Urdangarin’s Ex-Business Partner Implicates the King of Negotiating in Favor of his Son-in-Law

Jorge Forteza and Pedro Perelló in 2007. Photo by Tōru Shimada.

Urdangarin’s Ex-Business Partner Implicates the King of Negotiating in Favor of his Son-in-Law
Diego Torres remitted three emails with documents to the court
The Duke says, “He has told Cristina that in principle, there won’t be any problems.”

Duke Iñaki Urdangarin affirmed in three 2007 emails that the king acted as a mediator so his son-in-law could participate in a new yachting team for the 33rd America’s Cup. The documents were remitted by Urdangarin’s ex-business partner, Diego Torres, to the Palma court which is investigating the activities of Instituto Nóos. The Ayre Project, which still has not found prosperity after that fiasco of a sporting event, was managed by Pedro Perelló and Jorge Forteza – regattists, businessmen, and friends of the princes and princesses – with the support of the Duke of Palma.

In one of these communications, dated September 30, 2007, Torres asks the duke about his “experience” in seminars about urban planning in Philadelphia and informs him that Perelló has spent “a good while on the telephone every day” to intensify his contacts with the public administrations of the Valencian Community. The following day, Urdangarin answered him form Washington, “I bring a message on behalf of the king, and it is that he has commented to Cristina, so that she could pass the message on to me, that he will get [Francisco] Camps in touch with Pedro in order to tell him about the theme of the base of the Prada. And that in principle, there will not be any problems, and they will help us get it,” said Urdangarin in allusion to the necessary installations in the port of Valencia to hold Project Ayre’s future boat.

In this same email, Urdangarin informed Torres that “there could be a little something for the foundation” and lamented that the entity’s website was not in English. “It would give a more international touch,” the Duke said, and he added that Agustín Zulueta, leader of the Desafío Español (Spanish Challenge) crew – the team that participated in the 2007 America’s Cup – “had asked Cristina to coffee to talk about something that couldn’t be discussed over the phone.” “It was mysterious, but it seemed serious and important,” he averred.

The messages about the ambitious sailing project which Torres’s lawyer, Manuel González Peeters, handed to the judge, piled up on August 9, 2007. Urdangarin then revealed a supposed encounter between King Juan Carlos and Perelló. “We arranged a meeting between the king and Pedro in order to present the project. It went very well, and apart from seeming very well put together, the king has offered all his help in finding financial assistance,” he said to Torres, to whom he added, “Enjoy the cruise.”

Later, on September 10, the husband of Princess Cristina wrote a message to Perelló which again lead with the supposed actions the king had taken to make sure the project arrived safely in harbor. “The king commented to me that one of his friends had done the negotiating we requested with Miguel Fluxa,” in allusion to the owner and president of the Iberostar group, Miguel Fluxá. “From my end, I’ve given [Fluxá] the ear of BBVA so he can give a push to Paco González,” Urdangarin explained to Perelló.

The messages also reveal certain differences over the (failed) presence of a second Spanish team at the America’s Cup. Zulueta affirmed in an October 2007 conversation that he felt “more peaceful” after speaking with “Cristina” and that he believed Perelló “will not continue sending surprising documents to our sponsors.” The tone, despite it all, is conciliatory, and he informed Urdangarin that “the Desafío Español has nothing against another Spanish team taking part, and if course, it has not acquired any right to be the only team.” This relieved “a worry on our end.”

The message sent by another of those implicated in the Nóos case, Antonio Ballabriga, chief of the corporate affairs of BBVA and friend of the Duke, confirms that Urdangarin went forward with his activity in Nóos and his business with public entities. This, despite his formal renunciation in March 2006 and after the king’s emissary, José Manuel Romero Moreno, advised him that spring to disassociate himself with the business. “As we’ve established, we’ll meet at 10 in Nóos to talk about meetings for the European Games project.”

After the 2009 America’s Cup
J.G. reporting from Barcelona and A.M. reporting from Palma

The Mallorcan regattists Pedro Perelló and Jorge Forteza conceived of a project to give Spain a second representative in the 2009 America’s Cup in Valencia. They wanted a team capable of competing to win, and for that they needed to raise at least 100 million euros. Despite their efforts, and despite the Ayre project being enrolled as a challenger by America’s Cup Management (ACM), the project did not prosper.

In 2007, Perelló won the King’s Cup for sailing with a boat named Siemens in which Prince Elena was a navegator. It was then that the regattist and shipowner tried to put together a great team in order to participate in the America’s Cup. Perelló never hid who the project’s godparents were, and he affirmed that the project counted on the active participation of Urdangarin (who was to take charge of the “social and cultural” area of the project) and the blessing of the king, as well. Duke Urdangarin retired after the project. Three years later, one of his businesses dedicated to “sports patronage” (Promorace, FL) was condemned to pay 34,000 euros for abandoning a sailing ship in the installations of the Royal Nautical Club of Palma. The judge obligated the business to “vacate the installations.”

Perelló paired up with a person who could provide more economic muscle for the project, businessman Jorge Forteza, duke of the real estate company Nova. Forteza was tthe “fourth player” that participated in the table tennis game in the palace of Marivent Urdangarin, along with regattist and ex-Director General of Sports Pepote Ballester and ex-President of the Balearic Islands Jaume Matas, who were also imputed in the Nóos case. There, Urdangarin confirmed his patronage of the Illes Balears cycling team. Nóos bought to apartments in Novaen Palma. In addition, Forteza was an intermediary for buying and selling terrain for Mallorca’s territorial program, which was investigated by the attorney general. The BMW Oracle team took the plan for the 33rd America’s Cup to court, where the project was paralyzed more than a year and a half before it was finally cleared.

Saudi Businessman Paid for Spanish King’s Hunting Trip in Botswana

The King. Date undetermined. Photo by Rann Safaris.

Saudi Businessman Paid for Spanish King’s Hunting Trip in Botswana
Mohamed Eyad Kayali resides in Spain, where he represents the Royal House of Saud
El País: Un empresario saudí pagó la cacería del Rey en Botsuana
Mábel Galaz reporting from Madrid April 18, 2012

The King went on his controversial hunting trip to Botswana on invitation from Saudi businessman Mohamed Eyad Kayali, who has lived in Spain for years, as reported by El Mundo and confirmed by sources with knowledge of the expedition. Kayali, who has properties in Madrid and Marbella, usually acts as a representative of the Royal House of Saud in Spain, defending and driving their business. This lobbyist of Syrian origin was one of the people who accompanied the king on his safari.

In other news, whether it is coincidence or not, Queen Sofía decided to spend two anda half hours in the Hospital USP San José yesterday, where Don Juan Carlos is recuperating from a hip operation which began at dawn Saturday. This long visit was ten times longer than her first, on Monday, which was reduced to 15 minutes.

The royal family knows that its place in the public square is important and should be untainted by personal problems, which are private business. So the king and his children have decided to close ranks. All have gathered around Don Juan Carlos, the visible head of the Crown, who has never been in the eye of such a hurricane.

Doña Sofía arrived at the hospital at 1:30 PM. The Royal Family reported that the two had decided to have lunch together. They even gave details abot the menu. They both had greens for their first course. After that, the king requested a sirloin steak and the queen a hake; she no longer eats meat. Their private date was different from the visit on the first day, when they were surrounded for those few minutes by doctors and retainers.

The queen left the lunch smiling and relaxed and approached the press to inform them her spouse is “phenomenal”, “has an appetite”, and “is doing very well”. She only added, “I’ll say nothing more because there is nothing more to say.” As Doña Sofía approached her automobile, she heard a voice asking, “What’s your opinion of the trip to Botswana?” She did not respond. No one really expected her to.

The stage of closing the family ranks was completed yesterday with the visit of the Prince of Asturias, who has continued representing his father at public functions, yesterday in Valencia and today in Murcia. And with the presence of Doña Elena, who left her convalescing son for a while in order to be with her father, with whom she is especially close. She said about criticism of the king, “I haven’t heard anything; I’ve been working.”

Everything indicates that the king will be able to leave today. The director of USP San José, Javier de Joz, read the new medical report at noon on Tuesday and assured that the king is “showing great progress”. He explained that they had practiced new remedies and had intensified his rehabilitation, with several sessions per day.

Kirchner Extends Nationalization Threat to Other Groups like “Telecommunications Companies and Banks”

Kirchner Extends Nationalization Threat to Other Groups like “Telecommunications Companies and Banks”
Spanish firms are engaged in a wide array of enterprises in Argentina
El País: Kirchner extiende su amenaza a otros grupos como “telefónicas o bancos”
David Fernández reporting from Madrid April 16, 2012

The expropriation of YPF could be only the beginning of a nightmare for Spanish businesses. During her announcement of the nationalization, Argentinean President Cristina Fernández de Kirchner threw down the gauntlet before other foreign business interests in the country, like “telecommunications companies and banks”, about the “necessity” of reinvesting their earnings in Argentina.

After speaking about Argentina Airlines and its disappearance, the president moved on to comment on other sectors in which Spain has investments in Argentina. “We’ve made it clear that the businesses that are here, even if their stockholders are abroad, are Argentinean businesses,” she began. She referred to “telecommunications companies, some of which are Spanish and which have recently submitted us to blackouts. I hope that the Ministry will promptly respond to this,” she charged, clearly referring to Movistar. “And the foreign banks, as well…in sum, we don’t have a problem with profitability, but these profits must be reinvested in the country in order to help the country grow,” Fernández resolved.

The internationalization of Spanish businesses began in Latin America, and Buenos Aires was one of the first ports of call for these then-incipient multinational corporations. In recent years, the importance of Argentina on the bottom lines of these sought-after businesses has decreased in favor of other economies in the region (principally Brazil, Mexico, and Chile), but the Argentinean market continues to be a net contributor. This is the exposure that the principal Spanish companies have to Argentina, according to fiscal 2011 data.

Repsol: YPF provided 17.42% of operating revenues (~€11,105,000,000) and 25.61% of gross profit (~€1,231,000,000). Last year, Argentina received more of Repsol’s investment money than any other country (€2,182,000,000, 33% of the total). There are 15,119 Argentineans on Repsol’s payroll, 32% of the total, making them the second most numerous nationality on their staff after Spaniards.

Telefónica: Kirchner, without referring explicitly to the Spanish operator, has sent a message to Telefónica in reminding them of the “blackout” that some enterprises “have submitted us to recently”. This April 2, a breakdown in Telefónica’s Argentinean affiliate’s mobile phone service affected 16 million users and a smaller number of landline users. After the blackout, the Argentinean government signaled that it would study how to impose the “maximum” fine possible on Movistar, which indicated its intention to compensate its clients in the country for the blackout.

Telefónica of Argentina has licenses which permit it to provide landline, cellular, and Internet telephone services. These licenses will not expire, but as the operator recognizes in its annual report, “they can be cancelled by SECOM (the Secretary of Communications) for failure to complete the terms of the license”.

Telefónica has 21.9 million clients in Argentina, principally for its mobile phones (15.9 million users); it enjoys a 29.8% market share in the cellular market. The net total of the bills for this division in that country last year was ~€3,174,000,000, while its Operating Income Before Depreciation And Amortization (OIBDA) reached ~€1,085,000,000. Telefónica’s Capital Expenditure (CAPEX) in Argentina in 2011 was €449 million.

Banco Santander: Santander Río is the country’s principal private bank, with 358 offices, 2.5 million individual clients, and 6,777 employees. In 2011, the affiliate had gross earnings of €926 million, net earnings of €472 million, and €287 million in profits. Argentina contributes 3% of the Santander Group’s profits.

BBVA: The entity controls 76% of the capital of BBVA Banco Francés. In 2011, the Argentinean division earned a net profit of €315 million and an attributed profit of €157 million, a quantity which represents 5.2% of the group’s total profits. BBVA has 4,844 employees in Argentina, 4.4% of its total employees.

Endesa: The services of the generation and transportation of electricity provided by Endesa’s Argentinean affiliate netted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of €118 million in 2011. In addition, since the beginning of April last year, two interconnecting lines between Brazil and Argentina have begun to receive regulated remuneration, producing an EBIDTA of €127 million. The distribution business, for its part, had operating losses of €23 million, as greater fixed costs as a consequence of inflationary recovery in the country could not be recuperated by the bills charged to clients.

Gas Natural: The distribution of gas in Latin America earned the company an EBITDA of €621 million in 2011. Brazil, Colombia, and Mexico are Gas Natural’s principal markets; Argentina only contributed €27 million of its EBITDA.

Mapfre: Argentina is the insurer’s fourth most important market in Latin America. In 2011, it contributed €457 million in premiums (2.33% of the insurer’s total) and €18 million to Mapfre’s bottom line.

DIA: The distributor sold a total of €11,123,000,000 in products last year. Its principal markets are Spain, Portugal, and Brazil. Argentina is fourth, although it was the fastest-growing market in 2011, contributing 7.8% of the chain’s sales (€868 million). DIA opened 47 new stores last year for a total of 495 there.

Prosegur: The security company grossed some €500 million in the Argentinean Area, which also includes Paraguay and Uruguay, in 2011.

Codere: Codere Argentina is the principal operator of bingo sales in the province of Buenos Aires, with a total of 14 functioning rooms and more than 5000 recreational machines installed. This South American country contributes more to the group’s revenue and EBITDA than any other, €553 million and €165 million respectively.

NH Hoteles: On December 31, the group had 13 hotels open in Argentina (11 owned and 2 others under management) with a total of 2049 rooms.

Spain to Argentina: There Will Be Consequences for Hostility Toward Repsol

Spain to Argentina: There Will Be Consequences for Hostility Toward Repsol
The conflict between the Argentinian government and the Spanish business is far from being resolved
The Argentinian government will decide the future of Repsol’s affiliate today
El País: Soria advierte a Argentina: “La hostilidad [con Repsol] traerá consecuencias”
Carlos E. Cué reporting from Warsaw April 12, 2012

The conflict between the Argentinian government and Repsol-YPF is threatening to become an authentic diplomatic row of the first order. The Spanish government has been discrete until now, although it tried to mediate when the Minister of Industry, José Manuel Soria, traveled to Buenos Aires. Even the King of Spain has tried to stop the conflict. The president of Repsol, Antoni Brufau, has been in Buenos Aires for days looking for a solution. But it all seems useless.

Six Argentinian provinces have now revoked a dozen licenses from Repsol-YPF, sinking the company’s value in the Buenos Aires market. Today, the Spanish government decided to go on the attack. In a recording made by the executive department’s press agency at the doors of the Spanish embassy in Poland, where Spanish journalists could not be present and could not ask questions, Soria said, “The Government of Spain defends the interests of all Spanish businesses, within and without. If there are acts of hostility toward these interests anywhere in the world, the government will interpret them as acts of hostility toward Spain and the Spanish government. What this government is saying is that if there will be consequences for any acts of hostility.”

A diplomatic conflict seems inevitable. Repsol controls 53.47% of YPF, while the Argentinian group Petersen holds 25.46%. The President of Argentina, Cristina Fernández de Kirchner, has encouraged the escalation against Repsol, which she accuses of not making sufficient investments in YPF, causing that company to decrease production and thus forcing Argentina to import petroleum. Repsol has promised to increase its investment, but the row, far from settling down, has worsened, and there is a risk that at the end of this process, Argentina will buy the company for a low price, which would be very damaging for the Spanish oil company.

Spain to Prohibit Cash Payments for Professional Services of Over €2500

President Mariano Rajoy at the Congress of Deputies this morning

Spain to Prohibit Cash Payments for Professional Services of Over €2500
Violators will be fined 25% of the quantity paid illegally; Rajoy announces in Congress that this anti-fraud program will be approved Friday
El País: El Gobierno prohibirá a los profesionales el pago en efectivo de más de 2.500 euros
Cristina Galindo reporting from Madrid April 11, 2012

The anti-fraud plan the government has finalized in order to alleviate the public deficit by raising tax revenues, and which will be accompanied by the first fiscal amnesty in two decades, will include the prohibition of cash transactions of values greater than €2500 for between professional businessmen. Henceforth, such payments will have to be made by card or bank transfer. According to President Mariano Rajoy’s statement in Congress today, violators will face a fine of 25% of the amount paid illegally.

Housing is using this measure to impede the traffic of black money (most of all in the form of €500 bills) inside commercial operations, and in the case of businesses, to obstruct them from resorting to false invoices, a typical kind of fraud that occurs when a business that pays IRPF (income tax) by a system of modules sends a bill for a service that it did not render so that another company can claim a tax exemption from a VAT (Value Added Tax) which it did not actually pay. This anti-fraud measure, which the Council of Ministers will approve Friday, aims to collect €8.171 billion in tax that otherwise would not have been paid in 2012; this would help the country meet its deficit targets set by Brussels (5.3% of GDP this year and 3% in 2013).

The measure announced today is inspired by limitations on cash payments ratified in Italy (€1000) and France (€3000 for professional services and €1500 for salary payments) in 2011 and 2010, respectively. Though fiscal inspectors don’t know the fine print yet, they consider any initiative that complicates the transfer of cash an improvement. “While it is not a panacea in itself, it is a positive measure,” said sources in the National Housing Inspection Organization, which represents 95% of the 1500 inspectors. “We will have to see whether the €2500 cap is too high or not; it’s still early,” the association added.

According to the experts at the Ministry of Housing (Gestha), this maximum should be lowered again to €1000, the maximum in Italy, whose underground economy is comparable in size with Spain’s. In addition, some experts stated in a communique that the measure will just be wet paper in the fight against fraud, because it would still make more economic sense to get caught and pay the fine than it would to follow the law: “Fraud saves one from paying the corporate tax (which is up to 30% of an import) and the VAT (from 4-18%), which means savings that are greater than the 25% which would be the maximum penalty for those caught by Housing.” Sources in the inspectors’ organization stated, however, that once the fraud is discovered, and the fine paid, the corresponding taxes would also be charged while the money is regularized.

“Restricting cash operations is always a good measure in the fight against fraud,” argues Valentín Pitch of the Register of Tax Advisors (REAF). This is the first time that limits on cash payment have been established in Spain. Until now, the fight against black money had concentrated on the controversial €500 bills, which make up 70% of the cash in circulation, and in reinforcing vigilance toward bank income.

The government announced the limitation of cash payments without making the quantities concrete on January 7 when it presented its battle plan against fraud.

Rajoy advanced this measure during parliamentary question time in response to a question by the spokesman of the United Left, Cayo Lara, about fiscal amnesty. Regarding amnesty, the president also qualified that he would not bring about a total amnesty but rather one in which parties which brought money to the surface would pay an 8% penalty – for businesses – or a 10% penalty – for individuals. He defended this measure by saying “it makes sense for our current situation.”

He also insisted that it is an “exceptional measure” which would only be valid in 2012 and which responds to a moment in which Spain needs to reduce the public deficit to 3% of the GDP in 2013, making it “very important” that Spain improve its revenues.

According to what Vice President Soraya Sáenz de Santamaría explained a few months ago, the plan will place special importance on the lists of tax evaders provided by countries that have left the list of fiscal paradises, like Andorra, Panama, and the Dutch Antilles. Nevetheless, the goal for collections stated today is below the current goal: €8.171 billion rather than €9.400, a decrease of 13%.

During another part of the control session, the Minister of Housing, Cristóbal Montoro, announced that the next trimesterly report of state revenues and expenditures would be published “very soon”, and it would show each Autonomous Community’s effect on the state ledger “to increase transparency”.

Guindos in Favor of Abolishing R&D Investment
The Minister of the Economy, Luis de Guindos, has signaled that investment in research and innovation has a “structural deficiency” because it is dependent on state subsidies which, in his opinion, should be eliminated to make way for private investment.

In his response to a question by Basque representative Arantza Tapia on the floor of Congress, Guindos pointed out that from 2009 to 2011, there have been “implicit cuts” in R&D&D, which means the drop in subsidies since 2009 is greater than the 26% it appears to be in the 2012 budget.

Sony Lost ¥520 Billion Yen in First Quarter, Making it Worst Quarter in Company History

Sony Lost ¥520 Billion Yen in First Quarter, Making it Worst Quarter in Company History
Yomiuri Shimbun: ソニーの赤字、創業以来最大５２００億円
April 10, 2012

Today Sony revised its consolidated earnings estimate for the first quarter of 2012 downward; it estimated a ¥220 billion loss on February 2 but now foresees a ¥520 billion loss ($2.7 billion) for the period.

This makes it the worst quarter in the history of the company.

Yesterday, the corporation announced that it would lay off ten thousand people, about 6% of its work force.

Don’t Speak of Cuts; Speak of Love

Euphemisms are especially frequent when the economy is bad. Photo by Samuel Sánchez.

Don’t Speak of Cuts; Speak of Love
Euphemisms have been part of public discourse ever since there has been public discourse, but times of crisis can bring their abuse to a comical extent or sometimes even a cynical one
El País: No digan recortes, llámenlo amor
By Amanda Mars, March 5, 2012

Never fear, my friends; no one is going to lower your salary. All that international organizations like the European Central Bank (ECB) are asking from Spain is a “competitive devaluation of salaries.” As you know, we are going through a time of crisis – or “severe deceleration” – and cuts – pardon me, we meant to say “reforms” or “adjustments” – are necessary in many places. But don’t put your head on your hands: Catalonia has absolutely not considered a co-pay for public sanitation; it is merely looking at the idea of introducing a “sanitary moderating ticket.” And the government has not increased income taxes – as they promised they wouldn’t during the election campaign – rather, the Vice President has made it clear that this modification of the IRPF consists of a “seasonal recharge of solidarity.”

They say that this period of “negative economic growth” (only alarmists hawk it as The Great Recession) has not given the same invoice to everyone; it has been pricier for the working class than for the wealthy and powerful. This is not only “the asymmetrical impact of the crisis.” Though workers continue to swell the ranks of the unemployed, it’s not because their companies laid them off, but rather because these companies are immersed in processes like “rationalizing the office network”: for example, when they fused their strongboxes.

Circumlocutions, periphrases, roundabouts, ambiguities, unintelligible jargon, unnecessary foreign words…they have a long relationship with power and seduction. The persuasive use of language has been part of the public discourse ever since there has been public discourse, and in this delicate frontier, and it dances on the thin line between makeup and masks. But the use of euphemisms intensifies in times of crisis. When all the news is bad, language abuse can verge on the comic or the grotesque.

The basic idea is that the important thing about a rose is its name, that things are what we say they are. This linguistic turn explains that language is not just a vehicle to express a previous thought but the formation of a thought in itself.

Or, to go all the way down the rabbit hole, calling something love convinces us that it is love, and not vice versa, and that’s why we say “I love you.”

“The War of the Words overpowers wars between policies and has an anesthetic effect, most of all during recession periods,” states Antón Costas, chair of Economics and Public Policy at the University of Barcelona (UB). “Euphemisms has that function, (we can’t call it a virtue,) of anaesthetizing, but from there we can abuse them in a cynical, crude, and even perverse way,” he adds.

The risk of this abuse, argues the chair, is that, as Newton’s Third Law says, every action creates an equal and opposite reaction. Or, to use a medical image, “we should take care with euphemistic language because these words can numb us for a time, but when the sick man wakes up and sees what happens, he could beat the hell out of us.”

For Darío Villanueva, secretary general of the Royal Spanish Academy (RAE), “the phrase “negative growth” is the height of all this, an anti-phrase that represents the absurd. It’s like saying “hot ice”. Poets can play those games and talk of the sound of silence, but as prose, negative growth is an anti-phrase.”

Luis de Guinos, when he took over as Minister of the Economy last December 26, gave the first demonstration of his language management style. De Guindos stated, without saying “recession” a single time, that Spain would enter 2012 with a “negative growth rate” that would “determine the profile into which we are going with greater depth” and that – why not? – it would be “relatively decelerated” (sic). But this should not be just an incentive – he said – to launch the “reform agenda”.

Soon after, he put one of his reforms in black and white. Guindos himself let slip that labor reform would be “extremely aggressive” in a conversation with EU Commissioner of Economic and Monetary Affairs Olli Rehn; his words were captured by cameras and microphones.

Fernando Esteve, Professor of Economic Theory at the Autonomous University of Madrid (UAM), reiterates that economics “is not scientific about usage; there are very clear elements of persuasion, and depending on how you express something, you can cause one impact or another.” For example, “you could call the same decision a savings method or a cut, and the sensation you generate is different: saving makes you think of something good and prudent, while a cut is a loss of rights.” Saving, when you put it that way, sounds more like love than reduction.

Every era has its fetish words. At the dawn of this crisis, it was no more than an economic “deceleration”, as ex-President José Luis Rodríguez Zapatero pawned it. The real estate bubble – which was only recognized as such when it burst, as happens with bubbles – was only going to bring about “a smooth landing of prices”, to use the words of some developers.

Villanueva casts his view farther back: “During Francoism, we could also seem any euphemisms. Democracy, for example, was a taboo word, but in time it came into use. They said the regime was an organic democracy. What was inorganic was bad. Strikes were labor conflicts, and political parties were associations,” he recalls.

The risk of euphemisms – besides the risk that a user’s scheme will be exposed by a traitorous microphone – is that they lose their influence as time goes on. This is a theory of many linguists. “When people become so accustomed to a word that they immediately associate it with the concept it’s supposed to sweeten, it’s no longer a euphemism, and another word must be found to fill in for it,” explains journalist and writer Álex Grijelmo, president of the press agency Efe, who has studied the field of euphemistic language and gives some examples: “‘concentration camp’ was, in principle, a euphemism. It portrayed a remote place. Puta (“bitch” in modern Spanish) was used to avoid saying mujer (“woman”) in public.”

The media rides the euphemistic wave. “They are totally contaminated. They are now referring to information services when they are really talking about espionage,” he argues. In the economic camp, Grijelmo agrees that “I’m sure you could establish correlation between the GDP of a country and the use of euphemisms.” The author of books like La seducción de las palabras (The Seduction of Words) gives another example: a headline from the newspaper Diario de Burgos last November: “financial entities redefine their presence in small towns”. Or high-end fashion companies, which never announce “discounts” in newspaper pages, but instead “special sales”.

News reports refer to “encounters” with prostitutes and sometimes substitute the word “sex worker” for prostitute.

Political correctness in language has also lead to euphemisms like “developing country” rather than “undeveloped country”. Darío Villanueva mentions this and specifies that the key: “One way to confirm something is negative is to negate something positive.”

Economic language has been used for determined ends since days of yore, Fernando Esteve explains. “Think of all the wealth that a business creates, the entrepreneurial profits; they are called entrepreneurial surpluses, which would signify something good. But the profits for the workers are considered labor costs,” he points out. “Nobody wants to raise costs. That’s a common feeling. And we all end up in agreement that the more surpluses a business has, the better…We’ve already incorporated this into our language [and our subconscious as well],” Esteve explained. When we speak of education or public health, for example, we can forget that they are paid for with taxes.

The professor also finds a very persuasive bias or purpose in the use of certain metaphors. “When a politician or economist speaks like a dietitian, you should tremble in fear,” he says. “What he says is, ‘You have a lot of fat; you need to go on a diet, and then you’ll start to get better.’ If you give this image to citizens who don’t understand the economy, they’ll blindly believe that, in effect, they have eaten too much, and now they have to slim down, and that this diet, although it hurts, is the best thing they can do.”

The same thing happens with hangovers. Using this image for the crisis, in some way, puts the blame on someone who suffers, for being drunk. “For me, one of the most cretinous things about this crisis is the talk of hangovers. It implies that things are going badly now because of your excess, and we cannot fall for the tricks inside these metaphors,” he argues. Journalists, he critiques, “should stop carrying these facile metaphors.”

Technical terms can also make great allies for sweet talk. Referring to collective layoffs as “expedients for the regulation of employment” is a good example. Another is the “creditors’ competition”, which was a term a 2003 law chose for what was previously known as suspension of payment by a business, a much cruder and more explicit term.

Financial jargon, which is sometimes very complex, can also make communication hazy. Debt exposure and asset allocation often refer to real estate has been seized because the proprietors could not pay for credit. A little while ago, the airline company Spanair announced that it had seized operations because of “a lack of financial visibility”; that is to say, it didn’t have money, and no one would give it any more.

In this chapter of the interminable crisis, we never stop hearing the word “sacrifice” used for cuts to programs (seeking a “fiscal consolidation”). The European project is staggering because of budget disequilibria and sovereign debt crises.

It’s interesting to listen now to the Javier Pradera’s analysis published in this same newspaper August 1, 1993. The negotiations between government and social agents on an employment plan went beyond euphemisms. “The Byzantine wording the executive branch is using to convince Spaniards that convergence with Europe will demand effort but not sacrifice has nearly exhausted its reserves of verbal gunpowder,” Pradera wrote. “The useless semantic struggle to determine whether the rigor of the new government’s budgetary politics will lead to a cut in social spending sometimes distracts from the summertime blues, but it won’t do much to help negotiations progress,” he continued.

Miguel Boyer presented the budget like so May 17, 1983: “The fight against inflation will be facilitated by an attitude of salary moderation.”

This type of language is expressed not only by the lips of public powers, Antón Costas points out. “Corporations also use them when they have to defend certain pacts, such as those for salary moderation.” Moderation moderates: it tempers, tightens, and cleans up to avert excess.

Some debates and their linguistic resources are timeless. There will be more bad years, some melancholy poet said. Businessmen, on the other hand, evade “problems” in their interviews and instead speak of “challenges”. There will be cuts for some and adjustments, reforms, or fiscal consolidation measures for others, but a third group will call it love.

The Present-Day Consequences of the Peloponnesian War

Naval battle in the port of Syracuse (Sicily), where the Spartans defeated the Athenians during the Second Peloponnesian War.

The Present-Day Consequences of the Peloponnesian War
For centuries, Spain has been a pessimistic society resistant to change
Support for innovation is essential to its transformation
El País: Consecuencias actuales de la guerra del Peloponeso
By César Molinas, March 9, 2012

The physicist David Deutsch argues that human beings are not immortal yet because Athens lost the Peloponnesian War. This is a complicated statement, and I’m going to dedicate the first part of this article to analyzing it with some detail in order to introduce the notion of progress. In the second part, I will discuss the role of progress, especially that of R&D&D and its financing, and a project for the future of Spain.

I changed my computer recently. My old one had become obsolete, and it already couldn’t handle the latest generation of antivirus and office programs. I made a copy of all the archives and programs on my hard drive and moved them to the new computer, where everything started functioning rapidly again. In other words, in 15 minutes I successfully transmigrated the soul of my old computer to a brilliant new Quad Core. My computer has a potentially immortal soul: all I have to do is change the hardware sometimes to keep it eternally young, fresh, and capable of doing an unlimited amount of new things.

The immortality of the soul doesn’t have to be an exclusive prerogative of computers. It’s conceivable that a process similar to the one described in the last paragraph could be realized in humans some generations from now. A copy of cerebral software – its several million neuron connections – could be moved to a new brain which would control a new body housing a now-immortal soul. The reason we haven’t done it yet is that we don’t have sufficient knowledge; that is, the problem is technical. If progress continues, the solution to any technical problem is merely a question of work and time. Achieving immortality, in the sense used in this paragraph, depends on the continuity of progress.

Progress is an exponential accumulation of knowledge that results in a rapid succession of innovations. About one and a half million years ago, humans discovered how to file a flint rock to make a knife. It was another million years before it occurred to someone that the flint could be filed on both sides to make a lance point. In 1903, the Wright Brothers went down in history for a flight of a hundred meters. Only 13 years later, the Red Baron battled in the skies of France. In 1969, just 66 years after the Wright Brothers, Neil Armstrong walked on the moon. Only half a century ago, we learned about the double helix of DNA, and the base of genetic medicine is already very developed. It has been less than a quarter century since the first message on the Internet, but the web has already changed the world. Innovations, the fruit of creativity, a biological adaptation of the human species, are accelerating more and more: it’s estimated that in 2022, 90% of human knowledge will have been produced in the last decade, and it will all be things we don’t know now. Is this acceleration unstoppable? If progress continues, then yes.

Progress as we know it today began with the Enlightenment in the 18th century. It’s characterized by being inseparably multidimensional – scientific, technological, social, and moral – potentially unlimited, belonging to Western Civilization, and…fragile. Progress is fragile because to develop, it needs a society that is open (in Popper’s sense) and optimistic (in Deutsch’s sense). There cannot be progress in a closed society ruled by the principle of authority and in which there are strict limits on topics for debate and the interchange of ideas. There cannot be progress in a pessimistic society in which innovations are not perceived as opportunities but as threats. Progress requires an open society, with provisional truths, in which you can debate whether God plays dice or whether homosexual marriage should be legal. What’s important is not the topic but rather that there can be debate. With three exceptions, all societies in history have been closed and pessimistic. The exceptions are current Western Civilization, the Florence of the Medicis, which was very ephemeral, and the Athens of the Golden Age, whose optimism was squashed by Sparta when the former was defeated in the Peloponnesian Wars. What would have happened if Athens had won the war? What would have happened if Athenian optimism had been maintained for much more time? It’s possible to dream that the beginning of progress would have continued for centuries and that we would have already become immortal and visited the stars.

Spain’s relationship with progress has never been an easy one. For centuries, Spanish society has been pessimistic, resistant to innovation, and vigilant against the dangers represented by the new ideas spreading through Europe. Few countries have expended as much energy to keep from following into modernity, and even less have been so rewarded for their efforts. In a study about R&D performance published by the European Commission at the beginning of February, Spain placed 21st of 32 European countries, ahead of Greece and Poland but behind Italy and Portugal. The average Spanish grade on the 24 distinct factors analyzed in the study did not reach 5 out of 10, and the score for capacity for entrepreneurship within the society was less than 2.5/10. This does no more than confirm what is already known from others studies like the Pisa (on education) and the World Economic Forum (on competitiveness): Spain is backwards. It gives one vertigo to think that this diagnosis is the same one that Jovellanos made in the 18th century, but backwardness is a relative concept: the other countries in our area have advanced more. Reality is stubborn, and this is it. To overcome this backwardness and incorporate Spain into the flow of progress should be the prominent objective of a project for the future of Spain which would give perspective to the necessary efforts to overcome the difficulties of the present.

In a globalized economy like this, Spain doesn’t have a better option than betting decisively on R&D&D. The alternative is to compete on cost with Vietnam and Morocco. This bet is not a trivial one, though, because to bring about significant results would require very important cultural changes, as much in the public sector as the private one. We’ll look at it in parts.

All Spanish politicians, under one banner or the other and regardless of rank, fill their mouths with pompous expressions like “changing the productive model” or “accessing the knowledge economy.” The truth is that in times of abundance, budgetary allowances for R&D&D grow, but in times of scarcity, they are the first things cut. They are like flowers in an entrance hallway: they grow well and make a good impression, but they are dispensable. Here we have a grave problem in comprehension. Basic research and development needs a lot of time to mature and needs consistent financing. It would be better to provide less financing when things are going well – leaving some money unspent – so that financing could be maintained when things go badly. The rollercoaster R&D&D has to ride in Spanish public budgets provokes the emigration of scientists and the slowdown of research. Also, public incentives in the private sector are badly designed, as I will explain later on.

The principal factor strangling innovation in Spain comes not from the public sector but the private one. In the first article of this series, I distinguished between managers, businessmen, and entrepreneurs. The first execute a business plan; the second contribute a vision of the future of their business; and the third contribute a vision of the future of the world. A similar classification is made between financiers of economic activity: there are bankers, investment bankers, and financiers. Bankers need guarantees, and so they only finance managers and solvent entrepreneurs. Investment bankers work on commission: they finance entrepreneurs only when the financial markets carry the risk. And financiers finance entrepreneurs, especially in their first runs when they are typically insolvent. Financiers risk their possessions to share the entrepreneur’s vision, and they believe that the world can be changed in the direction proposed. Anyway, in Spain there are many bankers and sufficient investment bankers, but there are few financers. This truly strangles Spanish innovation: without financiers, Gates would have never been Gates, and Jobs would have never been Jobs. In Spain, there are entrepreneurs – not many – but they all have great difficulties with financing.

The scarcity of financiers in Spain has two reasons. The first is cultural, and to what I said about it in the first article of this series, I would have to add the exaggerated fear of failure that exists in Spanish society. A financier is accustomed to failure in a relevant percentage of his investments, but those that succeed bring a lot of money. For this reason, investment in venture capital – badly called “risk capital” in Spain – is done in a diversified manner. This is still not understood in our country.

The second reason is incentives. The tax system for Spanish financiers is punitive and dissuasive. In our country, fiscal incentives for R&D&D are channeled as deductions from corporate taxes. To benefit from them, corporations have profits. Large technology investors like Telefónica, Indra, and others do, but startups of innovative technology companies do not. This kind of business, essential for driving innovation, takes many years of turn a profit or be sold at a profit by financiers. These last are discriminated against in comparison to large companies, and they should be incentivized with a transparent regime that would bring the fiscal credit generated by investments to their tax bases. This regime could be extended, like in France and other countries in our area, to physical people. This would not be a privilege; it would only give them equal incentives to invest in R&D to what consolidated companies enjoy. The Minister of Housing should reflect very seriously on this proposal. As I hope I have explained in this article, no less than the immortality of the soul could depend on the decisions he adopts.

César Molinas, mathematician and economist, is Barcelonese by birth and Madrileño by adoption. He has been an academic, a governor, and an investment banker. He currently dedicated himself to “risk capital” in biomedicine and to consulting.

Curious Justification for Argentina’s Clampdown on Imported Books

Argentinian Secretary of Domestic Trade Guillermo Moreno

Curious Justification for Argentina’s Clampdown on Imported Books
Graphic industrialist Juan Carlos Sacco affirmed that the limitations would only affect books that had elevated levels of lead in their ink: “wetting your finger to turn the page would be dangerous”
La Nación: Curiosa justificación de las trabas de Moreno a los libros importados
March 31, 2011

The new regulations for importing books and any other graphic material has a justification: concern for public health. At least, that’s how the third vice president of the Argentinian Industrial Union, Juan Carlos Sacco, justified the rules today, stating that it could be dangerous to “handle” a book with lead proportions higher than 0.05-0.06% of the ink.

In a radio interview, Sacco emphatically denied that Argentina was prohibiting the importation of books, despite the new regulations from the Secretary of Domestic Trade which will delay the reception of graphic material bought abroad.

With this new norm, each buyer will have to check with customs officials in the Ezeiza airport that the ink in these publications does not have a quantity of lead greater than 0.05-0.06% of its chemical composition.

“Resolution 453 is environmental,” said Sacco in a dialogue on Radio 10. He then explained that it could be “dangerous” to manipulate a book with a greater quantity of lead than permitted. “One must handle a book. And one could possibly put his finger on his tongue to turn the page. This is a serious measure,” affirmed the industrialist in response to a question by journalist Marcelo Longobardi.

Sacco denied that this would block the importation of graphic products. “There is no sentence in any statute prohibiting bringing books into the country from abroad,” he assured. He also added that the norm had the intention of promoting domestic book production.

“In the last five years, 140,000 tons of books have been imported at a cost of $550 million. And in 2011, we had a trade imbalance of 78%, some $125 million,” Sacco explained.

Economic Crisis Pushes Record Number of Mobile Phone Users to Change Companies

Companies are making greater and greater offers in order to capture clients. Photo by EFE.

Economic Crisis Pushes Record Number of Mobile Phone Users to Change Companies
540,000 subscribers used the portability mechanism to change service operators in January
El País: La crisis empuja a los usuarios a cambiar más que nunca de compañía móvil
Ramón Muñoz reporting from Madrid March 13, 2012

The crisis is pushing more and more cell phone users to shave a little off their bills. Phone companies, in turn, are sweetening their offers more and more. This combination has lead to a record number of subscription changes in a month: this January, 539,599 mobile users changed phone service operators thanks to portability, the mechanism which allows users to keep the same telephone number despite the change, according to data from the Telecommunications Market Commission.

So-called Mobile Virtual Network Operators (MVNO), which do not have their own networks but instead rent space from large operators, lead the market. They captured more than two thirds of the 166,922 in net gains for mobile telephones (124,690). As for operators with their own networks, Vodafone gained 72,290 lines and Yoigo 46,470, while Orange and Movistar lost 44,180 and 36,270 lines, respectively.

The number of mobile telephone lines as a whole rose to 58,880,647 lines in January, 3.2% more than there were the year before. (The population of Spain is roughly 46 million.) This January’s growth was much reinforced by datacards (SIM cards devoted to Internet connections), which in January increased by 82,901 lines, breaking four consecutive months of losses.

Movistar and Vodafone were the operators that lost the most market share in the past year – 1.7% and 1.1% respectively – and they now have 39.89% and 28.25% of the market, respectively. Orange (20.08%) basically maintained its relative market position. The MVNOs and Yoigo increased their totals by 1.71% and 1.16%, respectively, to achieve 6.53% and 5.25% market share.

Fixed Broadband
Broadband services added 40,363 lines, so their growth rate was the same as it was the previous month. This pace is principally thanks to alternative operators, which registered 35,450 net gains. Telefónica, for its part, added 2080 lines to its network. Cable operators gained 2830 lines, reversing their December losses. The total number of broadband lines reached 11,188,297, showing a year-to-year growth rate of 4.7%.

Fiber optic lines in homes continued to increase. 9906 lines were added during the month (less than in December), and the total number of lines reached 181,083, the greater part of them for Telefónica. This majority owner lost 7866 ADSL lines that month, and thus lost 3.51% of its share, to fall to 49.13%. Alternative services gained 3.54% in the same period, and they now hold 31.5% of the market. Cable operators practically maintained their relative position in third place.