Camp del Ferro

Public Competition in Post-Independència Catalunya

This essay examines how the art of public competition functions when one of its most important competitors is absent. The suspension of policy-making within the Generalitat de Catalunya, following the region’s failed bid for independence, provided an almost unique opportunity to observe the strategic processes and limitations of the art of public competition. The optimistic finances of metro line 9/10 set the context, followed by analysis of the reactions of the city and metropolitan area of Barcelona to the Generalitat’s hiatus. That analysis exposes vast differences in the funding models of higher and lower tiers of Spanish government, which can be traced to the availability of externally-financed debt.

“Public Competition in Post-Independència Catalunya” is the third in a sequence of four essays titled, “The Art of Public Competition“, which together explore the competitive model underlying Spanish public transport. An anthropological analysis of the tension between this internal model and that of globalised economics, reveals the distortion of external finance on the internal workings of the art of public competition. The first essay in the sequence establishes the policy context for the liberalisation of public transport in Spain. The second explores the workings of the art of public competition using the example of interurban buses around Barcelona. The final essay ponders the strategic interplay of risk, debt and optimism, using the example of Spain’s high speed railway network.

Beyond Line 9/10

Like many of Spain’s regional Autonomous Community governments, the Generalitat de Catalunya’s initial reaction to the 2008 financial crisis was to maintain many prior expenditure commitments by borrowing, with debts rapidly rising from a baseline of around 8% GDP to around 35% of GDP by 2014. Roughly half this borrowing now occurs through the nation of Spain, using a mechanism called the “Fons de Liquiditat Autonòmic” (Autonomous Liquidity Fund, FLA) which allows regional government to borrow on broadly similar terms as the parent country, and thus benefit from Eurozone rates, which in this period were close to 0%. FLA funds come at the cost of fiscal autonomy, since the autonomous community’s plans for debt reduction must be approved by the Spanish government. The other half of the debt is sourced directly, commonly from commercial banks, which in Spain have traditionally had a strong civic investment function. The biggest single debt within the Generalitat’s total is that of Ifercat, the Catalan agency tasked with new public transport infrastructure: 4 billion euros of debt, roughly 5% of the Generalitat total. Half Ifercat’s debt is owned by the European Investment Bank, a non-commercial EU institution.

Aside from a 45 million euro project to rejuvenate the Lleida-Pobla de Segur railway, a line historically notable as the epitome of politicised infrastructure, Ifercat’s only practical project was Barcelona’s Line 9/10 metro route. Over-ambitious from the outset, both technically and financially, the “longest metro line in Europe” followed an all too familiar pattern of costs spiralling out of control in an environment of inadequate risk management. Ifercat pursued increasingly desperate funding mechanisms to keep their project alive in the face of the worst global financial crisis in a generation. Instead of using the private sector to mitigate construction risk, or using the private sector to deliver the desired transport system as a single build-and-operate concession, Ifercat sought short term liquidity simply to keep construction underway. And ultimately the money still ran out, leaving an incompete tunnel right in the middle of the route – a tunnel which is still inhabited by a pair of Tuneladores (TBMs) that haven’t moved since 2011. Such an incremental approach to funding inevitably led to poorly structured debt, notably creating many “hidden” liabilities, above and beyond the headline of 4 billion euros.

In 2014 Independents de Qui attributed Ifercat with another 1.8 billion euros of future guarantees to public companies, but that value transpires to be a fraction of the total additional liabilities: Between 2008 and 2010 batches of Line 9/10 metro stations were sold as 30-year concessions, typically to consortia of those companies building the stations, with the money raised by the sale ostensibly used to keep paying the builders to build those stations. The concessionaires levy an annual charge for providing and maintaining their stations – totalling around 250 million euros annually, an anticipated 7.6 billion euros in total. That figure seems infeasibly high, equivalent to the fare revenue of the entire Barcelona metro system. For context, in 2016 (including the first 10 months of passenger service to the airport) Line 9/10 conveyed just 4% of all metro passengers. The exceptional cost of these concessions is partly explained by concessionaires funding their initial purchases through commercial banking – the rates of such loans were inevitably less favourable than the Generalitat might have achieved itself, had it been able to raise the money through the FLA. This difference was accentuated by the political vacuum in the wake of the Catalan independence process: FLA finance reflected the overall stability of Spain, while the commercial loans of the concessionaires reflected the future ability of the Generalitat to pay the concession fees: Not only was the Generalitat less politically stable (and thus more risky) than Spain overall, but its Line 9/10 concessionary payments were somewhat less integral to the institution of the Generalitat, hence more risky, than Spanish bonds to the nation of Spain. Concessionaires consequently found themselves unable to refinance their debts, adding to the overall precariousness of the Line 9/10 finances.

Operator “Ferrocarril Metropolità de Barcelona”, Transports Metropolitans de Barcelona’s (TMB) metro, also carries a significant burden – in so far as it clearly identifies in its accounts, 75 million euros annually for leasing trains and a further 53 million in Line 9/10 “fees”. The lease presumably includes all the 9000 Series trains built for Line 9/10, in spite of only 28 out of 55 trains currently operating there, so presumably only half of the lease cost should be apportioned to Line 9/10, giving a total of 90 million euros annually. As documented in Interurban Buses in Public Competition, TMB‘s budget is managed through ATM, which is funded from roughly equal parts fares revenue and government support, with about half of that government support coming from the Generalitat. Such accountancy primary serves to shift the Generalitat’s past capital budgetary excesses into the current revenue stream, and in the process makes TMB’s metro look far more dependant on government support than it would be if it hadn’t been saddled with Line 9/10. That arrangement surely serves wider political agendas, but as we shall highlight later, TMB metro’s dependency on the Generalitat is broader than just Line 9/10.

Belatedly Ifercat (as the Generalitat de Catalunya) has been reduced to barter, trading land with the Ajuntament de Barcelona (the city government) to raise the money to complete a handful of stations on the Zona Franca branch. Line 9/10 was the final grand project of Jordi Pujol, who dominated Catalan politics through the “Olympic” Golden Age of the 1980s and 90s. However, post-Crisis, the Pujol agenda of grandiose (“pharaonic”) Catalan ambition evolved into a quite different hope of Catalan Independence, and for Pujol’s successors Line 9/10 became a slightly unnerving ghost from the past – albeit one still pending the traditional Spanish political exorcism called the corruption trial. The post-Referendum political hiatus in the Parlament de Catalunya stalled even the fig leaf of a new bid to the European Investment Bank for another 750 million euros to complete the central section of the line. However judging by his subsequent media appearances the holder of that fig leaf, Ricard Font, who is a common thread between many government transport interests within Catalunya, was not idle following the Generalitat’s fall from grace in November 2017. And he was not alone.

Herein lay the shifting sands of post-Independència Catalunya, an administrative void hitherto controlled regionally by the Generalitat, suddenly contestable, perhaps for the first time since the 1970s. While it is convenient to categorise the exercise of power through discrete organs of state, it is common for leading individuals to serve in many organisations. Indeed it is common for such individuals to shift between political, administrative and academic functions throughout their careers, in a way that, for example, the British civil service would not tolerate. It is therefore more instructive to understand the role of these individuals as an extension of Catalan society. Catalunya’s administrative institutions strongly reflect Catalan society, not least because they require their staff to be able to communicate in Catalá – which is not widely spoken outside Catalunya, so (for better or worse) affords substantial protection. At its higher echelons, Catalan society is virtual – where being seen to, to be in control of, these are the rewards – a monetary salary is almost incidental. The longer the Generalitat remained paralysed, the less important its civil service positions became within Catalan society, regardless of whether wages continued to be paid. And thus perhaps without even analysing their motivation, senior individuals within the Generalitat logically sought somewhat similar roles through other institutions. Given the pre-existing tendencies to switch and accumulate roles, their search was perfectly intuitive. That starts to explain why this sequences of essays is subtitled the art of public competition: For what at first looks like a power battle between institutions is far more subtle, far more human – and that in turn makes it harder to analyse and understand from an external perspective, especially an objective one.

A Generalitat Void

By seemingly to declare independence from Spain in October 2017, the Parlament de Catalunya seemingly exceeded its authority, and under article 155 of the Spanish Constitution Catalunya’s autonomy was suspended prior to the election and formation of a new regional government. December’s elections returned the narrowest of independentist majorities (in parliamentary seats, not in votes), which required all independentist factions to agree a future government agenda – something they spent the next five months trying to achieve – February’s review of El Procés helps explain why. In the meantime Catalunya’s civil service, the Generalitat de Catalunya, continued under the auspices of a Spanish government that seemed intent on deferring political decisions for the next Catalan government. With the exception of some particularly outspoken senior personnel, who were eventually dismissed, the Generalitat continued its administrative functions. However with no political direction, there were no new policies to enact or new budgets to spend, and thus new public transport initiatives that had been slated for the Generalitat in 2018, such as the BRCAT network of segregated bus lanes carrying feeder bus services to local railway hubs (a more affordable version of pre-Crisis local tram proposals), failing to materialise. In the first three months of 2018, Catalunya tendered public works totalling less than a third of the value of works in the Community of Madrid, a region with rough historical parity to Catalunya. Similarly, Catalunya lost its voice in decisions that could not wait for the return of its government, from exerting political influence on strategic issues such as the merger of toll road concessionaires, to future policy towards autonomous community financing. The ambition of, particularly of those within, the Generalitat was stalled while the rest of the world kept moving forward.

As described above, it would be logical for those that had traditionally worked through the Generalitat to seek to work through alternative Catalan bodies, and in the process maintain the perpetual counter-balance to centralist Spain. However, the institution of the Generalitat continued to represent the administrative core of “the Republic” to the independentists, and the administrative core of autonomy to the bourgeois, neither of whom were keen to see the Generalitat’s influence diminished. With the Generalitat in stasis, the only way to maintain parity with other bodies was thus to stall those too. Hence any body that sought to step into the post-Independència breach had to first overcome significant political hostility, even on topics with no obvious connection to Independència.

Such politics have certainly proved capable of stalling the advance of the Ajuntament de Barcelona, most obviously on the proposal to connect the two halves of the city’s tram network. The saga of the Diagonal tram connection was already a political polemic, an expression of wider political disagreement that had long-since surpassed any transport rationale, so its emergence as a post-Independència battleground was predictable: First attempts to push decisions through ATM – essentially a public transport revenue redistribution structure to which the Generalitat had historically devolved authority, allowing ATM to function without the Generalitat’s active involvement – were rebuffed by (Pujolist) ex-mayor Xavier Trias. Then Republican independentist Alfred Bosch back-peddled on his electoral support of tram expansion, instead praising (the Generalitat’s) Line 9/10. Bosch’s formal position, full public delivery, can similarly be read as a wait for the Generalitat, since (as discussed later) if only the Ajuntament’s financial resources are available, a degree of private involvement is inevitable in a system on the scale of the tram. Ironically El Procés then intervened directly to suspend the debate until the anguish caused by the unexpected arrest of Carles Puigdemont had subsided.

Two days after the tram’s eventual defeat – as if to reaffirm the pecking order – Íñigo de la Serna (Spanish minister of public works) stood atop the concrete carcass called Sagrera station (which, as described in The Expectations of Competition, is fundamentally a national railway scheme, even if the Ajuntament de Barcelona owns a quarter of the project) and announced improvements to the port section of the Ronda Litoral (which while a key arterial road for the city itself, is also part of the European strategic highway network, and thus administered by Spain). While presiding mayor Ada Colau may have been de-railed, her city was not about to be steam-rollered by Madrid: Barcelona’s mercantile core sought an improbable path between impasses – a future mayoral candidate that was neither independentist nor común. Ciudadanos, sensing an opportunity to repeat their success in the post-Referendum elections of Catalunya, heeded the call, proposing no less than former French prime minister Manuel Valls as mayor of Barcelona.

The political emphasis placed on the tram as, “a metropolitan issue and not a local one“, carries its own political resonance: The Àrea Metropolitana de Barcelona (AMB), whose administrative area covers both the city represented by the Ajuntament de Barcelona and the surrounding built-up conurbation, remained comparatively free of independentist politics. With no direct elections, AMB is instead governed by appointments from mayoral districts within its geographic area, a political geography that makes AMB perhaps the most left-leaning, and non-independentist body in Catalunya: PSC and En Comú (Podemos) combine to an absolute majority, even without the support of the left-leaning independentist ERC and CUP. No surprise that Pujol supressed AMB, rendering it an administrative body of little interest to its citizens. Yet with 50% of Catalunya’s economy and over 40% of its population, and with none of the complex politics that stalled the Parlament de Catalunya and Ajuntament de Barcelona, AMB emerged as a logical challenger to the hegemony of the Generalitat. This was particularly true of public transport, where AMB already had authority (not least over bus operating concessions) and budget (transport accounts for 40% of its spending, and it owns TMB).

A Metropolis Bestirred

In February 2018 AMB presented plans for a new bus network: AMB Exprés, a network of 7 limited-stop peak-period services, alongside AMB Metrobús, a further 14 high frequency routes. The routes serve the southern and northern peripheries of Barcelona, including corridors where the Generalitat had conceptualised (but not implemented) metro or railway services. The new services broadly mirror existing routes, so have presumably been implemented by modifying existing arrangements, thus avoiding any delay of public contracting. Still, a hundred new buses and 240 new drivers represents a significant increase in the scale of operations, adding approximately 20% more resources within the areas served. Even seasoned observers can seem surprised by the pace of implementation, especially when compared to TMB‘s recent “Xarxa de Bus” plan (a core network of frequent “horizontal” and “vertical” routes), which was subject to almost a year of public consultation and several more years of implementation. While the timing of the launch of AMB’s Exprés and Metrobús networks may be coincidental, there is some evidence to suggest the decision was taken at the start of November 2017, immediately after the fall: For example, Baixbus (Mohn, SL) tendered 27 new buses on 8 November 2017, an order agreed by 12 February 2018, logically allowing Baixbus sufficient extra vehicles to commence the first new AMB Exprés E95 route on 21 March. The company also acquired five second-hand vehicles, and is reported to have ordered a further 48 vehicles, to be delivered during 2018. The operator of much of the AMB Metrobús network, TUSGSAL (Transportes Urbanos y Servicios Generales, SAL), has so far only ordered 8 new vehicles (the first since 2014), although it has also recently acquired second-hand vehicles to bolster its fleet. So conjecture this may be, but the timing, combined with the rapid pace of implementation, makes the new network hard to interpret as anything except AMB expanding its influence in the wake of Independència.

Such a rapid pace of implementation is only possible with buses, a mode that requires no new infrastructure, nor excessively long periods of staff training or bespoke vehicle manufacture. Such pragmatic political transport policy was often highlighted by Ken Livingstone when mayor of London – buses may not always be ideal for densely populated cities, but they can have an impact within months. In contrast policy based on trains or trams can take forever. Buses are also highly effective for organisations that are capital poor but revenue rich. The logical conclusion – leasing – is only slowly becoming accepted in Spain, which traditionally places emphasis on owned assets. Indeed, Spanish accounting practice characterises leases as assets – even operating leases (where nothing is owned at the end of the lease) are now accounted as a debt (liability) securing an asset. The limited role of leasing in Spanish public transport (outside of aviation) reflects the operating environment: Leasing’s inherent flexibility over time is less important where concessions are fixed for long periods, while leasing’s implicit manufacturer support does not necessarily fit the traditional model of a self-contained transport company – Renfe, for example, form joint maintenance companies with each rolling stock manufacturer, to better integrate the manufacturer into Renfe’s own organisational structure. More broadly, the tendency to own assets seems to be rooted in Spain’s formal administration of company capitalisation, which presumably served to stabilise exposure to business risk in the past, but today can seem quite inadequate for modern businesses exposed to globalised risk.

TMB metro is increasingly reliant on leasing (“operació d’arrendament financer o lísing”) to acquire new rolling stock, notably in its March 2018 decision to reinforce the Barcelona metro fleet with 12 new 5-car trains to cater for rising patronage. Previously, in the 2000s, new metro rolling stock was purchased outright with half the funding provided by the European Investment Bank. But with the budgets of the Generalitat stalled, securing the other half would seem to have become too difficult. That TMB has become so dependant on the Generalitat for its long term survival (its ability to buy trains) is shocking given the natural strength of its market – which based on population density alone should be one of the strongest in Europe, and thus more than capable of generating sufficient surpluses to cover its long-run operating costs. TMB also acquired new buses in March 2018 – 83 vehicles for 38 million euros – and based on the largest contract, these were purchased, not leased. The different procurement methods for buses and trains can partly be attributable to environmental policy: New (electric and hybrid) buses can be more directly justified in the context of the city’s policies to reduce air pollution (especially where replacing diesel buses), while new metro trains would have no such impact beyond supporting a network that is already powered by electricity. However the dominant factor is likely to be cost: Per vehicle, the capital cost of urban buses is roughly a third that of metro trains. The administration of Ada Colau, Barcelona’s current mayor, has consistently favoured “smaller” transport modes and projects, including bus. While her “small” agenda fits the collectivist politics of her party (En Comú), and counters the Pujolist grandeurs of her predecessor (Xavier Trias), it is also exceedingly pragmatic – reflecting both the Ken Livingstone doctrine described earlier, and the actual financial resources of the Ajuntament. Minor embellishments to Barcelona’s tram are (theoretically) just about possible within this agenda, the city effectively loaning the money other agencies cannot raise with the Generalitat stalled. For example, the Ajuntament de Barcelona agreed to provide the money for a modest extension of the tram in the expectation that ATM would eventually reimburse that expenditure. However such favours cannot apparently be extended to TMB’s metro, which is too “large” for the Ajuntament’s agenda, and thus TMB’s management is logically forced into leasing.

2018 may have formally heralded an administrative turf war in Catalunya, but the history of Line 9/10 suggests some of the underlying factors had been brewing for a decade before. Yet while alternative Catalan institutions are logically just attempting to “step into the breach” to maintain the perpetual counter-balance against centralist Spain, the terms on which they compete are not necessarily the same as the Generalitat. Evidently if the competition involves buying fleets of trains, the players are limited to the Generalitat and the Spanish government, since neither local operator nor local government has the financial ability to support what is otherwise their own local public transport system. This is surely no accident, rather a part of a wider organizational structure that keeps each part focused upon what it knows. So while the Ajuntament de Barcelona may have a demographic size and international stature that exceeds many of the smaller Spanish autonomous communities, its financial construction is fundamentally different to that of regional government, and that in turn limits its competitive nature.

The Distortion of External Finance

The Ajuntament de Barcelona’s current debt stands at 836 million euros, with no sustained increase in response to the 2008 crisis. That’s equal to around 1% of the city’s Gross Domestic Product (GDP), a third of the Ajuntament’s annual revenues, or 6% of its assets: Unlike regional and national government, the city isn’t built on debt, it is built on the city itself. The city’s annual revenue expenditure costs about 80% of its income, and every year it takes the remaining 20% (as capital) and invests it in the city. The city still operates much like a traditional bank – highly internalised, with a strong sense of social economy – which helps explain why it has so little reliance of external banking. This structure limits the scale and ambition of investments (to a total of about 500 million euros each year), so precludes grandiose infrastructure projects, and makes single large investments (on the scale of 92 million euros worth of new metro trains) difficult to rationalise politically. Across Spain, the exceptions to this robust structure of municipal finance, such as the tram that bankrupted the southern Madrid city of Parla, are relatively rare. The municipal financial model may have limited scale, but it keeps the city far more financially stable and resilient than the region, in spite of the region’s presumed stability advantage due to the greater size of its underlying economy and tax base. Of course that isn’t the whole story – the city’s revenues are balanced such that only half are raised by the city itself (primarily through property taxes) with the remainder transferred from higher tiers of government, and ultimately that higher government still has to guarantee any deficit the city may make (such as that between 2009 and 2011) – so Barcelona is not entirely insulated from indebtedness. The size of Barcelona is also untypical of Spain, where most municipal (mayoral) administrations represent populations of hundreds or thousands, not millions, with budgets and debts scaled accordingly – so the circumstances of Barcelona are not widely replicated. Still, Barcelona serves to highlight fundamental differences in financial models, which have stark implications for risk and balance.

The conventional international financial logic of leverage (gearing) suggests that higher (typically geographically larger) tiers of government are more resilient than lower, because ultimately higher tiers can draw on a larger population (equity via taxation) or territorial (asset) base, and will thus always find it easier to repay debts than lower tiers. However, the unfettered ambition of higher government tiers is also greater: In modern Spain, notably some of its regional Autonomous Communities (Valencia, La Mancha and Catalunya all of which hold debts exceeding a third of their respective GDPs), unfettered ambition may have more than exceeded additional resilience. Consequently, lower tiers of government (such as the Ajuntament de Barcelona), may be considered financially net more resilient than their larger parent regional governments. The simplistic conclusion from post-Crisis Spain is thus that the advantage of access to global capital in, for example accelerating subsequent wealth creation, has been outweighed by the disadvantage of the instability that derives from the excessive ambition that such capital tends to propagate. Different logics perhaps still apply to shrewder, less politicised investors, although every investor’s ability to understand their investments will falter with sufficient scale and complexity of investment.

That access to revenue might trump access to capital, would have far-reaching implications for Spain’s societal structure, which (as demonstrated throughout this sequence of essays) is largely regulated by capital. However the structural flaw lay not in capital per se, rather that the upper tiers have access to global capital, the availability of which is far in excess of what they would have access to as internal Spain (or internal Catalunya). In contrast the Ajuntament de Barcelona (and AMB) effectively raises capital internally, directly from their city, not even using that city as security against externally funded debt. The gap between these methods of funding is evidently impossible to bridge, mocking the hypothesis that organisations like AMB might genuinely compete for the crown of the fallen Generalitat: The Generalitat de Catalunya could conjure up billions of euros for metro lines, that AMB subsequently can’t raise tens of millions of euros to buy new trains for – even though the metropolitan area contains half the Catalan economy. Each organisation is focused on that which it knows, with a degree of interdependence an entirely natural part of a stable societal structure – the weakness lay in the magnitude of the gap.

The post-isolationist Francoist era, and particularly subsequent era of modern democracy, opened the upper tiers of Spanish government (centre and autonomous communities) to the external world, here as global capital. Unfortunately such capital does not scale down below regional level – does not scale through the entire Spanish administration: The lower, especially mayoral, tiers maintain largely self-dependent financial structures, as if little had changed since the isolationism of the 1940s. Consequently as access to global capital – external debt – has become more important, those tiers of government without it have been left behind, resulting in the huge gap now found between the Generalitat’s finances and Barcelona’s. In so far as external capital supports industrial economic development at scale, the inequitable distribution of such capital is relatively unimportant, since only the upper tiers of the administration tend to invest in such projects. Indeed the societal structure need not be aware of the inequity – local public transport operators have simply come to expect than regional government will provide the infrastructure they operate upon. To understand the significance of the gap we first need to understand the broader, non-monetary, significance of the external in the administration of Spain.

The philosophical Idea of Spain, as introduced in The Act of Referèndum, is predicated on Spain’s paradoxical relationship to its external. A paradox that gives Spain its enduring stability on the global stage, ensuring Spain constrains its internal ruptures within itself, and fosters a robust, yet remarkably flexible, internal state that can function without a formally structured devolution of powers. But as a consequence, the injection of any element of the external into a necessarily internal institutional structure, risks instability – especially where such an external influence propagates skewed counter-balances that interfere with the internal art of public competition. The modern era is not the first to inject significant amounts of external finance – Habsburg Spain was bankrolled by European financiers (on the presumption of Spain’s continuing colonial gold-stream) – but the modern case is notable because of its skewed administrative distribution.

The first modern external capital, in the 1960s, flowed through a relatively centralist Spain. It is intriguing to hypothesise that the subsequent fall of Francoism and the rise of regional power was in direct response to the rest of the societal structure attempting to counter those external finances of the centre. More precisely, that external finance exposed Spain to external shocks, not least the oil crises of the 1970s, which required a more externally modelled administration to deal with – and thus the more Spain relies on external finance, the more it needs to modify its internal structure to mimic that of the external that provides its finance. Not least a more equitable flow of external finance through the entire institutional structure. Reality is invariably more complex, but the pattern suggests that the internal art of public competition may have always struggled to manage the selective injection of external capital.

Even more intriguing is the consequent rise of autonomous communities as (or at least towards) geographic totalities – entities with a focus upon a whole territory, not specifically a focus on the functions that are knowable to the community’s administration, as is their logical role in the underlying societal model. The difference is subtle, because it can be countered that (both in culture and proximity) autonomous communities know their own territory better than central government, and thus should logically preside over all the functions therein. However that counter-argument can be deployed against the autonomous communities to illustrate their dominance: For example, Catalunya as a whole has no direct interest in a new metro line that is wholly within metropolitan Barcelona, yet such a line can only be funded by the Generalitat – ergo the Generalitat wields disproportionate financial power. That such a disproportionate financial power derives from a need to counter the initial skewed external finance at the centre, is a more complex hypothesis. As is the further caveat that because global finance markets favour the whole nation over the region within, even by continuing to constrain the financial structures of the administrative tiers beneath them, autonomous communities can never adequately match the financial clout of the centre. That the very involvement of external finance skews Spain towards its centre, skewing the art of public competition.

The next essay in this sequence, On the Wings of Hope, ponders the interplay of risk, debt and optimism, with specific reference to the expansion of Spain’s high speed railway network. It summarises the renaissance of AVE expansion, reconciling different approaches to risk in the construction of transport infrastructure. The interaction of external finance within the Spanish societal structure is hypothesised as reliance on external debt with no internal counter-balances – a virtual economy characterised as Gross Domestic Optimism. The postscript asks what it means to invest in state, with reference to two evolving models – people and perception. Continue reading…