Why Valencia is paying the high price of rampant political corruption

With public debt levels of around €40 billion ¨C equivalent to 40 percent of its GDP ¨C the regional government of Valencia is only able to pay its bills thanks to financing from a special fund set up by the central government.

The region no longer even has a financial system: it has lost its CAM regional savings bank, and the Banco de Valencia now belongs to Catalonia¡¯s CaixaBank. The regional government has closed down broadcaster Canal 9 after allowing it to run up a €1.2 billion debt; it has sold the Terra M¨ªtica theme park, along with Castell¨®n airport; and it is selling off flagship projects such as the City of Arts and Sciences and the Ciudad de la Luz film studios.

A child born in Valencia today comes into the world owing €100,000, while around a third of the region¡¯s population, spread across the three provinces of Alicante, Valencia and Castell¨®n, lives close to the poverty line.

A child born in Valencia today comes into the world owing €100,000

As Valencia prepares to go to the polls at the end of the month to elect a new government, around 150 senior elected officials face trial for corruption, among them two former premiers, four deputy premiers, two speakers in the regional parliament, 14 regional deputies, the mayors of the three provincial capitals, and the leadership of the ruling regional Popular Party. Estimates put the amount stolen from public coffers at around €12.5 billion.

¡°In no other region in the developed world are so many politicians facing investigation or trial for corruption. We¡¯re not talking here about a few rotten apples: the entire barrel is in a state of decomposition. The PP in Valencia has acted not so much like a political party as a criminal organization,¡± says journalist and writer Sergi Castillo.

Santiago Grisol¨ªa, a leading biochemist from the region, says he is angry. ¡°Our politicians are simply not up to the task: the parties say that they are here to serve us, but it just isn¡¯t true. How can they deny these off-the-books payments when everybody knows it¡¯s true? If you deny reality, you can¡¯t address the problem,¡± he says.

¡°We pay our politicians very badly. There are three kinds: the heroes, the crooks, and the mediocre,¡± says Jos¨¦ Vicente Gonz¨¢lez, a regional business leader, without specifying how many of each are to be found in Valencia, the PP¡¯s second-biggest sources of votes.

¡°It¡¯s not entirely accurate to describe them as a mafia, and neither are they a caste [the term used by anti-austerity party Podemos to describe Spain¡¯s politicians]. They are cliques, they look after each other, and they are the elite, who in principle try to combine their own interests with everybody else¡¯s, and in the end, no longer represent the electorate, putting their own objectives first,¡± says Jordi Palafox, professor of economic history at the University of Valencia.

What puzzles many people outside the region is why voters in Valencia continued to reelect politicians who were already facing accusations of corruption.

What seems to be clear in Valencia, as in many other areas of Spain, is that ethics have not been the deciding factor in voters¡¯ minds when deciding which party to put into office. Some observers have suggested that all the political parties have become distanced from the people they are supposed to represent, and that in turn, voters no longer believe they can change things. Others point to a decline in community values in a society that has always been individualistic, a place where people do not look beyond the interests of the family. People here only began to turn against politicians when the money began to run out, when the bubble burst.

¡°We were the first to ask ourselves what we had been doing. After so many years, people had begun to accept that corruption was somehow normal. We forgave everything, until businesses started to close. Now people feel ashamed,¡± says Luis Aguil¨®, chief counsel at the Valencian regional parliament.

¡°We have made mistakes, we have been too focused on selling our economic management, and we began our democratic regeneration too late. We took too long to understand that our economy cannot depend so much on the property sector. We have also mismanaged our savings banks, the regional broadcaster, and other public companies,¡± admits Jos¨¦ Ciscar, the deputy premier of the regional government.

While Valencia is not the only region to have committed excesses, some of the things that have taken place here beggar belief. Politicians who made great show of their piety stole money that had been raised by charities to build a hospital in Haiti, or to help women in Africa with AIDS. Neither did they have any problem pocketing donations supposedly destined to help people in need in Valencia itself.

All of which raises the question as to whether the PP wouldn¡¯t do better to simply dissolve the Valencia branch and start again with a completely new set of names that have no association with the corruption of the last two decades. The party accepts that it will probably lose its absolute majority in the elections on May 24, but will still manage to hold on to power, despite a significant proportion of the electorate¡¯s disgust with practices that were not simply the result of one or two greedy individuals, but part of a systematic process to finance the PP at the national level.

¡°Nobody is more interested in getting rid of these people than us. Alberto Fabra [the head of the regional government] understands that the electorate demands exemplary behavior, and the regional government¡¯s own lawyers will be leading the prosecution against wrongdoers. From the premier down to the last councilor, we have all engaged in self-criticism,¡± says Ciscar. Judicial investigations point to highly organized structures whose job was to suck money out of public works projects, but Ciscar insists otherwise: ¡°There is no relationship between public works projects and corruption.¡± In other words, it was all the work of a few individuals.

Beyond discussions about the extent of the graft, it is worth taking the time to look at how the construction boom of the last two decades has impacted on Valencia. Aside from the huge projects supposedly aimed at boosting tourism, dozens of elected officials in villages, towns, and cities along the coast made fortunes out of issuing building permits and rezoning areas for construction. After selling their agricultural land ringing towns, many farmers bought new plots further out into the countryside expecting to sell that for construction. ¡°Those of us who raised objections about the savings banks¡¯ investments in construction were told that company directors working in London would come to spend the night in Castell¨®n, or that Norwegians were queuing up to buy a house here,¡± says Jordi Palafox.

¡°In less than 10 years, the coastal strip has gone from 10 percent occupation to 50 percent. Today, 82 percent of the population of this region lives in the seven percent along the coast,¡± noted Jos¨¦ Miguel Iribas, a sociologist and expert in town planning, shortly before his recent death. ¡°This was a catastrophe waiting to happen: this is the most sought-after land in Spain, thanks to its extraordinary climate and impoverished local councils looking to make money quickly by rezoning land. A lot of the time, the property developers didn¡¯t even have to bribe officials, they just told them that they were going to put their town on the map by building thousands of homes. The land was sold at bargain-basement prices, and now many local authorities are waking up to the reality that they cannot cover the cost of health and education, as well as other services in these new housing developments. But few mayors understood at the time just what they were taking on.¡±

In short, a bad business, both for the environment and Valencia¡¯s small towns. ¡°The local councils can¡¯t do anything about this, because they are unable to slow down the shark that is the market, and anyway, this is no longer just about town planning. Demand will return, and with it pressure to sell land. The battle isn¡¯t over,¡± warned Iribas.