: "We are resigned to the future demolition of our house and we never want to live there any more. Or in Spain. We just want our money returned to have a bit of life as we have been suffering over this issue now for eight years. We now rent because we don't have money to buy another house. My health has suffered; I have had heart attacks"...

An e-mail from Brussels from Marta Andreasen:
Disgraceful! For years I have been fighting to end this abuse.... but the EU turns a blind eye.
Will talk to Spanish MEPs who want to be re-elected. Marta

Perhaps, and here's a thought, the Junta de Andalucía, the agency that demolishes these houses, should be the one to pay reparation to the owners and then attempt to get the money back from the promoter.

'Land Grab' is where the neighbour, with Town Hall support, can put in a plan to urbanise his area and those bits of land surrounding it*. If passed by the appropriate authorities, a rural owner could find that his land has just been rezoned, and – inevitably – revalued. To atone for this, he would lose a portion of his estate and be obliged to pay a massive tax on the remainder. With the drop in demand for homes in rural areas, thanks to both 'la crisis' and, of course, Spain's reputation abroad for institutionalised fraud, things like the land grab (reparcelación forzosa – the rules here) have all but disappeared. But not entirely. The Alicante edition of Información tells of an Austrian family living in Orihuela Costa that continues to be harassed by developers after fifteen years of misery: '…The Wesenauer family has been struggling to keep this piece of land in its original state since 1996. One day in early 2000 they learned that their farm, with a better than 150 year old house, had been 'trapped' in the subdivision of an urban plan referred to in the General Plan of 1990, as the PAU-25 or 'La Cuerda'. Their 3,450 square metres of rustic land were reduced to 1,786 metres of urban land - with the capacity for 12 villas - and they should pay 43,869 euros in urbanization costs'... This, understandably, did not appeal to them. But 'Land Grab' is insistent: the Gods have spoken. Luckily for the Wesenauers, the promoter went bust and their land was saved. But now there's a new promoter, with papers for 25 houses... and demand, by foreigners, for homes is increasing locally.

*A fuller description of this odious practice comes from a friend living in Valencia who, himself, suffered from a 'Land Grab': 'It’s usually a developer,  a behind the back cash friend of the town hall or mayor who puts in a scheme, with a rigged system, approved as “in the general interest” by the town council, rubber stamped by the region (ignoring most of the superior laws unless challenged), etc. At that point the hapless property owner is forced to “cede”,  i.e. without any compensation, as much land as the developer wants, plus pay the developer’s infrastructure costs. The developer makes his money on reclassification, and on low cost loans from the bank on the overvalued property. He sells the property as though he had paid the development costs himself.  When he gets into legal or financial problems, hiding behind a false front company and having sucked the process dry, he just goes bust. Read the swamp development plans for Florida in the 20’s for a road map. Also see the AUN website.

So it has worked  (or did work) here in Valencia and with minor variations in other regions- Andalucía included. The land law there is a knock off of the one here. The underlying claim is that this system would facilitate economic housing for Spaniards and control rogue development. It achieved one of those, while making a lot of people poorer and a few very rich.

Those affected, were by numbers more Spanish (many who thought they would share in the spoils) but by proportion, ex-pats who had property in areas where the predators thought others would buy in.  Promised reforms to the laws are essentially to buy time, confuse outsiders and figure out a less transparent way to screw the unwary'.

'When the Supreme Court ruled last March that the controversial Algarrobico hotel in Carboneras, Almería, was an illegal structure, environmentalists rubbed their hands together at the prospect of its immediate demolition. Mar Moreno, the Andalusia government’s chief of staff, said the Socialist administration was waiting for the courts to give the go-ahead to “take a shovel and knock down the building.”

However, the hand that should deliver the hammer blow is being disputed at the highest levels. Last November, in the run-up to the general election, the former Socialist government of José Luis Rodríguez Zapatero signed an agreement with its Andalusia bloc to demolish Algarrobico. But the Popular Party, which assumed power in a landslide victory, is now hoping to avoid footing the bill for reducing the hotel to a pile of rubble'...  From El País in English which passes the poisoned buck to the PP.

Tourism:

'AENA has announced it will effectively give new routes to Spain, and routes that expand their customer base, free landing rights and air traffic taxes.

The agreement has been announced for Spain’s 2014 general budget, and AENA will notify airlines shortly of the new rules. The government has agreed to offset 100% of these taxes, if the airlines continue to bring new passengers to Spain.

The hope is that by attracting new routes, and additional capacity on current routes, air traffic for next year will increase by at least 2%, or four million passengers, above projected targets. 100% of air passenger tax on new routes can be claimed back. The plan is that airlines can claim 75% of the tax back at the end of 2014, and the other 25% back at the end of 2015 if they continue with the routes'... From David Jackson.

An enjoyable article from Condé Nast Traveler about what you can and can't steal ('pinch', 'nick' or 'lift') from a hotel. The writer says that 'A major Spanish hotel chain laments that some of their guests have taken reading lamps, cutlery from the restaurant and even breakfast menus. Light-bulbs are also particularly coveted. Mental note: think about what goes through the brain of someone who unscrews a light bulb in a hotel and puts it into his overnight-bag!'... You can take toiletries (be reasonable), the pen and letter-headed paper, the sweets... but perhaps not the hotel slippers or fancy magazines... and definitely not the towels (Holiday Inn lost 500,000 towels in 2008), pillows, hair-dryers and the Gideon's Bible...

Finance:

'The Spanish Treasury paid under an average 1 percent on 12-month bills at a debt tender held on Tuesday, the first time this has been the case since Greece asked for its first bailout in April 2010.

The debt-management arm of the Economy Ministry issued 4.570 billion euros in six- and 12-month bills, 20 million more than its target. Of the total it issued 3.75 billion euros in 12-month paper at a marginal yield of 0.98 percent and an average of 0.961 percent, down from 1.39 percent in September. It placed a further 817 million euros in six-month bills at a cut-off rate of 0.68 percent, down from 0.945 percent a month ago'... From El País in English.

The big traders took a bath after the rise in IVA last September:  The major distribution companies grouped in Anged – El Corte Inglés, Carrefour, Auchan, Fnac, Ikea, Media Markt, Leroy Merlin and Toys R'Us, among others – suffered in 2012 the largest decline in sales since the crisis started and, practically, since statistics are available. It was a decrease of 4.9%, which reduced revenue by 36.979 million euros...  ...data from the National Institute of statistics (INE) show that sales with the major traders showed a fall, by August, of 7.2%, demonstrating that the problem, far from improving, is becoming increasingly difficult'... Taken from El Economista.

'White goods maker Fagor Electrodomésticos, the flagship of the Basque cooperative group Corporación Mondragón, said Wednesday it had decided to call in the receivers after failing to find financing to service debts of 800 million euros. Mondragón has posted losses in the past four financial years, while sales have fallen sharply'... From El País in English.

'The association of concessionaires for toll motorways (Aseta) has urged the Government to address the "inevitable" implementation of the payment of a toll for the use of the currently free highways, a move that could bring to the public coffers up to 10 billion euros per year, according to the President of the Association, José Luis Feito.

"It is not feasible that Spain continues to pay the maintenance of her 12,000-kilometre motorway network with public money," stressed Feito, who believes that "sooner or later the Government cannot prevent introducing some kind of toll" on these autovias, similar to those used in other European countries'... From La Información.

'The Chairman of Iberdrola, Ignacio Galán, has urged the Government to "suspend" power generation through solar technologies to avoid spending five billion euros in "subsidies" and to achieve "a discount of 10% on the price of the light" for the general public. Such a move would mean the closure of all renewable energy facilities of this type in Spain since currently none of them could operate without public funding'... From El Mundo.

Corruption:

Spanish league president Javier Tebas says at least eight matches in the top two divisions are fixed each season. In an interview with the BBC’s World Football Show he said he believed the main problem was coming from an international mafia.

He said: “It sounds easier for players with financial problems to be corrupted but we cannot generalise it. It happens also with those who earn a lot of money who are comfortable, but I am trying to eradicate the black sheep in La Liga'...  From The Olive Press.

'Those affected by the toxic titles from the Caja de Ahorros del Mediterráneo (CAM) now have fresh options to recover their lost savings after the judge Gómez Bermúdez ordered the embargo on several properties of the former board of the entity to ensure the civil responsibilities that may arise from criminal proceedings against them'... From El Boletín.

'A new urban mafia in the Costa del Sol, this time in Benalmádena (Málaga). Those involved in the so-called 'Operación Mina' prepared the authorization of illegal licenses for numerous buildings within the town. So far, several officials and technicians from both the City Council and the Junta de Andalucía are accused. No politicians have been accused so far, although given the nature of urban crimes, it may just be a matter of time since it seems obvious enough that someone would have had to have given approval to these crimes'... More at Urbanismo Patas Arriba.

Politics:

'The arrival of Susana Díaz in the Presidency of the Junta de Andalucía was not brought about by leaving her as an unknown to the general public. Following the conclusion of a “primary espresso” in the PSOE of Andalucía, beating off the ex-councillor Luis Planas and the Mayor of Jun in Granada Jose Antonio Rodriguez Salas, without even a vote on the matter, the regional executive are aware that the exposure to the public of both its president and its policies is a pending matter. Thus, the Junta de Andalucía has just initiated administrative procedures to start up its propaganda machinery, and to make a mediatic campaign of 'institutional advertising', with a budget of close to two million euros'... From Vox Pópuli.

'In recent months, corruption linked to party finance has returned to the centre of the Spanish political agenda. The problems of the ruling party with its ex-treasurer, and revelations over cash bonus payments to national leaders in the past have, unsurprisingly, encouraged general disaffection toward Spanish political parties among the electorate. As a consequence, the Spanish government has attempted to react by fostering party transparency and strengthening control on public allocations. Simultaneously, parties from the opposition are calling for a complete ban on private donations to political parties, making public subsidies their only funding source.

However, it is not certain that new rules against private funding would actually be effective against Spanish parties’ current financial problems. While party corruption stemming from interest-oriented money is a de-legitimising factor for the political system, we can hardly consider it a genuine consequence of the party funding system. Those engaging in corruption will probably know how to accommodate to any legal scheme'... An article about Party funding in Spain by Juan Rodríguez Teruel for the London School of Economics.

The reform of local government is sailing into heavy waters: 'Mayors of IU, PSOE, CiU, CC, Compromis, CHA, ICV and the Spanish Federation of smaller local entities (FEEM), have announced that they will go to the Constitutional Court (TC) if the Government does not create a new draft law of rationalization and sustainability of the Local Administration that is in agreement with them.

More than 2,000 mayors and councillors of various parties have participated in a meeting held in Madrid, where a joint-manifesto was read showing them to be "radically against"  this local reform bill. The mayors have denounced that the Government "bases its reforms on the argument of the cost of the financial and economic burden that local governments mean to the country's economy"...    ...'this new regulation, which is intended to come into force on January 1, 2014, "erodes local autonomy by not respecting the municipal powers, does not consider the principles of proximity and of equity in the provision of public services, does not respect the powers of the autonomous communities or different peculiarities and historical realities recognized in the respective statutes of autonomy and is jeopardizing the provision of basic social services which citizens need in these times of tough economic crisis".  From El Huff Post. In short, this proposed new national law dealing with local administrations is the PP trying to take central control. The law attempts to emasculate the only level of government here that pays any attention to the citizens (and of course the ex-pat population) other than once every four years.

More on the same topic: 'The spokesperson of the Socialist Group in the Congress, Soraya Rodríguez, has denounced the reform of local government, which will face 10 amendments in full in the plenary session of the Congress, “as it will mean the dismantling of municipalities of less than 20,000 inhabitants”. According to the Socialists, this means about 7,000 town halls across Spain – more than 85% of the total. Therefore, the PSOE has assured that it will immediately repeal this law the moment the PP loses its absolute majority.

Sources from both the PSOE and the IU insist that the rationalization will be to privatize municipal utilities of whole provinces and deliver them up to large corporations. Such a restructure would, according to the left, precisely endanger those local services'... From El Mundo.

From El País in English comes this warning from Catalonian independents: - 'The leader of the Uniò faction of Catalonia’s governing CiU bloc, Josep Antoni Duran Lleida, delivered a stark warning to Mariano Rajoy in Congress Tuesday about the Government’s inaction over the northern region’s independence drive. Duran, who is opposed to separation from Spain and has often acted as a mediator between Barcelona and Madrid, said that Rajoy faced “a unilateral declaration of independence that some are going to approve in the Catalan assembly.” The Uniò leader added that the “sense of being attacked” prevalent among Catalonian citizens could lead to “irrationality and from there to conflict.”...

Various:

Those in Spain who live in abject poverty, that is to say, with an income of less than 307 euros a month, now number over three million people, says a report in El Mundo. This figure is double the number from before 'la crisis' began.

'The economic crisis continues to stimulate sales of second hand cars. But above all, of the so-called 'mileurista' cars (those over 10 years old), characterized by their low price and high mileage.

Such vehicles already represent nearly half of all operations of purchase and sale in second-hand cars (49%, compared to 47% from the previous year) and, what is most striking, has now surpassed the sale of new cars. Up to September, 592,674 ten-year-old bangers were sold, contrasted with 546,413 new vehicles'...  From Vozpópuli.  These ten-year-olds currently cost an average of 3,207€ (if anybody wants mine!)

'Beggars, dog-lovers and fortune-tellers who venture onto Madrid’s busy streets may soon find themselves out of pocket as authorities in the city and elsewhere seek creative solutions to their financial problems.

The Madrid council laid out plans this week to levy fines of €750 for public activities including soliciting for money outside shopping centres, feeding or washing dogs, reading tarot cards and performing acrobatics with bikes.

Spain’s autonomous regions and town halls have been saddled with huge debt since a property bubble burst in 2008. Core revenue has fallen as unemployment held above 25% and corporate investments dried up'...  From Business Day Live. '...Spain’s third-largest city, Valencia — left with a major financial hangover after a huge spending spree last decade — expects to take in about €9.5m in fines this year'.

From Marca España (undated): 'The Spanish photovoltaic sector represented by the Spanish Photovoltaic Union (UNEF) is made up of around 300 companies that conduct 85% of the country’s solar business. This sector is extremely internationalised, with more than 50% of the companies carrying out some kind of business abroad.

Spain has almost 60,000 electricity-producing solar facilities (45,000 MW), with electricity self-consumption and large power plants – with pipeline projects in excess of 35,000 MW – meeting around 3% of the country’s electricity requirements.

Spain was the world’s leading photovoltaic market in terms of installed capacity in 2008

UNEF says Spain is Europe’s third most important photovoltaic market and the fifth in the world in terms of installed capacity. In addition, two of the world’s five biggest photovoltaic electricity producers are Spanish, with operations on every continent, including Antarctica'...

'China denounced on Monday a decision by a Spanish criminal court to indict former Chinese president Hu Jintao for genocide as part of an investigation into whether his government committed abuses in Tibet. The Spanish National Court last week accepted a Tibetan advocacy group's appeal in a case asserting that Hu had supported genocidal policies when he was Communist Party secretary in the Himalayan region from 1988-1992 and after he took over as China's head of state in 2003. The ruling could lead to moves to seek Hu's arrest in Spain or other countries with which it shares an extradition treaty, though in practice he is unlikely to ever face a Spanish court'...  From Reuters.

'One out of every three workers in Spain is a smoker, which works out as an approximate expenditure for their companies of about 2,076 euros for each employee annually, in terms of lost productivity when they go out on the street to smoke or by absenteeism from work, since smokers miss more days from work than non-smokers'... From Público.

'While English may seem easy at first glance, there are so many exceptions to the rules that sometimes the language seems designed to make life difficult for students.

It's enough to make you want to tear your hair out!

As translator and English teacher Tara Lowe puts it: "Spaniards, we English speakers understand your pain.

"Patience, determination and above all, native English speaker friends, partners and work colleagues are vital to your success in learning this beautiful language."... Ten things Spaniards hate about the English language from The Local.

The Spanish Economy

By Andrew Brociner

Internal Devaluation

Over the summer, an IMF report came out about Spain, advocating a reduction of wages of about 10%. While this may seem too much of a bitter pill to swallow, especially at a time when austerity is exasperating an already difficult situation, it does merit some consideration.

First of all, as we know, unemployment is very high, especially for the young, but as we have also seen, it is forecast to stay that way for many years to come. The IMF forecast does not show much of a decrease at all for its five-year forecast, up to 2018, or beyond for that matter. The same organization, on the other hand, in its simulations, forecasts a potential decrease in unemployment of up to 7% in only the next three years – if this policy were to be adopted. Now surely, this is better than doing nothing at all.

Before the euro, it used to be that a country could engineer a devaluation and solve things this easy way. A devaluation of a country's currency raises prices and decreases the real wage. But now that this is not an option any more, lowering wages amounts to an internal devaluation, and although this is much the harder way, it is no doubt a way to contribute to growth in the longer run.

Spain has a structural duality of older protected workers and younger ones hired on a temporary basis. The younger ones are more productive, more creative and therefore contribute more to Spain's productivity level, but the older ones get paid much more. This cannot be the right way to do things. Spain does not make jobs available for its young, who are therefore leaving, and when it does, does not reward them adequately. We can compare this situation to the Balkan countries where there has been a recent turnaround. In Latvia, for instance, wages have decreased, contributing to its economic growth. Estonia's young receive higher wages than its older workers, whereas in Spain it is the ones who are about to retire who do. And in Ireland too, wages have decreased recently. Spain, on the other hand, lacks the political will to decrease wages in this way, to dismantle its archaic discrepancy between younger and older workers, or to do much in general to disrupt its stifled way of doing things, which would lead to greater market flexibility. One could say political survival takes precedent over economic recovery, even when the latter would surely contribute to the former. It seems to be a question of short-run over long-run. But the longer it waits, the longer it is mired in the current stagnant situation.

Finally:

A Q&A with Maura Hillen from the AUAN:

1  Is the Junta actively pursuing outstanding cases for the demolition of houses or are they just simply letting the cases run their course through the courts? (I know the result be the same but it would indicate the mind-set of the junta in these matters)
A. Actively pursuing. It is a war of attrition between home-owners/lawyers and the prosecutors.
2  Does anyone know how many cases are running through the courts for demolitions in the Almanzora area?
A. There are no quotable statistics from official sources. The system is chaos. However, we know of these 4 houses in Cantoria, 8 in Albox, 12 in Zurgena.... I personally believe that there are more – maybe around 40. There are numerous ongoing court cases which could result in demolition. From among our membership there are 50 homes in the administrative courts and 65 are in the criminal courts.
3 Is the Junta bringing new cases to court for the demolition of properties? I was under the impression that they were not but I could be wrong on this
A. In many cases they are now out of time to bring proceedings as there is a statute of limitations (to use the American expression) for planning crimes of 4 years (recently increased to six years). However, that does not apply if the property is on an urban parcelacíon (shares a parcela) or on some form of protected land like a rambla zone or vía pecuaria etc. I am aware of new proceedings.
4 What I cannot understand is why people under the threat of demolition have not sought advice nor more importantly joined AUAN. It seems to me the most obvious thing to do.
A. Lack of money, lack of faith in the system, counter propaganda from the self interested. There was also much confusion and personality clashes in the early days brought about by lack of experience and stress. Currently, we just suffer from stress. Plus, the town halls, promoters, politicians and local lawyers contradicted every word that came out of our mouths. The local lawyers still do, bless 'em.

 

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