Tensions rise in Spain over use of €140 billion in EU recovery funds

The Spanish government is increasingly under fire over its use of the European Union's massive economic recovery funds, with critics blasting the distribution of aid as too slow and arbitrary.

Spain's Prime Minister Pedro Sanchez presents a graph during an end-of-year press conference at La Moncloa Palace in Madrid, on December 29, 2021. (Photo by JAVIER SORIANO / AFP)
Spain's Prime Minister Pedro Sánchez presents a graph during an end-of-year press conference at La Moncloa Palace in Madrid, on December 29, 2021. (Photo by JAVIER SORIANO / AFP)

Spain is due to receive €140 billion ($160 billion) from the fund by 2026, half of it in grants, making it the programme’s second-biggest beneficiary after Italy.

The landmark €800-billion recovery plan was approved by Brussels in July 2020 to help the bloc rebound from the impact of the Covid-19 pandemic, and make its economy greener and more digitalised.

“We are talking about extraordinary amounts,” Socialist Prime Minister Pedro Sánchez said earlier this month, calling the funds “a historic opportunity for Spain”.

Spain and Portugal were the first nations to receive money, with Madrid collecting €19 billion during the second half of 2021.

The funds are at the heart of the economic and political strategy of Sánchez’s government after the economy contracted by a whopping 10.8 percent in 2020 under its watch as the pandemic hit.

The government faces elections by the end of 2023.

But some business leaders and opposition parties have complained about a lack of coordination between the central government and Spain’s powerful regions over the deployment of the money.

 ‘Lack of leadership’

Although Spain was the first to receive aid, the money was “not injected” as fast as expected in the “real economy”, the CEOE employers’ association said in a report in early January.

By the end of the year, only 38 percent of the funds allocated to Spain for 2021 had been used, official figures show.

This is “very far from the targets” that were set and the delay in using the aid will hamper growth, think-tank Funcas has warned.

Aerospace giant Airbus complained of a lag in the allotment of the funds, citing a “lack of coordination and leadership” from the responsible ministries, according to an internal memo published in El País newspaper last month.

Critics also say that even when the money is distributed, it is often not well spent, with small amounts spread across many projects.

“The current assignment system for the funds” leads to their “dispersion” and favours “little projects”, some of them “a bit odd,” said the Exceltur tourism association’s vice president, José Luis Zoreda.

He cited as an example a golf course in the rainy northern region of Asturias.

To have a “real impact”, the funds should focus on “a few large projects” with a strong potential to “transform” the Spanish economy, he added.

‘Cruising speed’

The row has in recent days become political, with the right-wing opposition Popular Party (PP) accusing the government of favouring regions and municipalities run by the left.

“Two years ago we proposed setting up an independent agency for managing EU funds” as happened in Greece, Italy and France, PP leader Pablo Casado said.

“But Sánchez preferred to distribute aid arbitrarily,” he charged.

Casado and several right-wing regional leaders have threatened to take the government to court over the distribution of the EU money, accusing it of “favouritism”.

But Sánchez quickly hit back.

“Let’s not turn the European funds into a partisan question… which is what the opposition wants,” Sánchez said Monday during a news conference with visiting German Chancellor Olaf Scholz.

Economy Minister Nadia Calviño, who served as director general in charge of the EU budget from 2014 to 2018, dismissed the PP’s criticisms as “not relevant”.

The deployment of European funds will achieve its “cruising speed” in 2022, she added.

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European court restores immunity of Catalan MEPs

The European Court of Justice restored the parliamentary immunity of exiled former Catalan leader Carles Puigdemont and two of his allies Tuesday, in a victory over Spanish authorities.

European court restores immunity of Catalan MEPs

Puigdemont and fellow MEPs Toni Comin and Clara Ponsati face jail in Spain for their roles in organising a banned Catalan independence referendum, and in March the European Parliament stripped them of their legal protection.

But on Tuesday, the vice president of the court issued an order to provisionally “suspend the execution” of the lifting of the immunity while judges prepare to study the case.

“Today we have another positive result,” Puigdemont tweeted, promising to face down Madrid from exile “no matter how uncertain things are and no matter how colossal the strength of the Spanish State. No surrender”.

Puigdemont led efforts by Catalonia’s separatist regional government to stage an independence referendum in October 2017 despite a ban by Madrid. The vote was marred by police violence.

Several weeks later, the Catalan administration issued a short-lived declaration of independence, triggering a political crisis that prompted Puigdemont and several others to flee.

Some Catalan figures who stayed behind were arrested and put on trial, with nine of them jailed for between nine and 13 years.

Although those jailed were pardoned earlier this year, Madrid still wants Puigdemont and the others to face justice over the secession bid. Puigdemont lives in Belgium.

Puigdemont enjoyed immunity for a time after being elected to the European Parliament in 2019, but that was lifted by the parliament in March in a decision upheld in July by the EU’s General Court.

The higher court, the ECJ, will now consider his case.