Weekly Report 31.08.12
Spanish workers take to the street
Spanish workers from various labour unions have taken to the streets in the capital Madrid and in several other cities for the fourth consecutive week to voice their opposition to the economic policies adopted by the government of Prime Minister Mariano Rajoy. The Friday protest rallies are being staged against the tough austerity measures and spending cuts introduced by the Spanish government to contain the current financial crisis in the country. The rallies come in the run-up to a huge ‘social summit’ demonstration planned for 15th September. In Madrid, the protesters have been assembling in front of Spain’s Finance Ministry to protest against what they consider to be the government’s “assault” on their welfare, resulting from the economic cutbacks and reforms.
Mortgages down 25.2%
According to the National Office of Statistics, the number of new mortgages applications for the purchase of a dwelling declined 25.2% in the year from June 2011 to June of this year, marking the 26th consecutive month of reductions. The reasons for this substantial fall are of course the financial crisis and the large number of unemployed, especially affecting young people, but also the public’s immense distrust of the manipulating bankers.
Record price at fuel pumps
Petrol and diesel prices are hitting new record levels. The price of a litre 95 octane is now 1.511 euros; diesel 1.42.
The strange side of the rising prices is that both in Spain and in the rest of Europe,
consumption is going down in the industrial sector, as well as private consumers.
7.7 million foreign tourists in July, But no increase in hotel occupancy
7.7 million tourists visited Spain in July, more than ever, however, hotel owners report a decrease of 1.4% in overnight stays and fear a recession. The solution to the riddle is that foreign and Spanish tourism occupation on hotels was previously 50/50, but the Spanish share has been dwindling. Last year the Spanish stays fell 11%, and this year the trend continues.
New elections in the Basque country
There will be elections to the regional parliament in the Basque Region next month, the first since the terrorist organisation ETA decided to lay down its arms and integrate with civic society. ETA and their supporters have mounted a campaign to get imprisoned terrorists released, but the national government is not making any concessions, but is instead demanding that all ‘wanted’ terrorists turn themselves in to the police.
In a recent poll, only 25% of Basques wanted independence from Spain. 44% believe that ETA will finally dissolve, 33% doubt it.
Occupants in the pool of luxury property
Workers from the SAT trade union, led by their flamboyant leader, Sanchez Gordillo, occupied the Moratella Palace in the Andalusia municipality of Hornachuelos, and took a dip in the swimming pool, to demonstrate the huge social differences still existing in Spain.
Sanchez Gordillo cautioned his supporters not to touch anything, and they left peacefully after some hours, before the Guardia Civil could react.
In some of the foreign press, Sanchez Gordillo was labelled ‘Robin Hood’ for his campaign.
Spain revising last year
First, the Rajoy Government revised upward the budget deficit calculated by the financial experts of former Premier Zapatero.
Now, the National Statistical Office has found that the economy last year grew only 0.4%, not 0.7 as previously published. For good measure, the same office also amended their estimate for the recession in 2010 from –0.1 to –03%.
‘Bastante canuto’
A PP counsellor in Ourense and member of Parliament had to excuse himself when a storm of criticism broke loose out complaining during an interview over his salary of 5,500 euro per month, declaring that he had it ‘bastante canuto’ (strained condition).
He now complains he is a victim of a ‘lynching mob’.
Regions courting mafia money
The Regions of Madrid and Catalonia have been competing with promises of free land and large tax incentives to court a US casino promoter to build a so-called Euro Casino in their area. In the meantime, it has become known that the promoter, by name Adelson, has had connections with the Chinese mafia (the Triads) in relation to his big casino in Macao. A sacked employee leaked the info to US authorities. This news has lefty the regional governments of Madrid and Catalonia with a lot to explai
The weekly crisis:
It seems the President of Greece is going back empty handed after failing to get a renegotiation of the conditions imposed on Greece. He pleaded that his country needed more time to comply, but both Merkel and Hollande insisted that the agreements must be kept. ‘Time is money’ chancellor Merkel remarked tersely
The President of the Bundesbank (the German Central Bank) Jens Weidmann,
warned the European Central Bank against embarking on a new program of
buying public debt, since such a program may ‘create a drug like addiction’ adding that the BCE must not at any price guarantee the permanence of the member states in the Euro Zone
The country risk of Spain is almost permanently over 500 points, and the speculative rally on the Ibex of last week is petering out
Prime Minister Rajoy had a meeting with the President of the European Council, Herman van Rompuy, at which the most notable agreement was that ‘Spain is suffering an imbalance due to an unsustainable property boom.’
Spain has been able to place 3,607 million euros in public bonds, with a lower interest rate than in previous auctions, but only very short maturity periods of 3 and 6 months
The amount of money deposited in the Spanish private sector fell 5% in July; the largest fall since 1997
Catalonia has officially asked for a rescue package of 5,023 million euros from the
Government fund for regional liquidity to cover its immediate debts. Catalonia, following Valencia and Murcia, is the third region to ask for assistance. Together they have asked for a total of 8,800 million, from a fund with reserves of 18,000 million
The announced increases in VAT from 1st September has not led to increased sales during August. Cars, on which the VA will increase from 18 to 21%, had a fall in turnover of 17.2% in July and 19% in the first half of August
The economy contracted 0,4% in the second quarter of the year, bringing the year on year recession to 1,3%. The consume of the families fell 2,2%, due to a 4% reduction in salaries.
Trafficking Children to Play Football
(a report in Público by Begoña Piña) Translation by Lenox Napier:
A new form of slavery is now spreading across the world: trafficking with African or Latin American children to play football in the big European clubs. Although FIFA rules prohibit clubs from hiring outside Europe, some of the big teams in Spain, Italy, France and England certainly do, according to the director Miguel Alcantud, who has done research on this in Africa, Norway and Paris, among other places, and has begun shooting on his film ‘Black Diamonds’, which denounces this barbarous situation. Currently, there are about 20,000 African children who have been abandoned by the teams and survive on the streets of Europe.
Cost to the Family
Known in international organizations and NGOs as a ‘form of trafficking’, this new perversion takes place in many different ways. Some clubs employ the tactic of fictitious scholarships, offering fake passports or with work contracts for the children as gardeners or bar staff at the clubs…
Generally, the families themselves are tricked, hopeful about the possibility of a different life for their children, they will sell their properties or become indebted for life to get the necessary travel money for the children.
When the children arrive in Europe, nothing is easy for them. If they do not respond as expected or suffer an injury, they are stranded. On the other hand, if the clubs choose to keep them, there will be no proper education or the chance for their families to participate in any way.
This is a reality that was denounced in the European Parliament recently by the representative of the NGO ‘Culture Foot Solidaire’ and former Cameroonian footballer Jean-Claude Mbvoumin.
Miguel Alcantud discovered a child in Norway called John Obi Mikel, who had been hidden there by a leading British football club, waiting for his 18th birthday. The club even brought to Norway three other Nigerian children to accompany John and that he should feel more comfortable and that ‘the investment’ would not go to waste’. In addition, the director contacted Ronny Van der Meij, a sports law attorney, who was the first to provide him with the shocking information of the 20,000 African children who once came to Europe to play football and today barely survive on the streets. In Paris, Alcantud met a number of these children, abandoned after suffering an injury or after failing in some fitness or sporting test.
For poor families in Africa and Latin America it is very difficult, if not impossible, to resist the temptation to turn their children into professional footballers in a European country. They know how much potential wealth and opportunity is there – they have seen it on the television. This greatly facilitates the trafficking of minors, a crime which could be avoided by creating football academies in their home countries, but of course that would mean spending a little more for obscenely wealthy first division football clubs of Europe.
Be Careful when letting!
From our good Spanish friend and collaborator José Antonio Sierrra, we have had a timely warning that the ‘letting sharks’ are at it again. We have written about this problem several times, but due to the seriousness, we gladly do it again.
José Antonio refers to dwellings standing empty, which may be occupied by families without money and without work. By using the pretence of renting the dwelling for a months vacation they obtain access. Then, after the first month, the family just stays on, but no more money is forthcoming. The owners then face real problems, albeit that the law on letting was recently reformed to better protect the owners.
The squatters may then sit tight in the dwelling for up to one year without paying any further rent, while the owners engage expensive lawyers to recover the use of the dwelling. You will never see the money the squatters owe you, nor any compensation for the costs of getting them out, or compensation for damages done to the dwelling.
José Antonio tells us that in some cases the squatters are even taking the furniture with them when leaving, and that organised gangs are charging for finding empty dwellings suitable for a squatter family. They open the door to the dwelling and change the lock, then give the apartment to the squatters, and disappear.
José Antonio asks: How can one buy an apartment for letting with the present legal insecurity? I can only imagine the surprise of foreigner owners coming to Spain and finding that their dwelling has been occupied without their permit and without any payment.
Municipalities updating the padron
We have received the following letter, which the town hall of Mijas has sent to foreigners registered on their ”padron municipal” warning them that they may be taken off the municipal list of inhabitants if they do not renew their registration. The same is happening in all municipalities with foreign residents. The number of foreigners registered on the lists will certainly drop considerably after this action.
The letter from Mijas Town Hall:
“Dear neighbour :
The National Office of Stadistics has informed the Mijas Town Hall that 14,000 inhabitants may be removed from the «padrуn» (official list of inhabitants) because no modifications have been made by them in the past 5 years. Those who are not in the padrуn are not considered inhabitants of Mijas and as such,will not be able to receive any of the benefits offered, for example; reduction on the rates (IBI), social help etc… This will also
harm the Town Hall, as the Central Government of Spain will provide less money, less policemen, less public transport and less doctors, etc to theTown.
The list of persons arranged in alphabetical order can be viewed on www.mijas.es. If your name is on this list please come to Mijas Town Hall (either to Mijas Pueblo, Las Lagunas or La Cala) in order to update your registration (empadronamiento) BEFORE 31ST OCTOBER 2012. You only need to take your passport and NIE number. This is free of charge and will only take you a few minutes. If you have any doubts, you can contact the Mijas Foreigner’s Department on 952 58 90 10 or via email frd@mijas.es You can also take this opportunity to check your address and leave yourtelephone and email
The registration in the padron (empadronamiento) has NOTHING TO DO with your fiscal residence, meaning that a citizen can be an inhabitant of Mijas and remain a tax resident abroad. We insist on the importance of registering and urge everyone to be included on the padron.”
The New York Times
(By ROBERTO SAVIANO)
THE global financial crisis has been a blessing for organized crime. A series of recent scandals have exposed the connection between some of the biggest global banks and the seamy underworld of mobsters, smugglers, drug traffickers and arms dealers. American banks have profited from money laundering by Latin American drug cartels, while the European debt crisis has strengthened the grip of the loan sharks and speculators who control the vast underground economies in countries like Spain and Greece.
Mutually beneficial relationships between bankers and gangsters aren’t new, but what’s remarkable is their reach at the highest levels of global finance. In 2010, Wachovia admitted that it had essentially helped finance the murderous drug war in Mexico by failing to identify and stop illicit transactions. The bank, which was acquired by Wells Fargo during the financial crisis, agreed to pay $160 million in fines and penalties for tolerating the laundering, which occurred between 2004 and 2007.
Last month, Senate investigators found that HSBC had for a decade improperly facilitated transactions by Mexican drug traffickers, Saudi financiers with ties to Al Qaeda and Iranian bankers trying to circumvent United States sanctions. The bank set aside $700 million to cover fines, settlements and other expenses related to the inquiry, and its chief of compliance resigned.
ABN Amro, Barclays, Credit Suisse, Lloyds and ING have reached expensive settlements with regulators after admitting to executing the transactions of clients in disreputable countries like Cuba, Iran, Libya, Myanmar and Sudan.
Many of the illicit transactions preceded the 2008 crisis, but continuing turmoil in the banking industry created an opening for organized crime groups, enabling them to enrich themselves and grow in strength. In 2009, Antonio Maria Costa, an Italian economist who then led the United Nations Office on Drugs and Crime, told the British newspaper The Observer that “in many instances, the money from drugs was the only liquid investment capital” available to some banks at the height of the crisis. “Interbank loans were funded by money that originated from the drugs trade and other illegal activities,” he said. “There were signs that some banks were rescued that way.” The United Nations estimated that $1.6 trillion was laundered globally in 2009, of which about $580 billion was related to drug trafficking and other forms of organized crime.
A study last year by the Colombian economists Alejandro Gaviria and Daniel Mejía concluded that the vast majority of profits from drug trafficking in Colombia were reaped by criminal syndicates in rich countries and laundered by banks in global financial centers like New York and London. They found that bank secrecy and privacy laws in Western countries often impeded transparency and made it easier for criminals to launder their money.
At a Congressional hearing in February, Jennifer Shasky Calvery, a Justice Department official in charge of monitoring money laundering, said that “banks in the U.S. are used to funnel massive amounts of illicit funds.” The laundering, she explained, typically occurs in three stages. First, illicit funds are directly deposited in banks or deposited after being smuggled out of the United States and then back in. Then comes “layering,” the process of separating criminal profits from their origin. Finally comes “integration,” the use of seemingly legitimate transactions to hide ill-gotten gains. Unfortunately, investigators too often focus on the cultivation, production and trafficking of narcotics while missing the bigger, more sophisticated financial activities of crime rings.
Mob financing via banks has ebbed and flowed over the years. In the late 1970s and early 1980s organized crime, which had previously dealt mainly in cash, started working its way into the banking system. This led authorities in Europe and America to take measures to slow international money laundering, prompting a temporary return to cash.
Then the flow reversed again, partly because of the fall of the Soviet Union and the ensuing Russian financial crisis. As early as the mid-1980s, the K.G.B., with help from the Russian mafia, had started hiding Communist Party assets abroad, as the journalist Robert I. Friedman has documented. Perhaps $600 billion had left Russia by the mid-1990s, contributing to the country’s impoverishment. Russian mafia leaders also took advantage of post-Soviet privatization to buy up state property. Then, in 1998, the ruble sharply depreciated, prompting a default on Russia’s public debt.
Although the United States cracked down on terrorist financing after the 9/11 attacks, instability in the financial system, like the Argentine debt default in 2001, continued to give banks an incentive to look the other way. My reporting on the ’Ndrangheta, the powerful criminal syndicate based in Southern Italy, found that much of the money laundering over the last decade simply shifted from America to Europe. The European debt crisis, now three years old, has further emboldened the mob.
IN Greece, as conventional bank lending has gotten tighter, more and more Greeks are relying on usurers. A variety of sources told Reuters last year that the illegal lending business in Greece involved between 5 billion and 10 billion euros each year. The loan-shark business has perhaps quadrupled since 2009 — some of the extortionists charge annualized interest rates starting at 60 percent. In Thessaloniki, the second largest city, the police broke up a criminal ring that was lending money at a weekly interest rate of 5 percent to 15 percent, with punishments for whoever didn’t pay up. According to the Greek Ministry of Finance, much of the illegal loan activity in Greece is connected to gangs from the Balkans and Eastern Europe.
Organized crime also dominates the black market for oil in Greece; perhaps three billion euros (about $3.8 billion) a year of contraband fuel courses through the country. Shipping is Greece’s premier industry, and the price of shipping fuel is set by law at one-third the price of fuel for cars and homes. So traffickers turn shipping fuel into more expensive home and automobile fuel. It is estimated that 20 percent of the gasoline sold in Greece is from the black market. The trafficking not only results in higher prices but also deprives the government of desperately needed revenue.
Greece’s political system is a “parliamentary mafiocracy,” the political expert Panos Kostakos told the energy news agency Oilprice.com earlier this year. “Greece has one of the largest black markets in Europe and the highest corruption levels in Europe,” he said. “There is a sovereign debt that does not mirror the real wealth of the average Greek family. What more evidence do we need to conclude that this is Greek mafia?”
Spain’s crisis, like Greece’s, was prefaced by years of mafia power and money and a lack of effectively enforced rules and regulations. At the moment, Spain is colonized by local criminal groups as well as by Italian, Russian, Colombian and Mexican organizations. Historically, Spain has been a shelter for Italian fugitives, although the situation changed with the enforcement of pan-European arrest warrants. Spanish anti-mafia laws have also improved, but the country continues to offer laundering opportunities, which only increased with the current economic crisis in Europe.
The Spanish real estate boom, which lasted from 1997 to 2007, was a godsend for criminal organizations, which invested dirty money in Iberian construction. Then, when home sales slowed and the building bubble burst, the mafia profited again — by buying up at bargain prices houses that people put on the market or that otherwise would have gone unsold.
In 2006, Spain’s central bank investigated the vast number of 500-euro bills in circulation. Criminal organizations favor these notes because they don’t take up much room; a 45-centimeter safe deposit box can fit up to 10 million euros. In 2010, British currency exchange offices stopped accepting 500-euro bills after discovering that 90 percent of transactions involving them were connected to criminal activities. Yet 500-euro bills still account for 70 percent of the value of all bank notes in Spain.
And in Italy, the mafia can still count on 65 billion euros (about $82 billion) in liquid capital every year. Criminal organizations siphon 100 billion euros from the legal economy, a sum equivalent to 7 percent of G.D.P. — money that ends up in the hands of Mafiosi instead of sustaining the government or law-abiding Italians. “We will defeat the mafia by 2013,” Silvio Berlusconi, then the prime minister, declared in 2009. It was one of many unfulfilled promises. Mario Monti, the current prime minister, has stated that Italy’s dire financial situation is above all a consequence of tax evasion. He has said that even more drastic measures are needed to combat the underground economy generated by the mafia, which is destroying the legal economy.
Today’s mafias are global organizations. They operate everywhere, speak multiple languages, form overseas alliances and joint ventures, and make investments just like any other multinational company. You can’t take on multinational giants locally. Every country needs to do its part, for no country is immune. Organized crime must be hit in its economic engine, which all too often remains untouched because liquid capital is harder to trace and because in times of crisis, many, including the world’s major banks, find it too tempting to resist.
Roberto Saviano is a journalist and the author of the book “Gomorrah.” He has lived under police protection since 2006, when he received death threats from organized crime figures in Italy. This essay was translated by Virginia Jewiss from the Italian.
