Although Murcia prides itself on a high degree of independence from central government on day-to-day issues, it is ultimately beholden to Madrid for many of its grander economic plans. In a candid interview, Murcia president Ramón Luis Valcárcel discusses this thorny issue and talks about the future for Murcia and its smoothing of relations with José Luis Zapatero’s Socialist government following the reversal of plans to divert water from the Spanish Pyrenees 400 miles north.
Q What can Murcia offer foreign investors compared with other regions of Spain such as Andalucía or Extremadura?
A We are undergoing a period of economic expansion at a regional, national and European level, and we are well situated inside the Mediterranean basin and at a major transport hub, both by sea and inland. The region has a totally modern highway network linking us with the whole of Spain; we will soon see a fully integrated, high-speed train network, the AVE, linking us with Madrid, Granada, Seville and Faro, plus connections via Euromed with Barcelona and the rest of Europe. The new Albacete-Alicante-Cartagena rail link will not only ferry passengers but also carry freight in and out of the Cartagena port terminal, which will link directly to Madrid and Barcelona.
The region also has a very good airport at San Javier, which transported more than 1.5 million passengers last year. The airport is very limited, however, because it is essentially a military airport. We are expecting the go-ahead for a new international airport at Corvera. We have expropriated the land, done the necessary paperwork; we are just waiting for the final signature from Madrid, which we expect to have within weeks. The airport also caters for exporting goods and will be strategically placed as a cost-effective alternative landing ground for transatlantic flights that are currently using Gibraltar, which is congested and has some visibility problems. Corvera International Airport will be open to private participation as well as that of the state – we welcome foreign investors to come and share in this exciting opportunity and have no nationalistic ambition to control the running of its services.
Another important factor is the high level of qualified, highly motivated and skilled labour that we have and the socio-political stability we enjoy. I personally have an excellent relationship with the unions. Our government, business community and unions are constantly signing new agreements: in 2005 we signed the education pact guaranteeing seven years of peace with teachers; this year we signed another accord with the health sector. I am a democrat and I firmly believe in participation and dialogue, not only with the unions but with the universities and any groups that want to engage in discussion. There is a sincere culture of dialogue here that is not contrived.
Q Immigrant labour makes up about 10% of Murcia’s workforce. Is there a workforce surplus or deficit in the region?
A Murcia created 100,000 jobs in 2005 and reduced unemployment by 7000. These figures are not bad considering that in 1995 we had almost 18% unemployment. Today, we have practically no unemployment – we are at the technical unemployment level of between 6% and 7%. We are very proud of these figures, which reflect the strong economic growth that we are experiencing. We have a situation in which we have sufficient immigrant labour and to invite more would run the risk of creating social problems, which fortunately do not exist here as in other regions of Spain. Immigrants come here to work and we guarantee them free healthcare and education. We have two types of immigrant here: those from Ecuador and those from the Magreb. It is easier for the Ecuadorians to integrate because of the language and culture, and we make every effort to integrate the African labour, which tends to be more migratory by nature.
Q In which sectors are these jobs being created?
A The jobs are mainly being created in the service and construction industries as well as agribusiness, although we are likely to see a slight slowdown in the agriculture sector next year. There is a certain climate of uncertainty due to the issue of water and how it will be delivered to farmers.
Q How have changes in EU subsidies affected agriculture in Murcia?
A The impact has not really been felt here because Murcia’s agriculture sector was not reliant on funding. Our agriculture, mainly fruit and vegetables, is extremely intensive and profitable, and the kind of EU subsidies on offer have been directed more towards dry extensive farming, such as olives, almonds or cereals, of which we have little. Murcians take risks and an entrepreneurial spirit has developed. A century ago, Murcians did not have language skills, tourism or construction sectors – our economy relied on agriculture.
Murcia was one of the global centres for silk and was covered in Mulberry trees in the past centuries, competing with China and the rest of Asia. We Murcians are very conscious of our strong work ethic and rich and fertile land, and the quality products that we produce have allowed us to become world leaders in fresh and preserved foodstuffs. We realise that we always have to be one step ahead of the game because an increasingly competitive market is developing from countries organising themselves quite well.
Q What is your government doing to create a sustainable future for Murcia?
A We already export €30m worth of organic food that is produced by 800 farmers and more than 100 businesses. This is all destined for the export market with about 75% ending up on UK supermarket shelves. The organic food market is still a fledgling one but farmers here are feeling strong economic benefits that come with these high-quality products. At the same time as demand is increasing from countries such as the UK, we are also seeing more demand for these products here in Spain, where public awareness is starting to lean towards a healthier lifestyle and diet.
Our renewable energy sector is booming with a brilliant future thanks to our Escombreras refinery, which is one of the largest in the Mediterranean basin, attracting significant investments from abroad. To give you an example, US company AES Corporation is spending €740m on a 1200-megawatt combined cycle power plant, which will be fully functional by the end of this year. Many other foreign companies are setting up combined gas, on and offshore wind farms, and solar power stations in the region.
Also, Endesa, Iberdrola and Unión Fenosa have undertaken a large construction programme of gas turbine-based, combined cycle power plants totalling about 26,000 megawatts. We see ourselves as a net exporter of electricity within the next five years.
Q Is Murcia in danger of allowing the construction boom to get out of control; does this need to be slowed down ?
A We must be prudent about not creating an extra one million homes here without the proper infrastructure to go with it. That means we have to decelerate the construction boom slightly and spread out the building process over more time. This will benefit our economy in the long run and reduce the risk of killing the goose that laid the golden eggs. That is why we have chosen to protect our coast and we have had to turn down some construction projects that were overstretching some local communities’ infrastructures.
Q As water becomes more of a sought-after commodity than a utility, it seems logical that the business of distributing and producing water will increasingly be run by private enterprise as opposed to public entities. Do you see this happening here in Murcia?
A Yes, I think you are right to point this out. Murcia’s Public Water Agency will, in effect, commission private construction companies to build new desalination plants and infrastructure, and sell on the water to our local councils, for whom we will guarantee payments.
Q You were a loyal supporter of José María Aznar’s previous government. How is your relationship with the new government of José Luis Zapatero, particularly since changes were made to the National Hydrological Plan affecting Murcia ?
A First, José Luis Rodríguez Zapatero’s centre-left government has not done our region any favours. The project to bring water from the river Ebro in the north was approved by the courts, tenders have been granted to the construction companies and building had already started on the canal infrastructure. Despite this, a political decision was made not to allow water to be brought from the river Ebro to the Murcia region. As the Socialists have a minority tri-party government, Mr Zapatero ceded to political pressure from the Catalans to block any flow of water from the river Ebro.
We will not allow our economy to be compromised by this political decision so we have entered into a phase of setting up desalination plants to counter the decision until we see a change in the Spanish government that will allow us to continue with the Ebro project in the future. The government has given us ‘water banks’, where farmers pay for water at an ATM machine corresponding to the amount of water they need – but these banks are empty. We built some desalination plants under the previous government but we need to build more, and this all costs money and is a drain on our resources.
Q Some politicians say that the wars of the future will not be fought over oil but will instead be fought over water. How does Murcia plan to deal with the water issue, which has been exacerbated by the Ebro decision ?
A Our relationship with Madrid started off on a bad footing when the Ebro tap was turned off and created confrontation between our regional government and Madrid. We are now having talks with the minister of the environment, Cristina Narbona, to resolve the situation because the government water plan is not working and people are complaining that there is not enough water and that it is too expensive. By confronting Madrid, I can gain many votes here in Murcia but right now what we need is water not votes. This means that it is in the interests of the region to negotiate a compromise with the Spanish government.
The compromise will mean that Ms Narbona will pay for some of the desalination plants and we will also meet some of the costs of new plants, providing we can take control of the water that we produce in the region.
Although political changes in Madrid have led to a delay in infrastructure projects in Murcia, we are committed to regional growth and economic expansion and our projects will go ahead. The Spanish government is now looking at 2019 for the completion of these projects, such as the high-speed rail network, instead of 2012.
We are now trying to speed up the infrastructure process through negotiations with the Zapatero government to bring the date forward to 2011 to keep up the pace with our booming economy and population. Our regional government is even prepared to pay the interest on such projects in order to see a more timely completion. We are in the process of drawing up a binding agreement with the ministry of development to define a budget and timeline for our infrastructure projects.