The Spanish city of Ciudad Real isn’t the most obvious tourist destination. Situated in the province of La Mancha 115 miles from Madrid, it has a population of 74,000 and few attractions beyond its associations with Spain’s most famous literary character.
In 2003 however, a private company named CR Aeropuertos began to attract investment for a new airport with a capacity for 5 million passengers, with the support of the regional government and the city council. The company claimed that a new airport would put Ciudad Real on the international map and pick up the overspill from Barajas airport in Madrid.
That was the aspiration, some might say, the fantasy. But it was enough to attract €1.1 billion in private investment, backed by a €140-million guarantee from the Socialist regional government, which also spent millions on flight subsidies and on advertising campaigns.
One of the airport’s main backers was the Cordoba-based savings bank CajaSur, which is owned by the Catholic Church, and which held 18.8 million euros of its outstanding loans. There was a time when CajaSur board meetings opened with a blessing from the chairman ‘In the name of Jesus Christ, amen.’ In 2010 God’s grace deserted the banker-priests, and their bank was taken over by the Spanish government after years of reckless lending left it owing lenders a whopping 445 billion euros.
CR Aeropuertos met a similar fate. In 2008 Don Quixote airport opened with a 4 km runway, a 28,000 square metre passenger terminal, a freight capacity of 90,000 tons a year – and approximately 1.1 billion euros worth of debts. But perhaps not surprisingly, Cervantes proved to be less of a draw than had been anticipated and the ten million annual passengers never turned up.
In its first year only 55,000 passengers passed through the airport, and flights soon dwindled to a handful a week, many of which had more crewmembers than passengers.
In 2010 the airport went into receivership, owing its creditors more than 200 million euros. Last December commercial flights stopped and this month the airport was closed even to the few private planes that still used it.
Now the government of Castilla-La Mancha is running a budget deficit of 9 percent. But not everyone is unhappy. Take these two clowns:
The one on the left is Juan Antonio León Triviño and his companion is José María Barreda. Until 2009 they were president and secretary respectively of the Ciudad Real Chamber of Commerce. Between 2003 to 2009 both men received annual payments of 2.2 million euros each from CR Aeropuertos, as a result of what the bankruptcy administrators’ report discreetly called ‘ a private agreement or parasocial pact’ with the company.
So you can see why they’re both smiling. For six years they enriched themselves through the construction of an airport that should never have been built, and which was not subject to any serious oversight by the authorities that granted it planning permission.
The Ciudad Real folly is one of various airports that were built during Spain’s boom years, many of which are under-used or not used at all. Take the 150-million euro airport that opened in Castellón, Valencia last year.
Unlike Ciudad Real, this airport has yet to receive a single plane because its runway is too narrow for planes to turn around and it has to be widened to meet regulations – something that neither the builders nor the regional government realised until after it was opened.
These ‘ghost airports’ are a symbol of the financial practices that characterized the época de las vacas gordas – the epoch of fat cows, when Spain was the sixth largest economy in the OECD.
For more than two decades Spanish banks financed infrastructure projects of dubious viability and prestige architectural projects in an attempt to turn money into concrete and concrete into easy money. These efforts have left the country dotted with museums, marinas, cultural centres, theme parks, motorways, and speculative real estate projects, that have made losses or have yet to recoup their investments .
By August last year Spain had built 1,963 kilometres of high speed track, with another 1,781 kilometres under construction – figures that were only second to China. Some 50,000 million euros have been invested in the AVE rail links, whose construction, like the airports, has wildly overshot demand. In 2009, 25 million passengers travelled on the Paris-Lyon high speed train a figure that nearly doubled the numbers who used the AVE networks in Spain nationally.
This discrepancy between expense and demand has left a trail of white elephants across the country. In 2007, Valencia opened a a new 1.8 billion euro marina to host the 32nd America’s Cup. Now the marina and its racing hangars are deserted. Nearby the massive €1.3 billion City of Arts and Sciences, a cultural complex designed by architect Santiago Calatrava has now been forced to offer itself as a wedding venue.
Further south in Benidorm, the Valencia regional government is looking to recover €65 million through the sale of the €400 million euro Terra Mitica theme park, which was inaugurated in 2000 and is now laying off half its staff.
Now the construction industry has collapsed, the banks are bust, and ordinary Spaniards are footing the bill. In 2010 the Socialist government announced 5, 250 million euros worth of cuts, and this year’s austerity budget by their successors has called for public savings of 15 billion euros.
Meanwhile the IMF is insisting that the taxpayer and the government play a greater role in re-financing the Spanish banks that did so much to cause the crisis in order to avoid ‘ resolution costs becoming too high for the industry to bear’.
The IMF’s concern is not merely driven by concern for the ailing Spanish economy. During the boom years Spain was the sixth largest recipient of Foreign Direct Investment (FDI) in Europe. Most foreign capital came from within the European Union, and was invested in transport, communications and the financial sector.
International capital, in other words, has also played its part in Spain’s downfall, and transnational political and financial institutions also bear some of the responsibility for it.
Spain may have its ghost airports, but other countries have their own white elephants, their dodgy banks and dodgy politicians, and have undergone the same transformation from dreams of endless wealth to ruin and enforced ‘austerity’.
And if Spain’s overblown infrastructure projects are monuments to the folly, corruption and despilfaro (waste) that took place under both Socialist and Conservative governments over the last three decades, then Spain itself is a symbol of a global economic model that has crashed and burned so catastrophically in the last four years, and which has brought so many countries to the brink of ruin.