Richard Laverack writes about the connections between the Spanish property development lobby and the shocking systemic corruption issues in Spain. There are many similarities between the Spanish and the Australian banking and property development lobbies and their relationships with government. The Ballieu Government's push for Westernport and a new "bubble" in Webb dock is based on the same philosophy of friendly fascism. So was the preceding Labor Government's. This article gives a short history of fascism and corruption in Spain before describing the current financial problems and their relationship with property and finance.
Spain's newly re-instated monarchy
Spain is attracting a great deal of news coverage for all the right reasons lately, but the Spanish people have suffered enough.
It has a recently re-instated monarchy. On 22 November 1975, two days after fascist dictator General Francisco Franco's death, the Bourbon heir Juan Carlos was designated King according to the law of succession promulgated by Franco. In 1969, when Franco named Juan Carlos as the next head of state, Spain had had no monarch for 38 years.
It has a King who, as head of the Spanish “branch” of the World Wildlife Fund, thinks it appropriate to holiday in Botswana shooting elephants.
The king’s daughter, la Infanta Christina Federica Victoria Antonia, is married to Inaki Undangarin, Duke of Palma de Mallorca, who is currently facing charges of embezzlement of millions of euros.
Spain's justice system in tatters
It has a justice system in tatters. The Supreme Court suspended fellow Judge Baltasar Garzon from practicing for 11 years after investigating so called (7) irregularities in Garzon’s investigation into wide scale corruption within the conservative Partido Popular. Up to 70 senior members were being investigated.
Supreme Court Chief Justice Carlos Dívar on Thursday resigned under pressure for charging 32 long weekend trips to Marbella and other Spanish destinations to the judiciary. (1)
Spain and the Oil Wars, News Ltd and ex-Spanish PM, Aznar
Carlos Divar was appointed by Jose Louis Aznar, ex- prime minister of Spain from 1996 – 2004. Aznar, now a very prominent member of Rupert Murdoch’s News Ltd board, was a founder member of the “coalition of the willing” leading the “oil wars”, even before John Howard. The only natural resources Spain has is a small amount of coal in Asturia.
Aznar was “scholared” in politics by Manuel Fraga. From 1951, Fraga served in various posts in the Franco regime, including minister for information and tourism. He took part in the Transition (restoration of the Monarchy), and formed the conservative People's Alliance (AP), the precursor to the Popular Party (PP).
Fraga was known as a heavy-handed politician. The drastic measures he took as chief of state security during the first days of the Spanish transition to democracy deeply damaged his popularity. The phrase "¡La calle es mía!" ("The streets are mine!") was attributed to him. This phrase was his answer to complaints of police repression of street protests. He claimed that the streets did not belong to "people" but to the State.
Partido Popular (PP) - The Peoples' Party
Appointing Aznar as head of the Partido Popular (PP) in 1989, Fraga duly became President of the PP. Fraga was known as a “social liberal”. He relaxed censorship laws (despite the severe lobbying of the Catholic Church) and finished his political career as Franco did, in office. He died in January 2012 serving as Spain’s ambassador to the European Union.
The “lineage” is further continued into the present day when Aznar’s “puppet”, Manuel Rajoy became head of the PP in 2004 after Aznar was dumped. (Rajoy is currently prime minister). Aznars wife is Mayor of Madrid, Spain’s largest city and the seat of government.
Fascism and economic crashes: the 1930s and 2012
Nothing has yet been mentioned of the fascist dictatorship, even less is currently spoken about the Second Spanish Republic from 1931 -1933, but if a cursory glance is cast, striking similarities can be seen to current events and recurring themes played out, separated by time but very relevant to the history of Spain.
Spain’s economy collapsed after the Wall St crash in 1930. General Primo’s 12 year dictatorship ended when the monarchy and people (who hated his brutal era) lost confidence in the government and elections were held that produced a republican and very anti-catholic majority. The unification of 1851 under the Bourbon (French) monarchy was being undone as King Alphonso XIII abdicated and Catalunya and the Basque became independent regions.
General Franco earned his stripes and became known as “the butcher of Asturias” after his brutal suppression of the miners strike in1933.
In January 1936 new elections were called which confirmed the socialist alliance as the dominant majority, but a series of assassinations and fascist/socialist violence (this is when Hitler and Mussolini were warming up), saw the invasion of Spain by Franco’s North African army. Three years later the civil war was won. General Franco, supported heavily by the catholic church, led a rebellion which systematically crushed the most progressive social and political reforms of the 20th century.
George Orwell’s Homage to Catalonia is a wonderful journey through the rag tag war.
A full length film -1632?">“Living Utopia – Anarchism in Spain” (subtitled) – details this tumultuous period. It tells and shows an impoverished, hard- working intelligent, society realising the truths of brutal fascism with original footage. (6)
Franco’s victory in 1939 allowed a period of massive reprisals aided by the catholic church. Claiming neutrality gave licence to untold mass murder under the cover of world war 2, including asking Hitler’s Luftwaffe to bomb and destroy Guernica in the Basque region. A bonus was the post war escape from attention afforded many fascists of the time because Franco was now actively butchering the communist leftovers much to the approval of America and the U.K.
The random killings and brutality continued right up to Franco’s death. Many of the prison camps and detention centres remained into the nineties. It was not until the 2004 dumping of Aznar and election of socialist Zapatero that the statues of General Franco were removed from all the major plazas and intersections around Barcelona.
The Falange lives on in Spain. They recently brought a summons against Baltasar Garzon for forcing the recovery of over 100,000 bodies which still remain in mass graves throughout the country. Manuel Rajoy has stopped any federal assistance to the searches. There is a group called the Commission of Historic Memory Recovery (8) which flounders to bring about what is granted in Australia on an “as needs” basis, a human right proudly supported by the government, - to re associate families with their dead/missing relatives. They are not even buried in a foreign country for God’s sake. (4)
The Catholic Church offers no support, preferring to denigrate homosexuality and force the government to reverse abortion rights, access to the morning after pill, and gay marriage. (5) Their [Rajoy’s Peoples Party government] crackdown on public gatherings makes further fascist tendencies obvious.
Last week, Interior Minister Jorge Fernández gave more details: Peaceful resistance will be deemed a form of illegal undermining of authority, punishable with one to three years in jail; the punishment for civil disobedience, which is currently six months to one year in jail, will be increased to two to three years. (2)
The corruption in the judiciary and government is not a one-sided affair. The first socialist government since Franco was ousted because of corruption, and Garzon had prosecuted both socialist, Basque separatist, and conservative, even handedly, as corruption in Spain is endemic, apolitical and established for many reasons.
Banking, Real-Estate and Development corruption in Spain
The banking industry is yet another industry rife with corruption as a servant of the real estate/development industry and is a prime example of the rampant corruption which extends into every one of the three levels of Spanish government – Federal, Regional (autonomous) and local. All Spanish bank board approvals are political appointments, so builders, teachers, cleaners earn board fees for unknowingly approving sub prime loans and not assessing budgets.
Corrupt regional governments have been allowed to finance self agrandisment projects worth hundreds of billions of dollars with help from the E.U. The country was 3rd world when Franco died, just starting a “package holiday” tourist boom initiated by Manuel Fraga which virtually destroyed the Mediterranean coastline. Jose Louis Aznar’s neo conservative economics saw Spain BOOM. The property market rose exponentially from 1996 until in a repeat of the Wall Street crash of 1929, Wall Street crashed in 2008.
European money providing infrastructure projects such as high speed rail, air ports and solar thermal power generation, saw Spain’s investment levels reach record highs and become the center for European tourism and holiday home acquisition. During the Aznar years regional governments such as Valencia's were given carte blanche to go for the tourist dollar. An airport was built at Castellón at a cost of 200 million euros with a 300,000 euro statue of the regional governor at the airport entry. Although completed in 2010 a license to operate has not been issued and the runway has been found to be too narrow to allow international flights to turn round.
There are now 48 airports in Spain, double the number in Germany. Only 11 make a profit. (9)
1 million empty houses and unsalable real-estate
Many reports detail the 1,000,000 empty homes in Spain as well as real estate which is virtually “unsellable”. (10) Caused by the pre-2008 bubble, exactly the same as in the U.S. Iceland and more particularly, Ireland (see below - McCreevy). It has taken 4 years for the true picture to be known.
It has taken 7 months of lies to hide the true extent of Spain’s bankruptcy and finally ask the E.U. for a 100 million euros “bail out.” Meanwhile Spanish bonds have been downgraded to junk as the taxpayer further bears the brunt of sovereign debt totally caused by corruption, speculation, belief in infinite growth and a destruction of the environment.
Socially the results have been disastrous: 25% unemployment, 50% 18 – 25 year unemployment, evictions, general strikes, indefinite miner’s strike in Asturias causing flashbacks to 1933 and Franco’s repression. (This really is war and perhaps people are only just hearing about it (11))
A veil of secrecy has always been part of the Monarchic/fascist/conservative Spanish governments, which fawn on protocol and tradition, and assume an undue respect. Those that experienced the hardships and brutality of the fascist regime, and the prosperity that followed to make Spain the 4th largest economy in Europe and the 10th largest in the world, are fearful of a return to a brutal past which has never been discussed during the “transition to democracy”. The church is very powerful socially and has easy purchase within the Peoples Party.
Time and again corrupt regional governments in Marbella, Valencia, the Balearic Isles, Catalonia and Gallicia were returned in the hope they would keep the “good times rolling”. Never has the average Spaniard experienced such 'wealth creation'. It is now common daily news reporting to hear of a mayor or regional governor in court facing corruption charges, and a recent (June) El Pais article asks “Is something rotten in the state of Spain”. (12)
Rajoy Peoples Party Government ratifying illegal developments and enforcing evictions
The people voted for Rajoy and the Peoples Party knowing that election day was the anniversary of Franco’s death, and a return to “austerity” was already foreshadowed by Rajoy, who was keen to participate in the friendly fascism underway in the Goldman Sachs-ing of Europe. His answer to the 1000’s of houses built and completed illegally on land not zoned for development, is legalization and further destruction of coastal environment. His answer to whole of the building industry cast into unemployment was to enforce evictions.
Rajoy Peoples Party Government trying for another unsustainable housing bubble
His answer to unemployment and the recession, that Spain seems doomed to endure for another 10 years, is to create another bubble, this one courtesy of Las Vegas and Macau gambling multi billionaire Sheldon Adelston and “Euro Vegas” (13) with 6 casinos, thousands of hotel rooms and 18 BILLION euros worth of investment which would reportedly halve Madrid or Barcelona’s unemployment rate. This would add to the already established 30 casinos currently operating in Spain.
A very insightful book has recently been authored by the son of the Republic in Exile post Franco, Nicholas Sanchez-Albornoz. The book is called Prisons and Exiles and revisits Franco when the police caught up with him and his colleagues in the anti-Franco fight. The escape of Sánchez-Albornoz and his fellow prisoner Manuel Lamana from the slave labor practiced at Cuelgamuros near Madrid in 1948 was one of the legends that most damaged Franco.
The Franco regime never conceived of peaceful co-existence among Spaniards without political exile, the period from 1939 to 1942 in which, according to reports from the time, more than 100,000 people were executed. But Sanchez-Albornoz's account is not from that time. It
“begins in 1947, and I am sure there were still firing squads then because I lived through it. The executions lasted until Julián Grimau in 1962, Franco kept killing after the war.”
Sánchez-Albornoz sees the whole 40 year period as ;
“corrupt. Franco's authority rested on two elements: death and punishment, and corruption . . . .
Q./ The regime ended. But when your father returned from exile in 1976, then Interior Minister Manuel Fraga Iribarne prohibited a formal dinner in his honor. So, the regime was still there.
A./ And it is still here today. There is a de facto group, which stands for everything that fuels that dark side of a segment of the Spanish population.”
Q. How do you see this current period?
A. There is a global economic crisis led by the financial system and its abuses, which in the case of Spain has been worsened by a dreadful economic policy created by the PP in its last government (Aznar), to give free reign to the real estate sector, which resulted in a certain level of euphoria at the time. And Zapatero didn't put a stop to it; he didn't know how to burst the bubble. What is alarming in the current situation is the level of improvisation. There is a return to certain Francoist roots in society, and that is worrying. A very unpleasant Spain is surfacing. “ (14)
The remnants of fascist Spain can most easily be seen at peaceful public demonstrations. Tear gas, pepper spray and rubber bullets are a first response, now demonstrations are being made illegal. (15)
How did Spain's banks survive the 2008 crash? – Basically, endogenous corruption
The Zapatero socialist government introduced many reforms after 2004, including Zapatero's most popular one of withdrawing troops from Iraq as soon as elected, but weakly caved into a laissez-faire ignorance of the bubble. It has recently been discovered that when the execrement hit the fan, Spain’s central bank, the Bank of Spain, had, in the timeless Spanish tradition, been cooking the books.
The full extent of indebtedness was only hinted at when E.U. contagion was considered. Greece’s debt pales into insignificance when compared to the level of debt owed by the Spanish real estate sector. This comprises anything up to half the money the European Financial Stability fund has on its books, just to recapitalise the Spanish banks, whose debt is now seen as “sovereign debt”.
Both socialist and conservative governments have been shamefully responsible for dereliction of duty with the burden of debt. In true Goldman Sachs fashion, they have transferred the debt from the private to the public sector. Rajoy’s PP government has been in complete naïve denial and lied as much as it could to save face, to just kick the can down the road until after summer and the tourists have gone. The full debt is still not known and Rajoy was refusing to call for assistance as recently as the end of May. He is now openly criticized in all European media.
Only 12 months ago he oversaw the privatization of Bankia, Spain’s 4th largest bank. The share float began at 3.69 euros and is now 1 euro.
The end of year 2011 report declared a 40 million plus euro profit which, on independent audit, was revealed to be a 3.3 billion euro LOSS. Bankia has now asked for a 19 BILLION euro bail out. The total “immediate” bail out for the banking sector is said to be 62 BILLION euros, this is excluding the BoS as it would not have enough time to complete the audit until September as “too many staff would be on leave over summer”.
See also a report republished on , with a short history of the Spanish debt and how it has been handled internationally. In 2009 Charlie McCreevy, the EU’s commissioner for financial services from 2004 to 2010, who previously had been Ireland’s finance minister, has said that he knew Spain's banks were violating violating International Financial Reporting Standards, but thought it was okay for them to do so.