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Is a “Deep Falange” at Work in Spain and Argentina?

Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. (The flash dri­ve includes the anti-fas­cist books avail­able on this site.)

COMMENT: Eco­nom­i­cal­ly beset Spain has been mak­ing aggres­sive moves toward British-gov­erned Gibral­tar, using that prin­ci­pal­i­ty’s “fis­cal irreg­u­lar­i­ties” as jus­ti­fy­ing Spain’s pos­ture vis a vis the nation’s “EU oblig­a­tions.”

At the same time, Argenti­na is mak­ing angry nois­es again about the Falk­lands Islands, which they claim as their own.

Before delv­ing into the two coun­tries’ coor­di­na­tion of their efforts against Gibral­tar and the Falk­lands, some back­ground dis­cus­sion is in order.

In a pre­vi­ous post, we dis­cussed the “deep fifth column”–a fas­cist con­stel­la­tion exist­ing over decades, root­ed in the fas­cism of World War II and per­pet­u­at­ed by the polit­i­cal iner­tia inher­ent in pow­er­ful political/economic elites.

In the con­text of the “deep fifth col­umn,” we have also spo­ken of the Falange, the inter­na­tion­al fas­cist orga­ni­za­tion based in Spain under Fran­cis­co Fran­co and cat­alyzed as a Ger­man-con­trolled pow­er polit­i­cal enti­ty in the run-up to the Span­ish Civ­il War.

Apply­ing geo-pol­i­tics to their plans for world con­quest, the Nazis saw Spain as the key to their plans for expan­sion. (See excerpts below from the descrip­tion for Falange–the Secret Axis Army in the Amer­i­c­as by Allan Chase, as well as the text excerpts from the book itself.)

As Chase wrote: ” . . . By con­trol­ling Spain, the Nazis felt they could con­trol both Europe and Latin Amer­i­ca. Geo­graph­i­cal­ly dom­i­nat­ing the entrance to the Mediter­ranean Sea from the Atlantic and “flank­ing” France, Spain also wield­ed tremen­dous influ­ence in Latin Amer­i­ca through the strong cul­tur­al and eco­nom­ic ties between the Span­ish and Latin Amer­i­can aris­toc­ra­cies. In addi­tion, the pro­found Catholic influ­ence in both Spain and Latin Amer­i­ca, aug­ment­ed Span­ish clout in that part of the world. . . .”

Under Fran­cis­co Fran­co, Spain remained an overt fas­cist dic­ta­tor­ship in Europe through 1975. Although Spain was “offi­cial­ly” neu­tral dur­ing World War II, it was, in real­i­ty, an Axis non-com­bat­ant, loy­al to the forces of Hitler and Mus­soli­ni that had ele­vat­ed Fran­co dur­ing the Span­ish Civ­il War.

Pri­or to, and dur­ing, World War II, Argenti­na was a major Reich out­post, with the most direct, pro­found con­nec­tions to the Nazi gov­ern­men­tal struc­ture itself. The rela­tion­ship was so pro­found, that mem­bers of the Argen­tine Nazi Par­ty mem­bers were con­sid­ered as actu­al mem­bers of the NSDAP! (See The Nazis Go Under­ground by Curt Riess and text excerpts below.)

For years, Argenti­na under Juan Per­on and lat­er under the jun­ta dom­i­nat­ed by Argen­tin­ian mem­bers of the P‑2 Lodge, that coun­try was not only overt­ly fas­cist but a major haven for Nazi expa­tri­ates and flight cap­i­tal con­trolled by the Bor­mann net­work.

Both Fran­co’s Spain and its heirs and Argenti­na formed key aspects of what Dan­ish jour­nal­ist Hen­rik Kruger called “The Inter­na­tion­al Fascista.”

Spain and Argenti­na are coor­di­nat­ing their efforts and this rais­es a num­ber of inter­est­ing con­sid­er­a­tions, to be weighed against the very real pos­si­bil­i­ty that we are look­ing at a “deep falange” in action:

  • Like the oth­er PIIGS coun­tries, Spain has expe­ri­enced grind­ing social con­di­tions as a result of Ger­man-dic­tat­ed EU aus­ter­i­ty in the wake of the col­lapse of Span­ish real estate and the 2008 finan­cial melt­down.
  • Pover­ty and depri­va­tion make peo­ple more des­per­ate.
  • Mar­i­ano Rajoy him­self has been fend­ing off cor­rup­tion charges.
  • Might we be see­ing a “let ’em eat nationalism/fascism/aggression gam­bit by Rajoy?
  • Rajoy’s ratio­nal­iza­tion for his actions con­cerns Spain’s “EU oblig­a­tions” with regard to finan­cial irreg­u­lar­i­ties. (See text excerpts below.) Might this be Ger­man-dic­tat­ed? Are we look­ing at a Ger­man hand in the “deep Falange glove,” so to speak?
  • Spain and Argenti­na are con­sid­er­ing a coor­di­nat­ed effort on Gib­tal­tar and the Falk­lands. (See text excerpts below.)
  • Spain is going to sell Argenti­na some Mirage jets, which might men­ace the Falk­lands. (See text excerpts below.)
  • Mar­i­ano Rajoy’s Peo­ple’s Par­ty evolved from Fran­co’s Falange. (See text excerpts below.)
  • Rajoy him­self appears to have been influ­enced by his father, a Fran­co jurist. (See text excerpts below.)
  • The Peo­ple’s Par­ty does not appear to have com­plete­ly cast off the fas­cist nature of the Falange. (See text excerpts below.)

“Spain Threat­ens Esca­la­tion of Gibral­tar Row” by Damien McEl­roy; The Tele­graph [UK]; 8/4/2013.

EXCERPT: Jose Manuel Gar­cia-Mar­gal­lo, Spain’s for­eign min­is­ter, said a row over fish­ing rights around Gibral­tar would force Madrid into new puni­tive mea­sures.

The Span­ish author­i­ties have already pro­voked the British ter­ri­to­ry by impos­ing cross­ing restric­tions at the bor­der on suc­ces­sive days last week.

After long queues last week, the For­eign Office called in the senior Span­ish diplo­mat in Lon­don who was giv­en a dress­ing down.

In the wake of that meet­ing, Madrid said it would tough­en its stance yet fur­ther.

“The par­ty is over,” Mr Gar­cia-Mar­gal­lo told ABC news­pa­per as he unveiled pro­pos­als for a €50 (£43) bor­der cross­ing fee and tax inves­ti­ga­tions of thou­sands of Gibral­tar­i­ans who own prop­er­ty in Spain.

Mr Gar­cia-Mar­gal­lo said the Span­ish tax author­i­ties would inves­ti­gate prop­er­ty owned by around 6,000 Gibral­tar­i­ans in neigh­bour­ing parts of Spain, as part of its EU oblig­a­tions to con­trol “fis­cal irreg­u­lar­i­ties”.

Spain was also con­sid­er­ing clos­ing air­space to planes head­ing for the air­port in Gibral­tar and chang­ing rules to wring tax­es from online gam­ing com­pa­nies based in Gibral­tar. . . .

Spain to Take ‘All Nec­es­sary Mea­sures’ to Defend Gibral­tar Inter­ests” by Steven Swin­ford and Ben Farmer; The Tele­graph [UK]; 8/9/2013.

EXCERPT: Prime Min­is­ter Mar­i­ano Rajoy said Spain will take “legal and pro­por­tion­al steps” after Britain sent a rapid reac­tion force of war­ships to vis­it the island’s waters.

Mr Rajoy’s com­ments appear to echo the lan­guage of the Unit­ed Nations Char­ter, which uses the phrase “all nec­es­sary mea­sures” to autho­rise the use of mil­i­tary force.

Ten­sion between Britain and Spain over Gibral­tar’s sov­er­eign­ty have inten­si­fied fol­low­ing a row over fish­ing rights and the impo­si­tion of puni­tive bor­der checks.

Britain is send­ing a force of nine ves­sels, led by the heli­copter car­ri­er HMS Illus­tri­ous and includ­ing two frigates, to sail for the Mediter­ranean on Mon­day for the start of a four month deploy­ment. Three of the ships, includ­ing HMS West­min­sters, will actu­al­ly dock in Gibral­tar. . . .

“Gibral­tar: Spain con­sid­ers joint Diplo­mat­ic Offen­sive with Argentin­­­a over Falk­land Islands” by Fiona Gov­an; The Tele­graph [UK]; 8/11/2013.

EXCERPT: Span­ish for­eign min­is­ter Jose Manuel Gar­cia-Mar­gal­lo will use a trip to Buenos Aires next month to raise the pos­si­bil­i­ty of forg­ing a joint diplo­mat­ic offen­sive with the South Amer­i­can coun­try over the dis­put­ed ter­ri­to­ries, sources told Spain’s El Pais news­pa­per.

Spain’s for­eign min­istry was also dis­cussing whether to take its com­plaints over Gibral­tar to the Unit­ed Nations, the news­pa­per report­ed on Sun­day.

The sources did not spec­i­fy whether Spain would ask the UN to back a request for Britain to give up sov­er­eign­ty or just adhere to cer­tain agree­ments.

It could take its peti­tion to the Secu­ri­ty Coun­cil or take up the mat­ter with the UN Gen­er­al Assem­bly.

Spain is also con­sid­er­ing the option of denounc­ing Gibral­tar to the Inter­na­tion­al Court of Jus­tice in the Hague for its “ille­gal occu­pa­tion” of the isth­mus — the strip of land con­nect­ing the penin­su­la to the main­land that was not includ­ed in the 1713 Treaty of Utrecht. . . .

“Falk­lands Alert as Argenti­na Strikes £145 Mil­lion Deal for 20 Mirage War­planes” by Nick Dor­man ; The Mir­ror [UK]; 8/4/2013.

EXCERPT: Argenti­na has launched a new round of sabre-rat­tling against Britain by buy­ing a squadron of war­planes to be based with­in strik­ing dis­tance of the Falk­lands, the Sun­day Peo­ple has revealed.

Pres­i­dent Cristi­na de Kirch­n­er – who wants the UK to hand over the dis­put­ed islands – per­son­al­ly agreed the £145million deal to buy 20 sec­ond-hand Mirage F1 jets from Spain.

The 1,453mph air­craft car­ry a fear­some array of weapon­ry includ­ing smart bombs.

Argentina’s move could force the Min­istry of Defence to bol­ster Britain’s pres­ence in the south Atlantic, even though its bud­get is to be slashed by £875million in 2015.

Senior offi­cers believe Argenti­na could now begin a cam­paign of ­“pester patrols” – flights towards the Falk­lands to test RAF respons­es.

Kirch­n­er is thought to be try­ing to boost her nation’s mil­i­tary capa­bil­i­ty in a show of strength before elec­tions which are due in 2015.

But last night a senior RAF source said: “If the Argen­tines start play­ing games and esca­late the ten­sion, we will see more RAF air­craft being deployed to the Falk­lands.” . . . .

The Nazis Go Under­ground by Curt Riess; Dou­ble­day, Doran and Com­pa­ny, LCCN 44007162; pp. 143–144.

EXCERPT: . . . . All of the more than 200,000 Argen­tine Nazis are mem­bers, not of an Argen­tine sub­or­ga­ni­za­tion of the Nazi par­ty, but of the Ger­man par­ty itself, and hold mem­ber­ship cards signed by Robert Ley, leader of the Ger­man Work­ers’ Front— which means, quite obvi­ous­ly, that Berlin con­sid­ered, and still con­sid­ers, Argenti­na not so much an inde­pen­dent for­eign coun­try as a Ger­man Gau. . . .

. . . . Main points of sup­port in the long-range Nazi strat­e­gy in Argenti­na are the count­less Ger­man schools there. These schools have the same rights and priv­i­leges as Argentina’s. In them the chil­dren of Ger­man immi­grants not only learn the Ger­man lan­guage but are taught Hit­lerism pure and sim­ple. The books used in these schools are “donat­ed” by the Ger­man Embassy. Hitler’s pic­ture hangs in every class­room. “Heil Hitler” is the oblig­a­tory greet­ing. The pupils are for­bid­den to speak to Jews. They are told that the Ger­mans belong to a race supe­ri­or to oth­er races; that they have been cho­sen to dom­i­nate oth­er nations; that the Nation­al Social­ist cul­ture is supe­ri­or to all oth­er cul­tures; that democ­ra­cy is a lie; that—and this may be the most impor­tant of all—every Ger­man must stick to the Nation­al Social­ist idea “whether it wins or los­es.”

These schools have been in oper­a­tion for ten years now. They num­ber among their for­mer pupils a great many of the most active Nazi agents in South Amer­i­ca today. And the teach­ers do not restrict their activ­i­ties to Ger­man schools. They also teach for­eign lan­guages in Argen­tine state schools, and thus com­mand an influence over the cul­tur­al life of the nation from which the Nazis have profit­ed and from which the Nazi under­ground will profit. All these Nazi teach­ers must, in fact, be regard­ed as full-fledged agents. So effec­tive has been their influence that some of the wealth­i­est and most promi­nent cit­i­zens of Argenti­na have for some time been send­ing their chil­dren to Ger­man schools because, they say, the lat­ter are so much bet­ter than the state schools. . . .

“The Span­ish Gov­ern­men­t’s Del­e­gate in Cat­alo­nia Pays Trib­ute to Hitler’s Sol­diers”; Cata­lan News Agency; 5/17/2013.

EXCERPT: María de los Llanos de Luna, from the People’s Par­ty (PP), gave a diplo­ma of hon­our to a broth­er­hood of sol­diers and sup­port­ers of the ‘Divisón Azul’, a divi­sion of Span­ish vol­un­teers who fought in the Nazi army on the East­ern Front dur­ing the Sec­ond World War. De Luna is the top rep­re­sen­ta­tive of the Span­ish Gov­ern­ment in Cat­alo­nia and she is known for her Span­ish nation­al­ism and anti-Cata­lan iden­ti­ty stance.

The ‘Blaue Divi­sion’, the 250. Infan­terie-Divi­sion of Nazi Germany’s Wehrma­cht, rep­re­sents the main col­lab­o­ra­tion between Franco’s dic­ta­tor­ship and Adolph Hitler, as well as the Con­dor Divi­sion – which bombed Gerni­ka – and the arrest of Catalonia’s Pres­i­dent Lluís Com­pa­nys by the Gestapo. The 12 mem­bers of the broth­er­hood who attend­ed the diplo­ma cer­e­mo­ny were wear­ing the Falange uni­form, which was the only par­ty allowed dur­ing Franco’s Fas­cist dic­ta­tor­ship, cre­at­ed before the Span­ish Civ­il War. This Fas­cist par­ty is still legal in Spain. . . .

. . . . The cer­e­mo­ny was com­mem­o­rat­ing the 169th anniver­sary of the Guardia Civ­il (the Span­ish Gen­darmerie) and took place in one of its bar­racks in Greater Barcelona (in Sant Andreu de la Bar­ca). The anniver­sary of the cre­ation of the Guardia Civ­il, which has his­tor­i­cal­ly been a corps linked to Span­ish cen­tral­ist pow­er and the impo­si­tion of order – some­times bru­tal­ly – had not been cel­e­brat­ed in Cat­alo­nia for many years. How­ev­er, De Luna decid­ed to com­mem­o­rate this anniver­sary again in 2013, half a year after 1.5 mil­lion cit­i­zens peace­ful­ly and demo­c­ra­t­i­cal­ly demon­strat­ed in Barcelona’s streets ask­ing for Catalonia’s inde­pen­dence from Spain. . . .

. . . . The Left-Wing Cata­lan Inde­pen­dence Par­ty denounced the fact that the Span­ish Gov­ern­ment has giv­en a €3,500 sub­sidy to this Fas­cist broth­er­hood this year. Alfred Bosch, ERC’s Spokesper­son in the Span­ish Par­lia­ment, asked for a law ban­ning the cel­e­bra­tion of any event recog­nis­ing peo­ple linked to the Nazi regime. . . .

“Peo­ple’s Par­ty”; Wikipedia.

EXCERPT: The Peo­ple’s Par­ty was a re-foun­da­tion in 1989 of the Peo­ple’s Alliance (Span­ish: Alian­za Pop­u­lar, AP), a par­ty led and found­ed by Manuel Fra­ga Irib­arne, a for­mer Min­is­ter of the Inte­ri­or and Min­is­ter of Tourism dur­ing Fran­cis­co Fran­co’s dic­ta­tor­ship. The new par­ty com­bined the con­ser­v­a­tive AP with sev­er­al small Chris­t­ian demo­c­ra­t­ic and lib­er­al par­ties (the par­ty call this fusion of views Reformist cen­tre). In 2002, Manuel Fra­ga received the hon­orary title of “Found­ing Chair­man”. . . .

. . . . The par­ty has its roots in the Peo­ple’s Alliance found­ed in 9 Octo­ber 1976 by for­mer Fran­coist min­is­ter Manuel Fra­ga. Although Fra­ga was a mem­ber of the reformist fac­tion of the Fran­co regime, he sup­port­ed an extreme­ly grad­ual tran­si­tion to democ­ra­cy. How­ev­er, he bad­ly under­es­ti­mat­ed the pub­lic’s dis­taste for Fran­co­ism. Addi­tion­al­ly, while he attempt­ed to con­vey a reformist image, the large num­ber of for­mer Fran­coists in the par­ty led the pub­lic to per­ceive it as both reac­tionary and author­i­tar­i­an. . . .

“Mar­i­ano Rajoy”; Wikipedia.

EXCERPT: . . . . While on the cam­paign trail in 2011, Rajoy pub­lished an auto­bi­og­ra­phy, En Con­fi­an­za (In Con­fi­dence), in which he recalled his stu­dious and qui­et youth, fol­low­ing a father who was climb­ing the ranks of Fran­cis­co Fran­co’s judi­cia­ry. . . .

Falange–The Secret Axis Army in the Amer­i­c­as by Allan Chase; (Book descrip­tion and text excerpts)

EXCERPT: In 1936, Reichs­mar­shall Her­mann Goering—one of Hitler’s top aides and the head of the Luftwaffe—observed that “Spain is the key to two con­ti­nents.” Goer­ing was enun­ci­at­ing a key prin­ci­pal of Ger­man and Nazi geopol­i­tics. By con­trol­ling Spain, the Nazis felt they could con­trol both Europe and Latin Amer­i­ca. Geo­graph­i­cal­ly dom­i­nat­ing the entrance to the Mediter­ranean Sea from the Atlantic and “flank­ing” France, Spain also wield­ed tremen­dous influ­ence in Latin Amer­i­ca through the strong cul­tur­al and eco­nom­ic ties between the Span­ish and Latin Amer­i­can aris­toc­ra­cies. In addi­tion, the pro­found Catholic influ­ence in both Spain and Latin Amer­i­ca, aug­ment­ed Span­ish clout in that part of the world. (In FTR#532, we exam­ined the Vatican’s involve­ment with fas­cism. The Vatican/Fascist axis was anoth­er major con­tribut­ing fac­tor to the influ­ence of the Falange through­out the Span­ish-speak­ing world.)

In order to uti­lize Span’s geopo­lit­i­cal influ­ence as a tool for Nazi impe­r­i­al designs, the Third Reich turned to Gen­er­al Wil­helm von Fau­pel and his Ibero-Amer­i­can Insti­tute. Von Fau­pel was a bit­ter oppo­nent of the Weimar Repub­lic, and read­i­ly accept­ed the Nazis as the anti­dote to Ger­man democ­ra­cy. Known as an “I.G. Gen­er­al” for his links to the I.G. Far­ben com­pa­ny, von Fau­pel also main­tained close ties to the pow­er­ful Thyssen inter­ests which, like Far­ben, were the pow­ers that backed Hitler. (The Bush fam­i­ly were also close­ly linked to the Thyssens.) Dur­ing the 1920’s, von Fau­pel had served as a gen­er­al staff advis­er to the Argen­tine, Brazil­ian and Peru­vian mil­i­tary estab­lish­ments and was famed through­out Latin Amer­i­ca for his skills as an offi­cer. Because of his Latin Amer­i­can ties and his links to the cor­po­rate inter­ests that backed Hitler, von Fau­pel became the Reich’s point man for the fas­cist takeover of Spain and sub­se­quent con­struc­tion of a Fifth Col­umn through­out the Span­ish-speak­ing world.

In 1934, von Fau­pel assumed con­trol of the Ibero-Amer­i­can Insti­tute, an aca­d­e­m­ic think tank orig­i­nal­ly found­ed as a legit­i­mate schol­ar­ly insti­tu­tion. Under von Fau­pel, the orga­ni­za­tion became a front for orga­niz­ing the Nazi infil­tra­tion and con­quest of Spain. Reject­ing roy­al­ist and Catholic sec­tar­i­an right­ist par­ties, von Fau­pel and the Nazis set­tled on the Falange as their cho­sen vehi­cle for gain­ing dom­i­nance over Spain. After arrang­ing the assas­si­na­tion of Gen­er­al Jose San­jur­jo (a roy­al­ist rival for the lead­er­ship of Spain after the over­throw of the Repub­li­can gov­ern­ment), the Ger­mans and their Ital­ian allies installed Fran­co as head of the fas­cist Falange.

” . . . Gen­er­al Jose San­jur­jo, wear­ing a pea­cock­’s dream of a
uni­form-the Lon­don-made gift of Adolf Hitler-board­ed
a Junkers plane in Lis­bon and ordered his pilot, Cap­tain
Ansal­do, to take off for a secret land­ing field in Spain. But
on July 17 the old gen­er­al was actu­al­ly head­ed fo: anoth­er
land­ing field his Nazi com­rades had cho­sen with­out his

A few remarks he had let slip to inti­mate friends in Esto­ril
ear­li­er that year had, unknown to San­jur­jo, reached cer­tain
Berlin ears. On April I 3, 1936, for instance, San­jur­jo had
com­plained, “They want me to start a rev­o­lu­tion to serve
the bankers and the spec­u­la­tors, but I won’t do it.” Two
weeks after say­ing this, he made anoth­er trip to Berlin. He
remained in Ger­many for only a few days, and on his return
he went to work in earnest on his plans for the pend­ing
revolt. What hap­pened in Berlin while San­jur­jo con­ferred
with von Fau­pel is of lit­tle moment now. His fate had already
been sealed before the vis­it.

Very short­ly after San­jur­jo’s plane took off from Lis­bon,
a Ger­man time bomb plant­ed in the bag­gage com­part­ment
explod­ed. The blaz­ing frag­ments of the Junkers mono­plane
became the pyre of the Anoint­ed Chief of the Span­ish Rev­o­lu­tion.
Jose San­jur­jo had the dubi­ous hon­or of being the
first of the Nazis’ mil­lion vic­tims of the Span­ish War. . . .”

Falange; pp.20–21.

Von Fau­pel then pro­ceed­ed to direct the con­struc­tion of the “Falange Exte­ri­or” as the fas­cist Fifth Col­umn move­ment through­out the Span­ish-speak­ing world (includ­ing the Philip­pines).

Author Chase describes the Falange Exte­ri­or on page 31 of Falange:

“. . . . On the sur­face, von Fau­pel had—in the Falange Exterior—delivered to the Third Reich a remark­able net­work, extend­ing from Havana to Buenos Aires, from Lima to Mani­la. This net­work, accord­ing to its cre­ator, was capa­ble of con­cert­ed espi­onage, polit­i­cal diver­sion, arms smug­gling, and any­thing that any oth­er Fifth Col­umn in his­to­ry had accom­plished. It remained only for the Wehrma­cht to give von Faupel’s instru­ment the tests which would deter­mine whether the Aus­lands Falange had been worth all the trou­ble its orga­ni­za­tion had entailed. The answer was soon pro­vid­ed by a num­ber of Falangists—among them one Jose del Cas­tano. . . .”



3 comments for “Is a “Deep Falange” at Work in Spain and Argentina?”

  1. Spain, being the Big Gov­ern­ment Social­ist hell­hole that it is, looks like it’s about to bail out its pri­vate­ly owned high­way oper­a­tors. It’s a reminder that pri­va­tized pub­lic ser­vices can eas­i­ly become too-big-to-fail pri­va­tized pub­lic ser­vices. It just comes with the ter­ri­to­ry:

    Rajoy to Res­cue High­way Bil­lion­aires Who Bet on Boom
    By Este­ban Duarte — Dec 5, 2013 5:17 AM CT

    Span­ish tax­pay­ers have bailed out banks and pow­er com­pa­nies. Next up are high­way oper­a­tors and their bil­lion­aire own­ers.

    Prime Min­is­ter Mar­i­ano Rajoy’s gov­ern­ment is con­sid­er­ing a 5 bil­lion-euro ($6.7 bil­lion) plan to take over and guar­an­tee the debt of about 364 miles (585 kilo­me­ters) of roads, accord­ing to two peo­ple famil­iar with the mat­ter who declined to com­ment because no final deci­sions have been made.

    This is anoth­er repeat of ‘too big to fail’,” Jose Gar­cia Mon­tal­vo, an eco­nom­ics pro­fes­sor at Pom­peu Fab­ra Uni­ver­si­ty in Barcelona, said in a tele­phone inter­view. “You don’t need to wor­ry if some­thing goes wrong, the gov­ern­ment will come to the res­cue.”

    The roads are con­trolled by some of Spain’s biggest com­pa­nies, includ­ing the Del Pino family’s Fer­rovial SA (FER), the Koplowitz family’s Fomen­to de Con­struc­ciones & Con­tratas SA, Sacyr SA (SCYR) and Activi­dades de Con­struc­cion y Ser­vi­cios SA, run by Real Madrid Chair­man Flo­renti­no Perez. They’re enti­tled to the res­cue through a law passed under Gen­er­al Fran­cis­co Fran­co in 1972, which stip­u­lates that when a pri­vate high­way goes bust, the state has to repay its own­ers for the cost of the land and the con­struc­tion.

    A spokes­woman for the Pub­lic Works Min­istry said the gov­ern­ment is work­ing on a solu­tion that won’t affect the bud­get deficit and declined to give fur­ther details. Spokes­men for Fer­rovial, FCC and ACS declined to com­ment on the plan. A spokesman for Sacyr declined to com­ment beyond say­ing it hasn’t received any com­pen­sa­tion for its part­ner­ship with Fer­rovial.

    Gov­ern­ment Guar­an­tees

    Under Rajoy’s plan to avoid pay­ing com­pen­sa­tion, the gov­ern­ment will set up a com­pa­ny and give the lenders that financed the high­ways, includ­ing Ban­co San­tander SA (SAN) and Ban­co Bil­bao Viz­caya Argen­taria SA (BBVA), first claim on its rev­enue, the peo­ple said. In exchange, the banks would extend the matu­ri­ty of the exist­ing 3.75 bil­lion euros of loans to 20 years on aver­age, they said.

    The gov­ern­ment may pro­vide a direct guar­an­tee for about 1.25 bil­lion euros of 30-year loans to cov­er expro­pri­a­tion pay­ments to landown­ers that the builders nev­er made and allow the high­ways’ cur­rent own­ers to retain 20 per­cent of the new com­pa­ny, accord­ing to the peo­ple.

    A San­tander spokes­woman and a BBVA spokesman declined to com­ment.

    As Rajoy strug­gles to turn around the Span­ish econ­o­my after two reces­sions that destroyed almost 4 mil­lion jobs, the Fran­co-era con­ces­sion law is adding to a bailout bill for banks and the regions that already exceeds 140 bil­lion euros. Spain’s sov­er­eign debt totals about 775 bil­lion euros, accord­ing to the Bank of Spain.


    The amount of debt guar­an­teed by the gov­ern­ment has increased 21-fold to 170 bil­lion euros since the finan­cial cri­sis began in 2008. That includes 23 bil­lion euros of pow­er indus­try debt the gov­ern­ment secu­ri­tized to reduce the lever­age of util­i­ties includ­ing Iber­dro­la SA (IBE) and Ende­sa SA. (ELE)

    One of the biggest ben­e­fi­cia­ries from the high­way bailout would be Ferrovial’s Radi­al 4, which has been run by court-appoint­ed admin­is­tra­tors since Octo­ber 2012, when the own­ers sought cred­i­tor pro­tec­tion after traf­fic vol­ume fell to a record low.

    The 60-mile R‑4 stretch­es south from Madrid and is draw­ing just a frac­tion of the traf­fic fore­cast to jus­ti­fy its 2001 con­struc­tion. Rajoy’s gov­ern­ment may have to pay the con­ces­sion 984 mil­lion euros, or 84 per­cent of total invest­ment costs, should the gov­ern­ment-led debt plan fail, a Feb. 4 court admin­is­tra­tion report shows.

    Fran­co-Era Bil­lion­aires

    Fer­rovial was found­ed by Rafael del Pino y Moreno in 1952 to work on the country’s rail­ways and in 1968 it won Spain’s first pri­vate high­way con­ces­sion, accord­ing to the company’s web­site. Its spe­cial­ist high­ways unit, Cin­tra, now man­ages 26 high­ways in nine coun­tries includ­ing a Toron­to ring-road.

    The Del Pino fam­i­ly is worth at least $5.7 bil­lion, accord­ing to Bloomberg Bil­lion­aires Index. Their wealth has increased by about $1 bil­lion this year as Ferrovial’s stock gained 22 per­cent; they’ve col­lect­ed more than 580 mil­lion euros in div­i­dends since Spain’s eco­nom­ic cri­sis start­ed in 2008, Bloomberg Bil­lion­aires data show. Esther Koplowitz, who con­trols 54 per­cent of Barcelona-based FCC, is worth as least $1 bil­lion, accord­ing to the rank­ing.

    Tilt­ing at Wind­mills

    Ferrovial’s R‑4 high­way con­nects the Span­ish cap­i­tal with the region of La Man­cha where Don Qui­jote, the delud­ed knight from Miguel de Cervantes’s 17th cen­tu­ry nov­el, tilt­ed at wind­mills believ­ing they were giants. In 10 years of oper­a­tion, traf­fic flows have reached less than half the vol­ume that Fer­rovial fore­cast in its bid.

    The com­pa­ny missed its traf­fic esti­mates for the R‑4 by an aver­age of 50 per­cent between 2004 and 2007 as Spain’s econ­o­my grew at 3.6 per­cent pace at the peak of the boom, accord­ing to the court’s admin­is­tra­tors report.

    Traf­fic vol­umes tend­ed to increase by about 1.5 per­cent for each per­cent­age point of eco­nom­ic growth before the cri­sis, accord­ing to Anna Matas, a pro­fes­sor of trans­port eco­nom­ics at Barcelona’s Autonomous Uni­ver­si­ty. On that basis, to meet Ferrovial’s traf­fic fore­cast by 2007, the Span­ish econ­o­my would have to have been 35 per­cent larg­er, out­strip­ping even China’s expan­sion since the start of the con­ces­sion.

    Exag­ger­at­ed Mod­els

    “Some of the mod­els they used were com­plete­ly exag­ger­at­ed,” Matas said in a Nov. 28 tele­phone inter­view. “In the end, the fea­si­bil­i­ty stud­ies were just anoth­er bureau­crat­ic hoop.”

    As well as miss­ing their traf­fic fore­casts, the cost of expro­pri­at­ing land for the high­ways set to be res­cued may end up almost six times greater than their own­ers had pro­ject­ed as landown­ers chal­lenged the prices they were offered through the courts. The total cost of land acqui­si­tions for the projects is set to exceed 2.3 bil­lion euros com­pared with about 400 mil­lion euros bud­get­ed, the Pub­lic Works Min­istry said.

    In the 2010 bud­get, the gov­ern­ment approved sub­or­di­nat­ed loans to help con­ces­sions off­set the decline in traf­fic and increas­ing expropi­a­tion costs, the Pub­lic Works Min­istry spokes­woman said. Bud­get restric­tions meant that some of the cash was nev­er actu­al­ly paid to the com­pa­nies, the court doc­u­ments show.


    And here’s a bit more on the own­ers of Fer­rovial: The del Pino fam­i­ly.

    Posted by Pterrafractyl | December 5, 2013, 12:08 pm
  2. Cata­lan’s pro-inde­pen­dence lead­ers have a three-step plan for inde­pen­dence and they’re stick­ing to it:

    Cata­lan leader says Spain can­not block inde­pen­dence vote: report

    MADRID Sun Feb 2, 2014 7:24am EST

    (Reuters) — Spain can­not block a non-bind­ing vote on Cata­lan inde­pen­dence that could become the basis for nego­ti­a­tions on Cat­alo­ni­a’s future, the pres­i­dent of the north­east­ern region said in an inter­view pub­lished on Sun­day.

    “If I call a con­sul­ta­tion, not to declare the inde­pen­dence of Cat­alo­nia nor to break with the Span­ish state, but to know the opin­ion of the cit­i­zens of this coun­try, a knee-jerk anti-demo­c­ra­t­ic response from Spain would be pret­ty bad and dis­grace­ful in the view of the entire world,” Artur Mas told La Van­guardia, Cat­alo­ni­a’s lead­ing news­pa­per.

    Prime Min­is­ter Mar­i­ano Rajoy has pledged to go to the Con­sti­tu­tion­al Tri­bunal to block any Cata­lan attempts to hold a ref­er­en­dum, argu­ing sov­er­eign­ty is a mat­ter for all of Spain to decide, but Mas said there was anoth­er pos­si­ble approach.

    “It is what I call the solu­tion tol­er­at­ed by the cen­tral gov­ern­ment. They let us hold the con­sul­ta­tion, they don’t get involved, and after­wards we go to Madrid to nego­ti­ate,” he said.

    Over the past three years the inde­pen­dence move­ment in Cat­alo­nia has gained force, with rough­ly half of Cata­lans say­ing they want inde­pen­dence from Spain and a much big­ger major­i­ty say­ing they should have the right to decide.

    Cat­alo­nia, which has its own lan­guage, has sig­nif­i­cant self-gov­ern­ing pow­ers. But eco­nom­ic dol­drums, pub­lic spend­ing cuts and per­cep­tions of unfair tax­es and the con­cen­tra­tion of pow­er in Madrid have fed break­away fever.



    Mas, who only became a sup­port­er of inde­pen­dence four years ago, set out a three-step process for Cat­alo­nia.

    The first step of the process, tak­en in Jan­u­ary, was to ask Span­ish par­lia­ment to allow Cat­alo­nia to hold a ref­er­en­dum. Par­lia­ment, dom­i­nat­ed by the rul­ing con­ser­v­a­tive Peo­ple’s Par­ty, is expect­ed to turn down that ini­tia­tive.

    The sec­ond step, Mas said, will be to hold a con­sul­ta­tion with­out the express per­mis­sion of the nation­al par­lia­ment. He said the con­sul­ta­tion would be legal under Cat­alo­ni­a’s auton­o­my statute, which defines the region’s pow­ers.

    The Cata­lan gov­ern­ment has already set a date of Novem­ber 9 for a ref­er­en­dum — two months after an inde­pen­dence vote in Scot­land — and has decid­ed on a two-ques­tion for­mu­la: Do you want Cat­alo­nia to become a state? If your answer is yes, do you want this state to be inde­pen­dent?

    If the cen­tral gov­ern­ment blocked a non-bind­ing con­sul­ta­tion, Mas set out a third step, which he said was not ide­al, which would be to use the next elec­tion in Cat­alo­nia, which must be held by 2016, as a proxy vote on inde­pen­dence.

    Mas is not expect­ed to rush to call ear­ly elec­tions because his Con­ver­gence and Union polit­i­cal alliance, known as CiU, has lost ground in the polls, while a more rad­i­cal pro-inde­pen­dence par­ty, the Cata­lan Repub­li­can Left, or ERC, would prob­a­bly win a large chunk of seats in the region­al leg­is­la­ture.

    The Cata­lan pres­i­dent told La Van­guardia that he and mem­bers of his gov­ern­ment had been engaged in infor­mal talks with Rajoy’s gov­ern­ment through Decem­ber to try to find a way past the dead­lock over the con­sul­ta­tion, but that there were not any talks now.

    Rajoy has resist­ed pres­sure to engage with Mas and seek a polit­i­cal solu­tion to the cri­sis.

    The Euro­pean Union has said that Cat­alo­nia would have to re-apply to join the bloc if it broke away from Spain, a dif­fi­cult road because Spain could thwart the nec­es­sary con­sen­sus to accept a new mem­ber.

    But Mas said Europe would have to respect a peace­ful, demo­c­ra­t­ic inde­pen­dence dri­ve by Cat­alo­nia.

    The ques­tion of whether or not Cata­lan is going to join the EU, and espe­cial­ly the euro­zone, fol­low­ing inde­pen­dence seems like a pret­ty huge ques­tion when you’re talk­ing about cre­at­ing a new sov­er­eign nation...

    Posted by Pterrafractyl | February 3, 2014, 12:35 pm
  3. US could top­ple my gov­ern­ment and kill me: Argenti­na pres­i­dent Cristi­na Kirch­n­er
    Agence France-Presse
    01 Oct 2014


    Argentina’s Pres­i­dent Cristi­na Kirch­n­er charged in an emo­tion­al address that domes­tic and US inter­ests were push­ing to top­ple her gov­ern­ment, and could even kill her.

    Domes­tic busi­ness inter­ests “are try­ing to bring down the gov­ern­ment, with inter­na­tion­al (US) help,” she said.

    Kirch­n­er said that on her recent vis­it to Pope Fran­cis — a fel­low Argen­tine whose help she has sought in Argentina’s ongo­ing debt default row — police warned her about sup­posed plots against her by Islam­ic State activists.

    “So, if some­thing hap­pens to me, don’t look to the Mideast, look north” to the Unit­ed States, Kirch­n­er said at Gov­ern­ment House.

    - Don’t believe US: Kirch­n­er -

    Just hours after the US embassy here warned its cit­i­zens to take extra safe­ty pre­cau­tions in Argenti­na, an aggra­vat­ed Kirch­n­er said “when you see what has been com­ing out of diplo­mat­ic offices, they had bet­ter not come in here and try to sell some tall tale about ISIS try­ing to track me down so they can kill me.”

    The pres­i­dent said local soy­bean pro­duc­ers unhap­py with prices, oth­er exporters and car com­pa­ny exec­u­tives, all were involved since they would ben­e­fit from a deval­u­a­tion of the peso, which is being pushed low­er by her government’s selec­tive default.

    “Exporters who have lost mon­ey have Argenti­na in a vise .. so do the car com­pa­ny exec­u­tives who tell con­sumers they have no inven­to­ry when they do …. What they are all wait­ing for is a deval­u­a­tion.”

    Argenti­na exit­ed reces­sion with 0.9‑percent eco­nom­ic growth in the sec­ond quar­ter, nation­al sta­tis­tics insti­tute INDEC said Wednes­day, a rare bit of good news amid the country’s new debt default.

    But with infla­tion esti­mat­ed at more than 30 per­cent and the val­ue of the peso tum­bling, Latin America’s third-largest econ­o­my is still mired in a slow­down after aver­ag­ing 7.8‑percent annu­al growth from 2003 to 2011.

    Argenti­na is still strug­gling with the after­math of a default on near­ly $100 bil­lion in debt in 2001, with the two hedge funds it labels vul­tures bat­tling the coun­try in US courts.

    But it has been blocked by US fed­er­al judge Thomas Griesa, who has ordered the coun­try to first repay two hedge funds demand­ing the full $1.3 bil­lion face val­ue of their bonds.

    Griesa ruled Mon­day that Argenti­na was in con­tempt of court after it passed a law allow­ing the gov­ern­ment to repay cred­i­tors in Buenos Aires or Paris — skirt­ing the New York judge’s freeze on the bank accounts it pre­vi­ous­ly used to ser­vice its debt.

    Argenti­na has been locked out of inter­na­tion­al finan­cial mar­kets since its 2001 default.

    More than 92 per­cent of its cred­i­tors agreed to take loss­es of up to 70 per­cent on the face val­ue of their bonds in 2005 and 2010 to get the strug­gling country’s debt repay­ments back on track.

    But the two hedge funds, US bil­lion­aire Paul Singer’s NML Cap­i­tal and US-based Aure­lius Cap­i­tal Man­age­ment, which had bought up default­ed Argen­tine bonds for pen­nies on the dol­lar, refused to accept the write-down and took the coun­try to court.

    The strat­e­gy, which stands to make them prof­its of up to 1,600 per­cent, has earned them the label “vul­ture funds” from Buenos Aires.

    Blocked from pay­ing its restruc­tured debt, Argenti­na missed a $539 mil­lion inter­est pay­ment and entered default again on July 30.

    It is now try­ing to buy time until the end of the year, the expi­ra­tion date for a clause in the restruc­tur­ing deals that enti­tles all bond­hold­ers to equal treat­ment.

    Argenti­na is mean­while lob­by­ing to cre­ate a UN con­ven­tion to pre­vent a minor­i­ty of bond­hold­ers from scup­per­ing strug­gling coun­tries’ debt restruc­tur­ing plans.

    A res­o­lu­tion to nego­ti­ate such a frame­work passed the Unit­ed Nations Gen­er­al Assem­bly ear­li­er this month.

    - Tough out­look -

    Eco­nom­ic ana­lysts are fore­cast­ing the econ­o­my will shrink two per­cent this year, though the gov­ern­ment is fore­cast­ing a return to eco­nom­ic growth of 2.8 per­cent in 2015.

    The end of the boom has revived the ghost of Argentina’s 2001 eco­nom­ic cri­sis, when it default­ed on $100 bil­lion in debt and dead­ly riots erupt­ed.

    That vio­lence, in which at least 26 peo­ple were killed, led to the res­ig­na­tion of pres­i­dent Fer­nan­do de la Rua, who was replaced by Adol­fo Rodriguez Saa. He resigned a week after tak­ing office amid more unrest.

    Posted by Swamp | October 2, 2014, 7:16 am

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