Current Affairs: Spanish duke Inaki Urdangarin questioned over corruption

Spanish duke Inaki Urdangarin questioned over corruption



BBC

The son-in-law of Spain's king has been questioned by a judge in Mallorca over corruption allegations.

Inaki Urdangarin, the Duke of Palma, is being investigated over claims he misused public funds given to a foundation he ran.

The duke has denied any wrongdoing in the case, which has been a rare embarrassment for the popular Spanish royal family.

"I come to clarify the truth and defend my honour," he said as he arrived.

"I have carried out my responsibilities and taken decisions correctly and with total transparency."

Scores of anti-monarchy protesters demonstrated noisily nearby as the duke arrived for the closed-doors hearing.

Some waved signs reading "Inaki owes us money" and "Monarchy Corruption", the AFP news agency reports.

"We want justice to be the same for all Spaniards. He should be convicted," said protester Claudio Borilla.

'Harassment'

The duke has not been formally charged but is reportedly accused of misdirecting part of some 6m euros (£5m: $8m) sent to his not-for-profit Noos Institute by regional governments to organise sporting events.

It is alleged that some of the money ended up in companies that he ran. The events in question happened between 2004 and 2006, when the duke stepped down as head of the institute.

A court official said the investigating judge Jose Castro had questioned the duke over the workings of the companies involved in the case.

The official, who asked not to be named, told AFP the judge would decide whether to order a trial and bring charges, a process which could take several months.

The duke, a former Olympic handball player, is married to the king's second child, Princess Cristina. He was suspended from official royal engagements in December last year.

On Thursday the duke's family released a statement defending his innocence and attacking what they called a "campaign of harassment" against him, AFP reports.

In response to the scandal, the royal family announced in December that it will make its accounts publicly available.

In an apparent reference to the investigation into the duke, King Juan Carlos used his Christmas speech to say that "all are equal before the law".

"When untoward conduct arises which is not in keeping with the law and ethics, society naturally reacts. Fortunately we live by the rule of law and any unworthy act must be judged and penalised," he said.

Finance&Economics: Spain’s recession enters new phase

Spain’s recession enters new phase



By The Financial Times

Until this week students gazing out of the windows of Lluís Vives secondary school in the centre of Valencia, eastern Spain, had little more than a concrete basket ball court to distract them.

That was until a demonstration held by students and parents against education cuts was violently broken up by police, triggering days of protests across the city and transforming the school into a symbol of a country where the pain of austerity is becoming a feature of every day life.

“There are schools where there is no money to pay the electricity bills and the students can’t study,” says Marta, a 14-year-old student standing outside the school, alongside hundreds of other young Valencians in protest against the violence.

She says her mother, a state school teacher, has not been paid since Christmas. “We are living on credit. Other people’s parents don’t even have jobs.”

Spain’s recession has entered a new phase where spending cuts risk compounding the effects of rising unemployment and weak domestic demand.

The centre-right government is now so concerned about a vicious cycle driven by austerity that it has begun pressing Brussels to allow a relaxation of a planned budget deficit reduction from 8.4 per cent of gross domestic product to 4.4 per cent in a year.

For Mariano Rajoy, Spain’s prime minister, the events in Valencia have also served as a worrying reminder of the possible social cost of large-scale austerity coupled with a deepening recession.

The plight of Valencia, which last year received a last-minute bail-out from Madrid to repay a bank loan and which has seen its credit rating slashed to junk, is particularly bleak.

Earlier this month the electricity was cut at one of the town hall buildings because the bills were unpaid, while locals complain of unpaid workers and schools lacking toilet paper.

Away from Valencia, once the crucible of Spain’s property boom, now pockmarked with half-built developments and empty offices, there is increasing evidence that relatively prosperous regions are lurching back into recession.

While the Spanish economy is expected to shrink by 1.5 per cent this year, according to the Bank of Spain, the region of Madrid is expected to contract by 0.3 per cent in 2012, compared with a 1.2 per cent rise last year, according to estimates by BBVA. In the Basque country, which has one of Spain’s lowest levels of unemployment, gross domestic product is forecast to drop by 1 per cent.

Some economists argue that suffering among Spain’s more comfortably-off, many of whom until recently had avoided the full brunt of the construction industry collapse that cost many temporary labourers their jobs, could drive this next leg down.

“People with higher incomes and fixed contracts are now losing their jobs, and this will have different economic effects to the construction workers who were the first to suffer,” says Juan Carlos Martínez Lázaro, an economist at the IE Business School.

With the prospect of tax increases intended to raise €6bn, Spaniards are likely to spend less, argues Mr Martínez Lázaro, which risks creating a vicious circle where the benefits of short-term austerity are nullified by a stagnating economy. Spain’s consumer confidence index has already fallen sharply since the summer in a country where domestic household consumption accounts for 60 per cent of GDP.

Mr Rajoy now appears fearful that short-term austerity measures could imperil his government’s programme of longer-term reforms, which centre on establishing greater flexibility for employers, and ensuring regional governments, such as Valencia’s, will never again need to be rescued by Madrid.

Whether this will allow enough time for consumption to recover remains in doubt.

Restaurants and bars on streets of parts of central Madrid, which had appeared to carry on as normal while the country’s construction industry collapsed, are already showing signs of slowing down.

“Look, this is the Soho of Madrid, and it feels dead,” says Richard Foster, pointing to empty streets and shuttered shops near his Maison Blanche restaurant in Chueca.

Reservations have fallen by a third since the turn of the year. “Why?” he asks, “because my typical client has lost his job”.

Current Affairs: Sunken treasure haul arrives in Spain from US

Sunken treasure haul arrives in Spain from US




BBC

A haul of gold and silver coins salvaged from a sunken Spanish galleon has arrived in Spain after five years of legal ownership wrangles.

US firm Odyssey Marine Exploration found the 17 tons of coins in a wreck off Portugal's Atlantic coast in 2007.

At the time, the treasure was estimated to be worth $500m (£316m).

But a US federal judge recently ordered Odyssey to give Spain access to the treasure, the last in a series of legal defeats for the salvage firm.

The coins arrived at an airbase at Torrejon de Ardoz, north of Madrid, on Saturday afternoon in two military transport planes.

On Friday, Spain's ambassador to the US had watched the planes take off at 12:30EST (17:30 GMT) from MacDill Air Force Base, Florida.

"This is history. We bear witness to that fateful day 200 years ago," Ambassador Jorge Dezcallar de Mazar said. "This is not money. This is historical heritage."

Once the treasure is unloaded, it will be transported to an undisclosed location, according to local media reports.

The 594,000 coins and other artefacts are believed to have been recovered from the Nuestra Senora de las Mercedes, sunk by a British warship in 1804.

Business or empire?

Odyssey, based in the Florida city of Tampa, said they had found the wreck in international waters in 2007, and quickly flew the coins to Miami, where they claimed salvage rights.

However, once the Spanish government learnt of the haul, it began legal challenges against Odyssey in an effort to recover the coins.

Odyssey had argued in US federal court that the wreck was never positively identified as the Mercedes, and even so, as it was operating as a commercial ship, Spain had no claim to the cargo.

International treaties generally hold that warships sunk in battle are protected from treasure seekers, unless they are formally abandoned.

Spain countered that it had never relinquished ownership of the ship's cargo, and the coins were part of the country's national heritage.

A judge first declared in 2009 that the US had no jurisdiction in the case and ordered the treasure to return to Spain.

Despite an ongoing battle with high unemployment and debt concerns, Spain's Culture Ministry has ruled out the idea of the treasure being sold to pay off the country's national debt, the Associated Press news agency reported.

Instead the coins will be exhibited in Spanish museums.

Peru made an emergency appeal to the US Supreme Court on Thursday, stating its own claim on the coins on the basis that they were mined and minted in the country while it was part of the Spanish empire.

But that claim was turned down by Judge Clarence Thomas on Friday, AP reported.

Current Affairs: Spain Judge Baltasar Garzon vows to fight conviction

Spain Judge Baltasar Garzon vows to fight conviction

BBC



Spanish Judge Baltasar Garzon has vowed to fight his conviction for authorising illegal phonetapping despite the court barring him from appealing.

In a statement, he said his rights had been "systematically violated" with the ruling, which saw him suspended from the judiciary for 11 years.

Hundreds of people protested in Madrid in support of the campaigning judge.

But Mr Garzon is also involved in two other legal cases and observers say he may be facing years of struggle.

The 56-year-old campaigning judge is best known for helping to secure the arrest of the former Chilean leader Augusto Pinochet in London.

In Thursday's finding, he was convicted of authorising illegal recordings of conversations between lawyers and detainees accused of paying off politicians of the now-ruling conservative Popular Party in exchange for lucrative contracts.

As well as being suspended from the judiciary, he was fined 2,500 euros (£2,100; $3,300).

He acted arbitrarily in ordering prison conversations between suspects and their lawyers, the judge ruled, adding that his actions "these days are only found in totalitarian regimes".

"I reject the sentence head-on," Mr Garzon said in a statement. "My rights have been systematically violated.

"I will turn to the appropriate legal channels to fight this sentence and carry out all pertinent actions to try to mitigate the irreparable harm that the authors of this sentence have inflicted."

His lawyer, Francisco Baena, told AFP news agency he may appeal to Spain's constitutional court and, failing that, the European Court of Human Rights - a process observers say could go on for years.

'Shame!'

Mr Garzon is also awaiting judgement in a second trial for trying to investigate atrocities committed during and after the Spanish Civil War in alleged breach of a 1977 amnesty - angering right-wing groups.

This is not the case against Baltasar Garzon which has attracted most of the publicity in Spain. The verdict in his second trial, which looked at his attempts to investigate alleged crimes carried out under the former dictatorship of Francisco Franco, will be more controversial.

However many people see the two trials - and a third which is still pending - to be a "vendetta" by the political right, against a judge who is regarded as a champion of human rights and justice by the Spanish left.

As much as he is loved by some, Judge Garzon is hated by others who feel he is a politically motivated judge who seeks controversy and the media limelight.

Whereas most international commentators are dismayed that the man who attempted to put Augusto Pinochet on trial has now been tried himself, in Spain the issue divides opinion and evokes strong feelings on both the right and left of Spanish society.

In a third case, he could be charged for alleged bribe-taking from a large Spanish bank.

Hours after the ruling, hundreds of protesters gathered in Madrid's Puerta del Sol square in freezing temperatures, shouting "Shame! Shame!"

The verdict was also condemned by the International Commission of Jurists.

"The circumstances in which this conviction has been made cannot avoid being seen internationally as a punishment for Judge Garzon for investigating the crimes of the Francoists," said Pedro Nikken, ICJ president, who observed the second trial.

But Justice Minister Alberto Ruiz-Gallardon said the government had "utmost respect" for the ruling, while the head of the Madrid regional government, Esperanza Aguirre of the PP, called it a "happy day".

"Because the ends, and I have no doubt that Garzon's ends were praiseworthy, the ends cannot justify the means and that is the basis of the rule of law," she said.

As well as pursuing Gen Pinochet, Mr Garzon also rose to prominence in Spain for investigating Basque separatist group Eta, 1980s-era government death squads and indicting Osama Bin Laden.

Current Affairs: Spain's lost generation: youth unemployment surges above 50 per cent

Spain's lost generation: youth unemployment surges above 50 per cent



More than half of young Spaniards are out of work, according to fresh statistics, signalling a lost generation that has been hit hardest by Spain's economic woes, as the total number of unemployed surged above five million.

The Telegraph

The number of 16-24 year old Spaniards out of work rose to 51.4 per cent in December, more than double the European Union average, according to a report by Spain's National Statistics Institute. The national unemployment rate hit 22.85 per cent, the highest rate in nearly 17 years and the current highest in the industrialised world.

Spain's young have been dubbed 'generacion cero' or 'the ni-nis' – neither in work nor full time education- and for many their only hope of seeking a better future is moving abroad, sparking fears of a brain drain.

"This is the least hopeful and best educated generation in Spain," said Ignacio Escolar, author of the country's most popular political blog and former editor of the newspaper Publico. "And it's like a national defeat that they have to travel abroad to find work."

When the crisis began in 2008, Spain's under-25 unemployment rate was below 18 per cent but it has nearly tripled within four years as Spain's housing boom collapsed and it sank into recession.

Young Spaniards are now living in the family home longer than ever before, pushing the average age of independence from their parents to well into their thirties.

"These people are delaying their advance into adulthood. It's a very scary time for young people," said Sara Elder an economist with the International Labour Organisation (ILO) which published a report into youth unemployment around the world.

"They find the path that worked for their parents is not working for them."

The ILO report, published last October, warned that the consequences of mass youth unemployment could be dire.

"Increased crime rates in some countries, increased drug use, moving back home with the parents, depression – all of these are common consequences for a generation of youth that, at best, has become disheartened about the future, and, at worst, has become angry and violent," it said.

Spain already has one of the highest rates of cannabis and cocaine usage among its young in western Europe.

The botellon, the social activity for younger people of drinking alcohol in public areas such as the streets, has also increased in popularity leading to police clampdowns.

Young Spaniards led the protests throughout last summer, setting up camps in plazas across Spain in the movement that became known as "Los Indignados" – the Indignant ones.

They complain that even a university degree leaves no guarantee of finding work.

"When you go to university, you develop very high expectations, and then you leave and get a reality check," says Tomás Muñoz, a 25-year old graduate of Alicante University and a spokesman for the Juventud Sin Futuro (Youth without a future) platform.

Analysts warn that youth joblessness could have a devastating effect on a nation that needs a dynamic young workforce to help economic recovery and lead Spain out of recession.

"It's a problem not just for them, but for all of us," believes economics professor Gayle Allard from the Instituto de Empresa in Madrid.

"This is the generation that will be paying for the welfare state and pensions in the future. If they can't get started with relatively secure, well-paying jobs, start to put away some savings, start to accumulate assets, start paying into the welfare system, where does that leave the rest of us?"

Current Affairs: Search for men swept away from A Coruña beach continues

Search for men swept away from A Coruña beach continues

Missing are a Slovakian exchange student and the officers who tried to help him



EL PAÍS

The search continued on Sunday for three missing men, including two police officers, who were swept away by gigantic waves off A Coruna's Orzán beach. The body of a third officer was recovered on Friday.

The incident occurred late Friday night, when a group of Erasmus students gathered for a beachside party. One of the students, Thomas Velcky of Slovakia, stuck his feet in the water before being swept away by a massive wave. Police officers and bystanders tried to rescue the 23-year-old student by holding on to a rope but another wave pulled in three officers. The body of one of the policemen, Javier López López, was found hours later.

Searchers continued to look for Velcky and the two other officers, Rodrigo Maseda Lozano, 35, and José Antonio Villamor Vázquez, 34.

"It was an accident that ended in tragedy," said Ignacio Ulloa, Galicia's secretary of state for public security.

During the winter season, people often gather near the city side beach to watch the waves crash into the seawall. In 2007, the waves swept away a 32-year-old Madrid woman while she was walking on the beach with her husband.

Finance&Economics: Fresh wave of Spanish bank deals imminent

Fresh wave of Spanish bank deals imminent




By The Financial Times

Luis de Guindos, Spanish economy minister, has launched another round of Spanish bank restructuring after more than three years of a financial crisis centred on more than €175bn of bad loans linked to construction and housing.

The detailed plan announced by the centre-right government last week, five weeks after it replaced the Socialists in power, obliges banks to find about €50bn from profits and capital this year to boost bad loan provisions and clean up their balance sheets.

Only the strongest banks – led by Santander, BBVA and Caixabank – can milk their recurring profits to achieve the new requirements quickly, and Mr de Guindos intends to force further restructuring among weaker lenders by allowing banks that have agreed to merge by May an extra year to find the money.

If they cannot, they will have to apply to the Fund for Orderly Bank Restructuring (Frob) for high-interest loans in the form of contingent convertibles or Cocos and risk being nationalised.

Spanish bankers and bank analysts say the measures will trigger more bank mergers – although the number of cajas or savings banks groups has already been cut from 45 to 13 – and also accelerate deals already under consideration.

Francisco González, executive chairman of BBVA, said last week he expected “six or seven” significant banks would remain after the current restructuring was completed.

Much attention is focused on Bankia, the merged group of Caja Madrid and six other cajas that is heavily burdened with non-performing property assets and needs to find €6-7bn to meet the new rules.

Although the group says publicly it can comply by converting preference shares into equity, selling non-strategic assets and other measures, bankers say it is examining the possibility of buying a smaller bank – possibly Unnim or NovaCaixaGalicia, which were nationalised last year – to give itself the extra year.

Previously, banks that had received direct official aid from the Frob, as Bankia has, were not permitted to launch bids in this way. “Before we had only one choice, to fulfil [provisioning and capital requirements] or not,” said one banker familiar with Bankia’s strategy. “Now we have another option.”

An earlier possibility was that one of the big three – Santander, BBVA or Caixabank – would be persuaded by the government to take over Bankia, but neither side is enthusiastic about the idea.

Santander, for example, has remained profitable through the crisis mainly because it has diversified into Latin America, and it is reluctant to increase its exposure to the struggling Spanish economy.

The main criticism of Bankia’s likely strategy of buying a smaller bank is that it undermines Mr de Guindos’s attempt to organise a rapid clean-up of the banking system. “The key question is whether this leads to consolidation that makes sense, or to marriages of convenience,” says Iñigo Vega, bank analyst at CA Cheuvreux.

Bankia, however, is not the only lender talking about deals. Sabadell is planning to launch a €1-1.2bn rights issue to help finance its takeover of Cam, the Valencia-based savings bank from most of whose losses Sabadell is shielded by an official asset protection scheme.

Other possible combinations under discussion include a BBVA takeover of CatalunyaCaixa and the sale of Banco de Valencia by the state to Banco Mare Nostrum.

A worry for the government and the banks is that the underlying domestic economy continues to worsen, with Spanish gross domestic product expected to shrink by 1.5 per cent this year.

Under the de Guindos plan, banks will have to set aside €40bn of extra provisions and capital on the €175bn of bad property assets – including repossessed land and homes – already identified by the Bank of Spain. Provisioning on land holdings, for instance, will rise from 31 per cent to 80 per cent by the end of the year.

But he earmarked a further €10-11bn in provisioning, to the tune of 7 per cent, for the €160bn of property developer loans that are performing but may not continue to do so.

The Bank of Spain numbers used by Mr de Guindos are already out of date, since they represent a snapshot of the situation on June 30 last year.

According to Mr Vega, in the last quarter of 2011 Santander and BBVA alone (which are among the better banks and represent just 15 per cent of the exposure between them) added €2bn in non-performing property loans.

Elcano Sicav, a fund manager, estimated additional provisioning needs at €100bn, double the headline number provided by Mr de Guindos.

Spanish bank reform, in short, is still a work in progress. “This is a good initiative to accelerate the restructuring process of the financial sector,” say analysts at Espirito Santo investment bank, “although we expect a significant number of banks to ask for public support via Cocos.”