Basic guide to understand the Royal Decree | Spain

In the most acute phase of the health crisis, when the European economy began to see the ears of the wolf with falls in GDP, stratospheric deficits and other secondary effects of the induced coma to which governments have subjected their economies, the EU approved a bazooka of 750,000 million euros, half in credits and half in constant and sound aid for the most affected countries. The never seen: fiscal rules were suspended and Brussels put a candle to Keynes. Spain and Italy will be, in principle, the most benefited if the Spanish-Italian chestnut is as spectacular as it seems: a little more than 140,000 million will arrive in Spain in six years, half in direct transfers that do not have to be returned. Keynes used to say that in the event of a depression, when the demand sinks, the state must take command and, if necessary, dig trenches to cover them again: some villain says that Zapatero’s Plan E was the exact definition of that Keynesianism of broad brush.

There is supposed to be more this time finesse: European funds will have to be accompanied by reforms and, rather than growing again, they will allow for better growth; They are focused on digitization and environmental policies and, if the reforms really go ahead, they will raise the growth potential of the Spanish economy, which is lacking. The music, in short, sounds great, at least on the score. Now we have to get down to business: that is the objective of the approved Royal Decree, with the usual hardships and a new episode of the Apocalypse in PP version (which qualifies it as “Peronist” and alerts to the risk of corruption and generating a clientelist bubble) .

The decree, in short, seeks to undo the bottlenecks that may exist in the Spanish Administration to streamline management and allow EU funds to activate the long-awaited recovery. In 61 pages a kind of legal envelope is raised to absorb that fine rain of funds. These are the four great doubts it generates:

1. Fuzzy governance. Vice President Nadia Calviño, the face of Spain in Brussels, was supposed to lead the operation. But it does not seem like it: a very vertical structure is created, with Calviño and President Pedro Sánchez (and his head of the Economic Office, Manuel de la Rocha) very above, but the steering wheel is for a semi-unknown: Mercedes Caballero, general director of European Funds, is the new rising star of the Spanish Administration. A senior official with management experience, basically of the structural funds and the Common Agricultural Policy, with a very good reputation in the Treasury and with a lot, a lot of personality. You will need luck: the pressures have already begun, both with Moncloa and with the autonomous communities (which will manage a good part of the money), and this has not even started.

2. Streamlining. The decree promised them happy to end management bottlenecks, but it seems to speed up little. And the operation is already delayed. The European Commission has been changing the guidelines and in the end the funds must be governed by competition and state aid policies: in some cases, bars and deadlines are lowered, but Spain has not finally decided on a public company, which would have allowed impose private management criteria. In addition, the public sector will have to incorporate many officials to manage that money at the appropriate speed: despite the story of the center-right, the Spanish public administration is in the bones and is the oldest in Europe, only behind Italy. And the procedural culture of the civil service is going to collide with the need to streamline procedures to spend all the money, and to try to spend it well.

3. Don’t expect me in April. Spain has a mediocre performance in the management of European funds. And now many more are coming: the final photo of the Spanish plans and associated reforms will not be ready until April, which means at least the entire first quarter in white. Then the first exam from Brussels will come. If Spain approves it, the money could begin to arrive in the summer, and it is very likely that the first projects will not be tendered until the end of the year. Moncloa points out that the money is already budgeted and that Spain can advance part of the funds, but in short, its impact in 2021 will not be as expected. Health management began to relax when vaccines appeared: the reality is that there are six very tough months ahead. The same thing happens to the economy: the entire Government is absolutely aware of European funds, but before that fine rain begins, a very difficult economic semester awaits Spain.

4. Biblical parables. The Government estimates that the economy could grow by 9.8% if Spain spends as it has to spend the more than 20,000 million budgeted this year. The decree launches the PERTE, strategic projects, a kind of VIP plans that will have absolute priority. And the new regulation also bets “on public-private collaboration, which can lead to multiplying the amount of funds by four or five,” according to De la Rocha. All of this seems like a reissue of the biblical parable of the loaves and fishes: “The reality is that we are facing a formidable management challenge and that analysts have gone from initial enthusiasm to skepticism,” says José Moisés Martín Carretero, economist and member of the Advisory Council of Calviño.