On the Wings of Hope

This essay 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.

“On the Wings of Hope” is the final essay in a sequence of four 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 third examines how the art of public competition functions when one of its most important competitors is absent, using the case of post-Independència Catalunya.

AVE or Bust

Given all that has so far been described in this sequence of essays, it should be self-evident that grand public infrastructure, of the type Catalans and Spaniards came to expect in the early 2000s, can no longer be funded publicly. That the Generalitat de Catalunya’s post-Independència hiatus merely emphasised a reality first exposed by the 2008 Crisis. There is some evidence that the Generalitat, the regional government of Catalunya, had already shifted policy prior to the Referèndum, for example its 2017 proposal to replace the tolls levied on users of recently built strategic roads (those still under concession), with an annual “vignette” (tariff) paid by motorists for access to all such roads – which would generate a constant revenue stream with which to fund subsequent network development. With half these roads still administered centrally by Spain, Catalan policy would have to be shared with the Spanish government, which is itself deciding whether to maintain tolls when concession periods end. The 131st President of the Generalitat‘s personal commitment to the non-payment of tolls during 2012’s #NoVullPagar campaign, highlights how road tolls are a thorny issue in Spanish politics, not least in the wake of the recent financial failure, and consequent government rescue, of several high-profile highway concessions around Madrid. Funding the construction of new roads via private toll-raising concessionaires is broadly accepted (even if only by historic precedent), while perpetuating tolls on roads that are ostensibly already paid for resembles state taxation (even if the proceeds are hypothecated into transport projects). The resulting shift between private and public sectors has complex, long-term socio-political connotations. In the meantime, the evidence suggests that, unlike the Generalitat de Catalunya, the government of Spain has not accepted the “reality” that grand public infrastructure can not longer be funded publicly, and that it only need better risk management to achieve its pre-Crisis policies, as best illustrated by its current approach to high speed railways:

For several post-Crisis years Spain pursued ugly engineering compromises to maintain the illusion (in its Anglo-Castellano meaning of both ambition and deception) of a high speed railway building programme it could no longer afford. For example, by re-using historic railway alignments, even where those alignments mock “high speed”, as is the case for the ongoing integration of the 30 km/h Loja curves (on the line to Granada) into a network intended to reach 300 km/h. The “AVE” from Valencia to Castellón epitomised the problem: Implemented by dual-gauging (Iberian and International) one of the existing two tracks, (International gauge) AVE trains operated no faster than other trains on the same track, thus offered no additional utility beyond what could have been achieved by simply passing the AVE rolling stock through a gauge-changer. The claim that Castellón had been added to Spain’s high speed railway network was met with a good degree of Valencian cynicism, and did nothing to assuage the view that the government in Madrid ascribed a low priority to the Mediterranean Corridor (along the east coast).

2018 heralded a return to pre-Crisis high speed railway building, particularly in the north of Spain where none of the intended network had been completed beyond Valladolid – the Crisis having left an eclectic mix of disconnected infrastructure in its wake, from stations served by no trains, to depots maintaining no rolling stock. Works agreed in 2018 include Bilbao station, the most expensive railway station project in the history of Spain, a 720 million euro investment that makes the 240 million euros lavished on the temple to AVE that is Zaragoza Delicias, look cheap.

Compared to Castilla, the geology of northern Spain increases construction costs, as the Norte discovered in the 1860s – its route from Madrid to Irun cost around 550 thousand Pesetas per kilometre, compared to 208 thousand Francs per kilometre from Madrid to Zaragoza (the two currencies directly comparable because the Peseta and Franc maintained parity via the Gold Standard – although it should be noted that the Norte was actually dealing in “Reales de Vellón”, in a decade when the Spanish currency changed twice). Modern engineering techniques, such as the New Austrian tunneling method, may make many AVE route alignments possible, but such construction carries increased geological risk, as epitomised by the Pajares tunnels on the route to León and Asturias: Construction costs have more than tripled, to over 3 billion euros, as has construction time, from the five years anticipated in 2003 to perhaps twenty – while water leaks from punctured aquifers, and relentless landslides, raise doubts as to whether the line will ever open to its intended specification.

Risk is not necessarily so visual: For example, in the case of the failed highway concessions around Madrid, land purchases were budgeted on the assumption the land was categorised as rural, however that land was ultimately judged urban, greatly inflating the cost of acquiring it. Similarly, project management, even of relatively unambitious projects such as Girona’s concrete box of an AVE station, can get bogged down in local political disputes – not to mention the equivalent project in Barcelona, which was stalled for several years by anti-corruption audits. That ADIF-AV budgeted half a billion euros in 2017 to deal with litigation by its own construction contractors paints a dismal picture.

In 2017 the Spanish government legislated to moderate risk in public contracting: To spread risk across more contractors by encouraging the participation of smaller contractors through the contesting of more minor contracts, splitting large contracts, and measures such as ensuring prompt payment and improving transparency. And in parallel, to transfer risk to contractors, notably by limiting the modification of contracts with the private sector to no more than 50% of the original bid price. On genuinely risky projects, this dual policy of spread and transfer naturally tends to contradiction, since only larger companies can carry larger risks. Mid-sized construction companies remain unconvinced that the Spanish government’s approach to procuring transport infrastructure has actually changed. That the new legislation is simply patching up the cracks in the original (internal societally structured) model, is borne out by the counsel of the larger Spanish construction companies, who consider risk as a far more fluid, flexible component of project financing than the government: Shifting risk to reflect the capacity of each sector to manage it, adding value through the private sector management of projects over a longer period than the political electoral cycle, and conversely reacting faster than the public sector to offer short term flexibility. Not least because of their temporality, these are unmistakably lessons from the external, globalised environment in which these companies now operate.

Since the Crisis of 2008 Spanish construction companies have learnt to thrive in markets outside of Spain, their global dominance now second only to China: Their technical competence is not in doubt, nor is their ability to work effectively in different societal and administrative environments. Which makes their domestic environment all the more intriguing. Spanish national transport infrastructure is theoretically ripe for the application of externalised risk models:

• The Spanish construction industry are both willing and able to adjust to more external organisational models. That adjustment does not necessarily suppose a radical change in epistemology. Rather that the internal societal model of knowable groups has the potential to be arranged differently, should it be exposed to a different environment.
• The existing internal societal model has never worked well at the scale of national transport infrastructure, as described in The Expectations of Competition. Indeed the purpose of such transport infrastructure’s “presence” is precisely to bind groups that cannot know one another through the base societal “family” model.
• The theological root of infrastructure presence – the boundary at which the state manifests the external (God) in nature – is surely just as capable of delivering alternative external concepts.

The inhibiting factor is elementary: The nation of Spain, by Westphalian definition, cannot be global. Spain, like other sovereign nations, is predicated on its ability to differentiate itself from the global whole. Since every element of the external that Spain accepts weakens itself as an entity, it is crucial that it uses external elements to strengthen itself as an entity. Since losing the European intellectual hegemony to the Dutch Republic, the question of what strengthens itself as an entity has plagued Spain, because its internal strength manifests in a different manner to the way the external (at least northern European) world measures strength. AVE is a contemporary example – its presence strengthens the internal idea of Spain, while its utility strengthens the external notion of economy. In practice a compromise between these internal and external assessments which perhaps satisfies neither adequately. A relentless tension – here between presence and utility – rather than a happy equilibrium be found, with respite ominously implying isolation. Given the stakes, exposure to externalised risk is moderated by the state: Unfettered external finance could weaken Spain more than it strengthens her, or might negatively alter the balance between presence and utility.

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Absolute Devolution

“Absolute Devolution” is the fourth essay in a sequence that explores the current Catalan independence process. The first essay introduces The Act of Referèndum. The second, on hope, 1714 and All That. The third, Patria and Patrimonio, on state. This essay characterises power.

The Battle of Ciutadella continues in perpetuity. Sure, they stormed the gates. But only to raise both flags upon Prim, the Catalan-born architect of Spain’s 1868 Glorious Revolution, the subsequently assassinated herald of a particularly turbulent period of political experimentation, from monarchy to aristocracy, via canton to federation, and then back to monarchy. The Iwo Jima moment captured by no one, because no one hopes for six years of tumult to restore the initial state. Sure, they were there. The core Madrid media all but glued to the stage behind, where the “Spanish” (many, but by no means all, Castilian) crowd politely listened to speeches of unity. The more separatist (Catalan and Basque) media camped outside the parliament ahead, where a dozen vans of “Mossos d’Esquadra” (Catalan police) waited apprehensively behind barricades for a riot that never materialised. Even the new-left-biased “Sexta’s” interest waned at the dearth of televisual anger. All with a story to tell, just not this one.

Bias is truth, because – in state – knowing is social. The disunity of a people, a state, reflected in the distribution of biases, the breadth of truths. To bridge disunity is to become an observer with no tribe. Hard enough within a state, ’tis the bane of a foreign correspondent, already lost between the language (as culture) of their audience and the language of that on which they report. Now transpose philosophies, and add a final twist: The external projection of an internal certainty, for an internal which is inherently not-so-certain. Welcome to Spain. Or in the ambiguity of Catalunyian, “Hola República Suspensus”, which roughly translates into English as “please see terms and conditions” – and into the Corsican separatist French of Charlie Hebdo as, “nous exigeons un debat”. These essays are thusly biased, not least by a language that has come to betray its assumptions – a hope of communication that is necessarily never quite realised.

British policy-making is causal and predictive, as befits its dominant philosophy. Policy is analysed or discussed, the method nuanced by the government of the day, then fixed in law. The aim of the process is to implement a robust piece of legislation, not “bad law” full of ambiguities that subsequently require judicial review or referral back to the legislature. This practice presumes a degree of stability or predictability in the target of the policy, and thus inherently struggles to manage rapidly-changing policy areas. Traditionally most obvious in technology, now the bane of a Brexit process that embodies both instability and unpredictability on a huge scale. The pragmatic short-term strategy of British government has been to centralise powers, so that it is best able to exert control over that which it cannot reasonably hope to legislate robustly upon. Brexit’s expected “return of powers from Europe” has thus stalled the devolution of powers promised in the wake of the 2014 Scottish referendum on independence. Not just for Scotland, but for the less obviously separatist regions of England, especially in the North – those that had progressively seceded power to the Place of Westminster during the 20th century, power that, in the 21st, Scotland had shown was possible to take back.

At its root, Spanish policy-making is far more fluid than in Britain. Spanish legislation is more solid than raw policy debate, yet often retains fluidity, as if a live trial upon society: Laws that fit society gradually take on a popular certainty, while those that cannot be accommodated by the social order are gradually reworked. The Spanish legislature is considerably less dependent on absolute power than the British, because it rarely has to enforce anything upon its society. A sense of absolute power is only important in the Spanish state’s dealing with the external. International law and relations presume sovereignty, absolute dominion, even if the reality within is more complex. The European Union routinely strains this structure by its reliance on the supposed absolute power of sovereign member states to implement policy directives, with no particular regard for the quirky transactional structures of policy-making within states. European policy directives that Spanish society can’t easily accommodate are implemented in a state of flux. The implementation of the European Union Services Directive to Spain’s taxi sector provides an example:

The 2009 Services Directive’s principle of “freedom of establishment” inverts the Spanish social principle of “visto bueno”, to ask permission beforehand. Unfortunately that inversion was not first applied to government, which continues to operate on the implicit assumption of “visto bueno” – that government will be given the opportunity to fix problems in law before they actually become problems, exactly the opportunity that the principle of freedom of establishment denies them. Now add a taxi business operated on the traditional principle of “autogestión”, somewhat akin to an extended family – its operations protected from other (competitive) agents by locally-administered regulation, built on three tiers of Spanish legislation (Law, Regulation, and Order) and often further augmented by local Autonomous Community legislation. What was thus unlikely to be a simple or socially acceptable policy change was none-the-less implemented with almost naive simplicity: A historically niche class of taxi licence officially named “arrendamiento con conductor”, but colloquially called VTC (“Voiture de Transport avec Chauffeur”), was reclassified as discretionary transport, much like a coach hire. That should have created a pre-booked “private hire” taxi market alongside the existing on-street “hackney carriage” market. In the (then) coming age of Uber and Cabify, services which would make pre-booking (via mobile phone application) as easy as hailing a cab in the street, both markets would merge. VTC licensing had previously been intended for limousine-style operations, far less prescriptive in its regulatory requirements than for regular taxi operations, but limited to a ratio of 1 VTC licence for every 30 regular taxi licences – a limit the reclassification theoretically removed.

Many autonomous communities, notably Madrid, issued new VTC licences, yielding different degrees of liberalisation in their respective local taxi markets. In Catalunya, nothing much changed. The region’s government, the Generalitat de Catalunya, continued to ignore new taxi licence applications, much as it had done for the previous three decades. Prior VTC licences became more flexible, but insufficient in volume to support the envisaged competitive market. The Generalitat’s head of transport merely acknowledges their “restrictive interpretation of the law“, referring to the contentious test of “underlying consumer demand” which a 1998 Order had arbitrarily defined as the 1:30 ratio (of VTC licences to regular taxi licences). Unfortunately such a fixed definition of “consumer demand” cannot reasonably be interpreted within the terms of the original parent Law – a law which must justify regulation within the Constitutional state, and thus ultimately takes precedence over an incompatible Order. So taxi legislation had already been in flux for 11 years prior to 2009. Arguably the entire policy approach had been misguided since at least 1987, when the Law was made compatible for European Economic Community membership: The Law emphasised econometric passenger demand, built on a systems theory conception of transport that de-humanises supply, when the prime policy requirement was to regulate taxi drivers’ working conditions – specifically drivers’ sense of ownership and security, to counter the excessive variability of their work patterns – in short, to maintain drivers’ sanity. European Union technocratic economic policy has consistently failed to understand this prototypical “gig economy“, both Commission and Parliament still struggling with taxi regulation. In the meantime “gig” workers in Barcelona’s internet-era food delivery businesses have already started edging toward the locally familiar model of cooperativism, in search of “economic sovereignty”.

In 2013 the Spanish government acknowledged the principle of “autogestión” – in effect, acknowledged the Spanish social order – and applied the historic 1:30 ratio to the Law (LOTT). Except the ratio had not previously been written into the Law, and it took another two years to modify the more detailed Regulations (ROTT) and establish a consistent body of legislation. Albeit for a now inconsistent reality: Since taxi licences are permanent, even transferrable, the 1:30 ratio could not be retrospectively applied in regions where it had been exceeded after 2009. Indeed, where previously exceeded, the actual ratio would likely forever exceed 1:30 and thus no new VTC licences would ever be issued again. Speculation ran rife, especially around contentious (unsuccessful) applications made between 2009 and 2013 – and perhaps also between 2013 and 2015, a particular messy period on which different regional high courts have reached different judgements. In Catalunya alone, thousands of applications are stalled pending the final judgement of the Spanish Supreme Court – awaited since July 2016.

In effect, the judiciary has been left to determine the balance of policy, a policy even the Spanish competition authority (CNMC) is reportedly split on. With a blurring of policy and law comes a blurring of political and judicial power, especially apparent at the higher echelons of state, where the risk to Spanish society of power becoming tyrannical is greatest. A similar pattern can be found within the structure of political power: As the Catalan crisis deepened, the executive government sought greater consensus within parliament than was strictly required for its governing majority – yielding to the policy concerns of the new-right Ciudadanos and old-left PSOE. The closer to the heart of the state issues become, the more blurred the three core institutions of power (judiciary, parliament, and government) become – an in-built protection against the rise of absolute tyrannical power. The same cannot be seen within Catalunya’s Independentist process because the structure is inherently unable to process a separation from itself – Constitutional Spain has no capacity to leave itself.

Modern Spain’s method of policy-making is no accident: The Spanish Constitution enshrines the “development of fundamental rights and public liberties” in Organic Law. Organic law is essentially a philosophical construction that allows the thing to be based on itself, a principle common to the founding charters of much of the United States, famously guaranteeing the rights of the people, in the people. The fiat currency of law, Organic law is ultimately based on trust. Spanish Organic law thusly emphasises competency, not hierarchy. Humanity, not divine right. Where the unity of Americans can lean on history (inverse prediction) to define “the people” as a continuation over time, Spanish unity has no such luxury: As concluded by 1714 and All That, ilusión is to be lived, not lived in the past. This societal need for a living constitution was moderated by the addition the monarch and military as living defenders of the unity embodied in an otherwise increasingly historic text. Unity is state, because knowing is social. A theme explored further in the next essay, The Moral of Sovereignty. The hierarchical (God-given or feudal) nature of traditional monarchy never intuitively matched the (structural or philosophical) autonomy of modern Spain. While in 1978 the monarch served to transition Spain out of dictatorship by preserving noble entitlement (the social order inevitably frames governance), the monarch’s constitutional role was always likely to grow awkward. Both monarch and military have transpired to be unpopular in Catalunya – the monarchy popularly considered frivolous, the military oppressive. Neither evokes the intended sense of unity. Their involvement may thus make the Spanish Constitution more vulnerable, not less.

Trust applies both internally and externally, which is where the concept of Organic law in the 1978 Constitution melds with the traditional idea of Spain (described in 1714 and All That). That idea maintains different internal and external perceptions, thus what appears absolute to the external, can remain fluid to the internal – the paradox held in the idea of Spain. Independently, each of these philosophical constructions has historically been robust – Organic law in the United States, the idea of Spain for Spain. The combination of these two constructions in modern Spain, each with its logical vulnerabilities, has a complex interplay:

Spanish citizens trust in Constitutional Spain as they trust in themselves, reflecting the broad pattern of Organic law. Yet as explored in Patria and Patrimonio, the transactional model of responsibility within state is functionally broken, and in complex policy areas citizens are trusting to little more than a void called “state”. The common physicality of state should enable transaction from the small-scale family model to the large-scale nation, but this physicality too often fails. “Simulacres et Simulation” are more indicative of Catalan societal reality, whose intensity the formal structured political state cannot match in physicality. The emphasis on the physical within the political state stems from the idea of Spain, which holds the external in ilusión, and rewards participation in the political state with the manifestation of such ilusión. The contention is that this manifestation is physical to avoid confusion with society itself – more specifically to retain the idea of Spain’s fundamental demarcation between internal (as social simulacres) and external (as physical ilusión). A political state operating solely at the functional level of its society could not maintain such a demarcation. The idea of Spain thus inhibits the transactional state which would be ideal for trust in Constitutional Spain. However the idea of Spain cannot be relinquished without removing its philosophical protections. Based on contemporary events, those philosophical protections are critical to the normal function of Catalan society.

Such analysis is flawed by its narrow logic and presumptive interpretations, but gives a general indication of the interplay between the two philosophical constructs that seem to guide modern Spain. The Act of Referèndum both admonished Catalan trust in Constitutional Spain and fatally exceeded the idea of Spain. The expected model of policy-making unavailable, the state dropped into ambiguity. In the absence of an alternative philosophical project, Catalunya lists precariously in unfamiliar waters. Her Independentist manifest still expecting sight of the promised land. And all the while, storm clouds gather across the Iberian sea.