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Catalan leader unveils new government after coalition crisis

After the Catalan regional coalition was thrown into crisis in recent weeks, a new minority government has emerged after bitter infighting between separatist groups.

Catalan leader unveils new government after coalition crisis
Catalan regional president Pere Aragones. Photo: Pau BARRENA/AFP

Seven new faces entered Catalonia’s regional administration on Tuesday, now a minority government following a crisis that saw the hardline JxCat withdraw from the separatist coalition.

“We are turning a new page and will continue working with total determination,” said regional leader Pere Aragones of the left-wing ERC party following his government’s first meeting without JxCat.

JxCat decided to quit the coalition after 55 percent of party activists voted to leave against 42 percent who wanted to stay.

Although JxCat’s departure left ERC running a minority government with just 33 of the Catalan parliament’s 135 seats, Aragones ruled out early elections, quickly moving to restructure his cabinet.

READ ALSO: Why Catalan separatists are in crisis five years after independence vote

Four of the new ministers are from ERC and three from other allied separatist parties.

In order to pass key measures such as the regional budget, Aragones could seek support from Prime Minister Pedro Sánchez’s Socialists, whose minority left-wing coalition is backed by ERC within the Spanish parliament.

Although both ERC and JxCat want independence for Catalonia, they have been sharply at odds over how to achieve it.

JxCat is headed by former Catalan leader Carles Puigdemont who played a key role in staging the October 2017 referendum banned by Madrid and the failed independence bid that followed, sparking Spain’s worst political crisis in decades.

Puigdemont fled abroad to escape prosecution while others who stayed in Spain were arrested and tried. Nine were handed heavy jail terms by the Spanish courts but later pardoned.

The failed independence bid triggered a bitter rift between the two separatist parties that has never healed.

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PROPERTY

ANALYSIS: Is Spain’s decision to axe golden visa about housing or politics?

The government claims the decision to scrap the golden visa is about controlling a speculative property market, but experts aren't sure it'll make much of a difference and critics say it's a political 'smokescreen'.

ANALYSIS: Is Spain's decision to axe golden visa about housing or politics?

On Monday Spain’s Prime Minister Pedro Sánchez shocked many and announced plans to scrap Spain’s golden visa (visado de oro). You can read more of The Local’s extensive coverage of this decision here and its potential impacts below. 

The golden visa allowed non-EU nationals to gain Spanish residency if they bought property worth €500,000.

The visa, first introduced in 2013 by the then centre-right Partido Popular government, has been criticised for essentially selling Spanish residency (and by extension, EU rights) to the wealthy, as well as contributing to property price inflation. 

READ ALSO:  Q&A: When and why is Spain axing the golden visa?

However, some commentators in Spain say that foreigners purchasing luxury properties for half a million euros or more has little impact on Spaniards struggling to find affordable housing, and that the number of property purchases made through the scheme made little difference to the market overall.

Golden visas issued through the purchase of Spanish properties worth more than half a million euros total 14,576 since its inception, according to Spain’s Housing Minister Isabel Rodríguez.

Now, after the dust has settled, property experts and politicians alike have begun to consider the potential consequences of the decision and some are questioning whether it was about housing at all or was a purely political move.

Critics of Sánchez argue that scrapping the golden visa is a ‘smokescreen’ to distract from poor management of the rental sector. Property experts wonder how much effect it will really have on reducing prices for locals, and some fear the decision could even drive away foreign investment in Spain.

What the experts say

It’s certainly true that some experts, whether in property or immigration law, feel the decision could deter non-EU foreigners from coming and investing in Spain.

Maryem Essadik Rhafour, an immigration law expert and partner at Marfour International Law Firm, spoke to The Local and described the move as “a bad decision” that could potentially drive away foreign investment to Spain.

The golden visa, she said, “is a type of investment that has brought a lot of foreign capital to Spain. Moreover, behind every investment there are thousands of sources of income for the local population.”

READ ALSO: What the end of Spain’s golden visa means for foreigners

“This type of measure slows down the arrival of foreigners with a high level of economic capacity and a high level of consumption,” Rhafour added.

Though the total number of golden visa holders is small overall, according to transparency data analysed by Spanish daily El Diario golden visa holders have pumped €5 billion into the Spanish property market over the last five years alone, something that some argue distorted the market overall.

Yet the proportion of property sales made through the scheme is very small. A spokesperson from property website Fotocasa told state broadcaster RTVE that golden visas represented “a very small percentage” of property purchases and that removing them “would not really have an impact on the common residential sale and purchase market.”

A couple pose next to a Ferrari car in Puerto Banus, near Marbella, on March 30, 2013. AFP PHOTO / JORGE GUERRERO (Photo by Jorge Guerrero / AFP)

 

However, despite that some feel that the decision is still a positive step forward and symbolic in terms of trying to address the structural problems in the Spanish property market. In Spain in recent years, anti-foreigner and anti-tourist sentiment  has grown. Much of this comes from a resentment among Spaniards towards short-term tourist lets (known as pisos turisticos in Spanish) that cater to remote workers and digital nomads, which has an inflationary effect on local markets.

As such, for many the issues of spiralling rental costs, tourism, the influx of digital nomads and the golden visa are all intertwined and the government’s measure, indeed any measure, perceived to be doing something about the impact on Spaniards is welcome.

READ ALSO: Where in Spain do locals ‘hate’ tourists?

Julio Rodríguez, a member of Spain’s Council of Statistics, told RTVE that although “it will have a limited impact on the overall demand for housing… the message is positive in terms of reducing speculative tension.”

This market speculation increased particularly after the pandemic, when the number of golden visas given out increased rapidly.

“It was in 2022 when the alarm was raised as golden visas doubled,” Housing Minister Isabel Rodríguez told journalists at a press conference on Tuesday.

“In 2016, 471 golden visas linked to Spanish real estate were issued. In 2017, 946. In 2018, 988. In 2019, 861. In 2020, 632. In 2021, 997. In 2022, 2,017. And in 2023, 3,272.”

However, despite this clear post-pandemic uptick in golden visas, it is undeniable that the number of foreigners purchasing property in this way made up a very small proportion of the total number of properties bought by foreigners in Spain. Critics have been quick to point out that golden visa holders represent a far smaller share of the foreign buyers market than other foreign second homeowners without a visa (0.7 percent compared to non-resident foreign buyers who bought a Spanish home in 2023).

So it seems that on balance, the decision to scrap the golden visa is certainly seen as a positive step or symbol, but may not have as big an impact as many first thought, or indeed the government let on when announcing it.

Smokescreens and demagoguery

Despite praise from some Spaniards, the Sánchez government has faced growing criticism in the aftermath of the decision. Many feel it is a performative political ploy that will have little impact on house prices.

Citing statistics on the percentage (less than 1 percent) of properties golden visa holders purchased, opposition Partido Popular spokesman Miguel Tellado claimed in a press conference that eliminating the golden visa is “a smokescreen to cover up the government’s incompetence in housing policy.”

“It’s a good try but I have to tell you that it’s not going to work,” he added.

But it’s not just Sánchez’s political opponents critical of the move. President of the Spanish Chamber of Commerce, José Luis Bonet, has described the scrapping of the golden visa scheme as a “demagogic and ill-advised gesture”.

Luxury houses and hotels in Llafranc, on Spain’s Costa Brava. Photo: Manuel Torres García/Unsplash

The commerce leader also believes the decision could drive foreign investment away. “Spain has become the summer resort and second home for millions of Europeans. Reducing the ways for them to come here seems to me to be unwise,” he said.

Ruth Merino, regional Minister of Finance, Economy and Public Administration in the Valencia region, where many golden visa holders choose to settle, described the decision as “electioneering.”

“This is not good news, it gives the impression that Sánchez does not have a plan for housing: he has electioneering ideas,” she said.

Internal politics

There’s also another layer to the political considerations behind this decision, and it revolves around internal management. The Sánchez government has faced growing criticism for its housing policy not only from opponents on the right, but also from the left too.

Sánchez’s Socialists (PSOE) are in coalition with far-left Sumar, a party which has long called for better regulation of the property market and protections for Spaniards getting priced out of their own towns and cities. Scrapping the golden visa could also speak to the internal political pressures within the Spanish coalition: Sumar had been pressuring PSOE for this, or restrictions on the golden visa scheme at the very least, for some time.

Upon hearing the news, Culture Minister Ernest Urtasun, a Sumar member, referred to the Spanish golden visa as a “European disgrace”, adding that “it cannot be that someone is given a residence permit for the fact of being rich; this is creating first and second-class citizens.”

In this sense, and with the opinions of property experts considered, scrapping the golden visa does appear more like a political step than it does a strictly housing policy decision.

The political benefits are clear. By scrapping the golden visa, the government can stand up to its critics that claim it does nothing about the housing crisis, while also simultaneously keeping members of its coalition on side and quelling frustrations (however disingenuously) among Spaniards about the property market more widely, that is to say: the government felt political pressure to be seen to be doing something about the housing problem, not that this decision will necessarily do anything to solve it.

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