Page 24 Irish Daily Mail, Monday, July 9, 2012

by Brian Carroll

In Madrid

Azucena is a married mother of three forced to live in a squat after being evicted from the family home. She fears losing her children. It’s a harrowing parable of the financial crisis in Spain – a country where banks are stuffed with cronies and corruption is endemic

IT’S approaching midnight on Friday in Plaza Mayor, a 400-year-old cobblestoned square in central Madrid. The Madrid Orchestra is playing for free on the site where they used to

burn heretics at the height of the Spanish Inquisition.

Tourists and Spaniards — distinguishable by the presence of grandparents and toddlers at their tables — sit outside the restaurants that line the square, beneath elegant apart-ments painted clay-red, and framed by wrought-iron balconies.

As Beethoven’s 7th Symphony lingers on the balmy air, they drink wine and pick from plates of suckling pig, octopus and the Galician green pepper dish of Pimientos de Padrón. Even here, surrounded by such history, a three-course meal and wine costs less than �€25.

My Spanish waiter, who speaks English, Dutch, German, and Italian fluently, having worked across Europe in a 40-year career,

shrugs when I point to the orchestra and ask him what the special occasion is. ‘This is Madrid,’ he says simply.

Spain, with its sun-soaked cultural cocktail of cities like Madrid, Barcelona, Valencia and Seville, and its coastal resorts from the Costa Bravo to the Costa del Sol, will always attract tourists — they spent almost �€50billion here last year. But, like a bon viveur whose good days have eventually caught up with her, beneath the surface, Spain is riddled with the economic contagion spread-ing across the eurozone and the world.

Earlier on Friday, I’d travelled to northern Madrid to meet Azucena Paredes Villar, a blonde 30-year-old Spanish mother of three. She buzzed me through the electronic gates

Like half of those under 25 in Spain,

she is unemployed

of her apartment building — a nondescript red-brick high-rise over-looking dry wasteland in Roquetas de Mar, a working class suburb at the Pinar De Chamartin end of the blue Metro line.

I could hear her two-year-old son crying as I walked up the cracked marble steps to her second floor squat. Beyond the damaged front door, inside the cramped two-bed apartment, I meet her sick son, and his two older sisters, aged three and five. There is a large hole in the living room door and a sense of desperation everywhere.

Azucena’s 88-year-old grandmother, Tomasa Morcillo, is asleep in another room. Azucena, her children, and her grandmother are all squatters here in this bank-repossessed apartment.

They were evicted from the family home — an apartment in a nearby building — on November 18 last year, after they fell behind on the �€800 monthly payments. Azucena now sleeps with her three children in one room, with her grandmother in the other. Her partner has since moved back in with his parents, like 50 per cent of Spanish 30-year-olds.

Azucena is unemployed, like one in two people aged under 25 in Spain. She used to survive on �€390 a month from welfare, but in Spain the dole is cut off after two years.

She now gets by on emergency funding from charities, her grand-

promised �€100billion in bailout funds from the European Stability Mechanism — have shown no mercy.

There are evictions scheduled in barrios across Madrid today and throughout the week. On average, across Spain, there are 159 evictions every day, and four out of every five involve families with children.

Suicides have increased by 20 per cent since 2008, and prescriptions for medication to treat depression have increased by 35 per cent. A resident of Hospitalet de Llobregat, in

Madrid, hung himself in a park near his home, after his two years on the dole ran out and he received an eviction notice.

Identified only as MP, he was a 45-year-old electrician, married with one daughter, and, like 1.5million others in Spain, had lost his job due to the collapse of the construction industry. Juan Alvarez, the chairman

mother’s �€600 a month pension, and whatever help her mother, who lives on �€500 a month, can give her. She doesn’t speak English and pleads through an interpreter for us not to photograph her children: ‘The chil-dren could end up in a foster home and my grandmother in a residence.’

When a squatter is evicted, and children are involved, the Directorate General Of Care For Children And Adolescents (DGAIA) will automati-cally convene a meeting with the par-ent or parents to discuss custody of the children, if those evicted have no suitable alternative accommodation.

Azucena tried to shield her children from the eviction but her eldest daughter witnessed the reality of Spain’s economic collapse at first hand. ‘The eldest came home from school and found all her little things on the street and she got scared,’ Azucena said. ‘We told her the old house broke and that’s why we’re in the new one.’

There are 300,000 others in Madrid who are threatened with eviction after falling behind on mortgage payments or rents. When the police came to evict Azucena and her family, protesters fought with them on the street outside, and neighbours helped kick in the door of the nearby apart-ment she now illegally occupies. The Spanish banks — who have been

of the neighbourhood association where MP lived, said he had sought shelter for his family from the local housing council, but had been turned down twice on the day he took his own life.

Groups like the Plataforma de Afectados por la Hipoteca (PAH) orchestrate campaigns against the banks, and try to physically stop evictions. However, the courts, imple-menting a range of public order laws introduced by the new government, are able to pass injunctions stopping PAH from interfering with evictions.

As in Ireland, the people feel a huge sense of injustice, that the banks are being bailed out, while all the arms of the State — the government, the legislature, the judiciary, and the police — are used to throw people out of their homes.

Olmo Gálvez, a 31-year-old IT entrepreneur who spent three years working in China before returning to Madrid in 2010, tells me: ‘The EU is giving money to the banks but the banks must pay interest to the ECB.

‘Someone has to pay for it, but many of the banks are broke. Spain will not carry the debt, so someone else will have to pay it. We are not going to repay a debt that has been artificially created by bankers, politi-cians and investors. In Ireland, Greece and Iceland it happened the

same — bankers were giving credit to everyone without any controls.

‘They created a bubble and now everyone is suffering in Greece, in Ireland and here.’

And just like hundreds of thousands of Irish people, the Spanish were induced to buy their own homes, with 100 per cent mortgages.

Banks often loaned up to ten times the applicant’s salary. Home owner-ship levels in Spain are among the highest in the EU.

The giant mortgage lender Bankia, which is responsible for 80 per cent of the evictions in Madrid, has asked for �€23.4billion in bailout funds — but it is believed to have losses of more than �€100billion on its books.

The Spanish equivalent of Anglo Irish Bank, Bankia’s story is a para-ble of the greed, political corruption and lack of regulation which has now forced Ireland, Portugal, Greece, Iceland, Cyprus and Spain to seek bailouts. Spain was promised �€100bn for its banks on June 29, but already the markets have issued their judg-ment — the crucial ten-year bond yield in Spain, the amount the government in Madrid pays to bor-row, soared back above seven per cent on Friday. Spain’s conservative government — run by the Popular Party — has been telling its people that the State hasn’t been rescued,

‘My children could end up in a foster home’

FAMILIES raiding rubbish bins for food; an entire generation trapped by insurmountable debt; mass unemployment. In an illuminating dispatch on Saturday, Brian Carroll described the alarming challenges ordinary Spanish people face daily.

Today, he reveals how families have been betrayed by irresponsi-ble bankers, persistent corruption and a government too long in denial...

A FAMILY FORSAKEN

this year alone. Income taxes have increased while, as in Ireland, various indirect levies are further squeezing middle incomes.

With plans to cut tax reliefs on indi-vidual property investments and to increase VAT to 18 per cent across a range of services — including restau-rants and bars which currently pay a maximum of 8 per cent — Spain hopes to squeeze another �€8billion

out of taxpayers in 2013.These are harsh measures, but Spain

has to cough up �€27.5billion in matur-ing debt by the end of October and it has only weeks to agree terms for the first �€40billion of that immense

�€100billion bailout. Indeed, Reuters

has quoted government sources saying that unless Spain gets this �€40billion by the end of July, national-ised lenders Bankia, CatalunyaCaixa, NovaGalicia and Banco de Valencia will collapse. The money will not come without conditions, however, and the price for an EU-backed bailout will be long overdue reform of Spain’s politi-cal and banking sectors — politicians and political appointees still control-led 80 per cent of Spain’s financial institutions in 2010.

Party hacks and even politicial wives and girlfriends were appointed to the boards of banks throughout Spain. The CAM bank in Valencia,

which received a �€6billion bailout

from Spanish taxpayers had a ballet dancer on its ‘control committee’.

And Bankia, then headed by Rodrigo Rato, a close political ally of

Rajoy, falsified its accounts, ahead of

a share offering. It claimed it had made a �€309million profit, when in

fact another set of accounts showed the true picture: losses of �€3billion.

Following a court ruling last week, Rato will now face criminal charges.

Meanwhile, Aurelio Izquierdo, one of Bankia’s leading executives con-tinues to draw a �€14million pension.

The stories of corruption are legion. In the Costa Blanca area —best known to Irish holiday-makers for re-sorts like Alicante — mayors of towns took suitcases of cash to approve dodgy planning developments. On Saturday, I took the three-and-a-half hour train journey from Madrid to

Alicante, where in the nearby town of Orihuela, the mayor, Monica Lorente, and five members of the Popular Party, have been indicted on corrup-tion charges. In a case that’s seen as typical of endemic local political corruption in Spain: the mayor and her party colleagues are accused of rigging public service contracts, to grant lucrative rubbish collection licences to friends of the Popular Party, which currently runs Spain.

In an area where most earn less than �€15,000 a year, there are no long-er any cranes on the skyline of Costa Blanca. The advertising hoardings that dot the roads from Alicante to

Guardamar are in Russian — because

they are now the only ones investing in property. Meanwhile, the Chinese are taking over vacant commercial units with giant low-cost hyper- markets that are driving Spanish providers out of business.

In the Costa Blanca area there is so much hot money circulating, locals used to call �€500 notes Bin Ladens

— because the authorities would nev-er find them. The ECB has allegedly tracked more �€500 notes in circula-tion in Costa Blanca than any other part of the EU. Although Osama bin Laden is now dead, the black market is thriving across Spain, which has one of the highest rates of non-tax paying workers in the EU, according to the European Centre For Econom-ic And Social Rights.

Spain’s Gestha Union of Tax Inspectors (GESTHA) estimates the annual tax loss is equivalent to �€88billion a year. It’s not surprising,

against such a backdrop of political and banking corruption, close to �€100billion was taken out of Spain

last year alone.In shades of Fianna Fáil’s nefarious

past, party apparatchiks presided over dubious planning decisions across Spain. Luis Rivera Gurrea- Nozaleda works with start-up companies in the internet and mobile industry in Madrid. He says some work has been done to reform the system, but the last bastions of power are the politicians themselves and the estimated 250,000 who earn

State payments through public serv-ice jobs. ‘Very little has been done

around the 150,000 politicians in

Spain and the 250,000 non-political

politicians — those people who are union representatives or who have public function type jobs and get a

government subsidy. That is what we have to start cleaning up. No-one has started addressing that.’

Joe Haslam is professor at the

School of Entrepreneurship at the IE Business School in Madrid. From Ireland, he believes reforms will work, but only if the older order moves aside to let the generation born after 1975

— the year Franco died and democ-racy returned to Spain — flourish.

‘Spain has a far better than chance of a return to growth than Greece, Italy or Portugal. The pre-democracy generation has done a good job in bringing stability after 40 years

largely cut off from the world, but now they need to hand over to the new generation, those born after 1975, who are more outward looking

and allow them to bloom.’From 1936 to 1938, the people of

Madrid led a bizarre double life, as they fought Franco’s advance with the catchphrase ‘No pasaran’ (They shall not pass), and went about their daily lives while bombers strafed Madrid and artillery fire turned the Gran Via, Madrid’s main thorough-fare, into ‘Howitzer Alley’.

For two years, they refused to accept the reality that they were surrounded on all sides, before finally negotiating a surrender in 1939.

There is a growing feeling in Europe, particularly in Germany, that Spain needs to end the political cha-rade that everything is OK, and admit that along with its banks, the State and its people are also in trouble.

Irish Daily Mail, Monday, July 9, 2012 Page 41

Azucena is a married mother of three forced to live in a squat after being evicted from the

he fears losing her children. It’s a harrowing parable of the financial crisis

banks are stuffed with cronies

Vibrant: Madrid’s Plaza Mayor remains a hub of activity

just its banks. But less than ten

days after a �€100billion bank bail-out, it now seems certain Spain — the EU’s fifth largest economy — will need more money, just to run the

country and keep paying benefits to its 4.6million unemployed.

Despite already having the highest unemployment rate in the EU, a bailout for Spain’s banks will mean more austerity for Azucena and her compatriots — who have already seen �€10billion of cuts in education and

health, as well as increased VAT charges, and a series of indirect taxation hikes. The bite of austerity is becoming more severe across society. Teachers have already

protested with a nationwide strike. In Valencia 98 per cent

of pharmacists went on strike in June

because the government couldn’t pay them the �€480million it owes for dis-pensing medicines. The previous

Spanish government insisted until 2010 that there was no economic cri-sis in Spain before it was ousted from power by Mariano Rajoy’s Popular

Party in November. However much Rajoy insists on spinning that every-thing is alright with the Spanish cof-fers, the days of Spanish procrastina-tion, and Mañana politics are over.

Spain, with a 46million population,

spends �€64billion a year more than it

takes in — compared to Ireland’s �€9.4billion deficit.

Spain’s middle class has already been squeezed by direct tax increas-es aimed at raising more than �€6illion and spending cuts designed

to deliver over �€9billion in savings

One bank had a ballet dancer

on its committee

Spain spends !64billion more than it takes in

Struggle: Azucena Paredes Villar squats illegally with her children and grandmother