Authors: Ghina Mohsen, Tihomira Doncheva
The Spanish region of Valencia has been lavishly spending funds it receives on unnecessary projects leaving the economy in tatters. Now the region is in debt and struggling.
The Valencian Community is the land of extremes: a heaven for tourists and a hell for youth unemployment; a skyline made up of architectural masterpieces and rotting buildings; a dumpster for European investments and a concert hall for corruption.
Five years ago a member of the regional legislature for the Leftist Esquerra Unida party, Ignacio Blanco, stated for the Telegraph that the Community had been put on the map for corruption and waste, “bringing shame on Valencia”. Five years on, this autonomous region still cannot shake off the bad image.
Traditionally, the European Union (EU) invests millions of EUR in Spain, mostly within the Regional Development Fund. As part of Europe 2020’s goals, EU subsidies should target employment, research and development projects, the environment, education and social exclusion. Instead, the Valencian government has spent billions on extravagant buildings and useless sites. The Valencian Community is the perfect example of all that has gone wrong in Spain.
“…I think the main problem has been an absolute disdain toward public money and public services, also they [the previous government of Valencia] thought the regional government was their property and, due to this, they were doing what they wanted… This kind of behaviour has been constant during the 24 years of government.”, the Director General for EU Affairs in the Government of Valencia Daria Terradez said.
The EU and the money down the drain
As it turns out there was no actual control over the reckless spending during the projects. The system was made in a way that the responsibilities were shared and the European Union could only make suggestions. In reality the evaluation reports were written by the Valencian government which came after the project was finalised and the money spent. Often, those reports are meaningless without clear assessment and outlined targets.
“In Spain, it [evaluation] is something new and is perceived as negative instead of positive. Authorities are very nervous to conduct an evaluation due to the possibility of not seeing results and then having to explain it to the people. If they do an evaluation it is only a compliance evaluation, not performance. They can then say they did what they said they were going to do and ignore the actual results of the project.”, Euroscope writer Tessa Fox said upon visiting the region.
The question is not why is the EU allowing the misuse of money or who is to blame, the question is what is going to happen.
“Maybe the EU has to think about its control procedures, make them shorter and more effective; I do not think the EU is allowing this kind of behaviour, but it could be a solution to simplify the procedures and to have an audit management board in every member state.”, proposes the Director General for EU Affairs. According to her, the EU is not to blame for those frauds, yet she thinks the audit procedures are too complicated and “take a lot of time to identify an irregular use of funding”.
What has been done so far?
Currently, a big part of the cases where EU money has been misspent is under judicial procedure, so Ms Terradez cannot comment on any outcomes. Those procedures take years to be resolved, while in the meantime there is no guarantee that the same kind of deals are not being repeated.
Even though most of the cases are still open, some decisions have been made and EU officials have asked for compensation. The latest fine is from November last year when Spain had to pay sanctions to the amount of 19 million euros for misreporting of deficit data. It was the first casualty of the new EU rules on statistics active since 2015. Two years ago the European Commission also fined the Valencian government six million euros because of bad management. The project in question was being funded between 2007 and 2011.
But the most iconic “white elephants” of the region have not been scrutinised legally, even though they have received a lot of negativity from the Valencian people.
Next to the miserable old blocks of flats, proudly stands the fabulously expensive City of Arts and Sciences by the architect Santiago Calatrava. His task back in the 90’s was to get the Spanish city noticed, no matter the price. And the mission has been completed: the complex of glimmering white buildings rivals world-renowned masterpieces such as the Opera in Sydney, but it also reminds the tired Spanish of the housing bubble which burst around the time Spain was hit by the economic crisis.
When the economy crashed and Valencia became the first region to seek bailout from Brussels in 2012, the pricy new Castellon airport in the eastern part of the Community epitomised the vast public overspend. The first commercial flight took off almost five years after the airport was built. But the bad luck never stopped hounding the airfield and currently there are only four destinations to which people can travel.
Left to be demolished by time, a Formula One urban racing circuit has not been used in years. The empty buildings around a harbour built for the America’s Cup in 2007 make Valencia look like a ghost city.
By 2014 the Valencian Community was head over feels in debt, owing 26 million euros. The only good news is that since then the unemployment rate has slowly been decreasing, reaching 20.2 percent in the third quarter of 2016, reports Statista. Still, those numbers do not take away the many “for rent” signs, which remind citizens of all that they have lost.
All of this reckless spending is not only the fault of corruption in the high levels of the Valencian government. It is the result of fierce competition between Spanish cities in the first years of the Eurozone. Billions were spent to attract international tourist business. The EU gave all the money Valencia asked for, hoping that local politicians and experts would evaluate the outcomes of the projects.
A new era?
Last year was an eventful one for the people of Valencia. After the change of government in 2015, 24 people all connected to the Popular Party were arrested last January because of corruption allegations. It is them who are believed to have participated in a corrupt network which charged commissions in exchange of granting public contracts. Some of those contracts might have used EU money.
“Although it is very difficult to have information about the corrupt, there is data that in the last fifteen months there were approximately 1,300 accused of corruption in the Spanish courts.”, said Jesus Lizcano Alvarez, president of Transparency International Spain, an organization that conducts research on fraud and corruption by public institutions and works on developing instruments of transparency for these institutions. Alvarez believes that corruption has been recently decreasing with the new government but, it still does exist. “In any case corruption in Spain is a political corruption, and it is not a systemic corruption, as it happens in other countries” he said.
Valencia has become a “white elephant” on its own – an eyesore in the Spanish economy. Tourists see Valencia as the home of the City of Arts and Sciences or the Castellon airport. However, the citizens of this city are furious that the government is spending all the funds it receives on expensive unwanted projects. Jesus Lizcano said “Spanish society is very outraged by corruption, and is the second biggest cause of concern among citizens, after unemployment.”
Although politicians in Valencia argue that these expensive buildings help put Valencia on the map, others argue that the money could be used for better projects. For example, an organization that previously did “corruption tours” around Valencia to show people the white elephants of the city used to argue that the money could have been used for the run down schools or hospitals that lack the right equipment.
Valencia seems to be past the bailouts and the street protests from a few years back. What is left is a region full of artefacts, a reminder of a former glory which has left the Community hungry for a better future.
Until recently, the team of Ruta Despilfarro Valencia gave special trips around the city to eager visitors. However, the President of the organization, Miguel Angel Ferris Gil, has since moved to Paris, France, and the tours have been stopped. “The political situation has strongly changed and the responsables of corruption and misuse of money in public institutions are waiting for Tribunals of Justice.”, Mr Gil told Euroscope. The slideshow shows what the “corruption tours” used to look like.