Seaplanes and tech gods: Spain’s drive to dish out $84 billion of EU cash

Seaplanes to combat forest fires are red-flagged as environmental hazards. COVID-stricken companies seeking relief must have a strong balance sheet in recent years.

According to interviews with business associations, government officials, companies, and consultants, Spanish and EU bureaucrats’ calls for 77 billion euros ($84 billion) in EU pandemic recovery fund grants are conflicting.

Spain is the EU’s experimental project for disbursing grants from the largest stimulus package ever, 724 billion euros, including loans. It was the first to meet Brussels’ policy standards and get its financing, demonstrating Europe’s potential.

We’re guinea pigs. “Everything tested in Spain will be applied to other countries,” Economy Minister Nadia Calviño stated in February. “But it is in our interest that these funds are used to the maximum.”

As of December 2018, the government had allocated 23.5 billion euros a year into the payment process. Given the EU and Spain’s end-of-year deadline to grant all 77 billion euros, that’s slow.

A February Bank of Spain survey of 6,000 enterprises indicated that 16.5% sought for grants and 7% were granted. The Madrid-based Esade Centre for Economic Policy, which analyzes pandemic recovery money, estimates that just 9 billion euros have reached businesses allocated funds.

The EU has frozen a tranche of Italy’s 69 billion euros in grants and requested explanation on Rome’s attempts to reach “targets and milestones” to unlock the money.

The southern European nations’ struggles to access finances and put cash into the real economy could test the EU’s stimulus plan, which aims to establish a greener, digital, and self-sufficient post-pandemic Europe.

Spain’s government told this piece that it was following EU standards to “combine agile management of the funds together with guarantees of control” and that approximately 300,000 Spanish projects have been sponsored.

New Italian Prime Minister Giorgia Meloni accused Mario Draghi and Giuseppe Conte for the delays.

Spain’s fund-control procedures were approved by the EU and Madrid, according to the European Commission. It stated that the countey’s plan is on schedule.

After two years of preparation, Madrid’s Minerva tech system, required by Brussels to assess grant applications, was launched in February.

The system, named after the Roman goddess of wisdom and justice, can scrape millions of data points to look for conflicts of interest in fund-seeking companies.

Coffee audits applications and tracks money, demanding lots of paperwork from companies.

“There are bottlenecks at all levels,” said Manuel Hidalgo, a senior fellow at the Esade Centre, adding that the current task of disbursing billions into an economy has collided with a public administration “in the 19th century”.

“This could make companies dislike these forms of help economically.”

Nanosats hit Red tape
Successes exist. According to the Economy Ministry, almost 180,000 small firms have received funding from a 3-billion-euro program to create websites or payment networks.

Automation allowed the funds to be distributed in five or six months, proving the new technologies’ efficacy.

According to CEOE, Spain’s largest employers organisation, the initiative has only released a third of the digital project’s money.

According to small business associations Cepyme and ATA, many companies have abandoned grant applications, especially smaller ones without the means to handle the paperwork.

Julian Fernandez, CEO of Madrid-based Fossa Systems, which makes lightweight nanosatellites, had to dedicate one of his 24 staff to paperwork to get a 300,000-euro grant. He recruited a government liaison consultant.

“If I had to start a company again I don’t know if I’d do it in Spain,” said Fernandez, who is waiting for the final government approval for the complete grant to help pay for his company’s next satellite. “For less effort and bureaucracy you can get millions for tech in the US.”

Forest firefighting
A Spanish government official told Reuters that EU authorities first denied seaplanes’ forest firefighting proposal because they utilize harmful fossil fuels.

According to the confidential official, Spain convinced the Commission that fighting fires outweighed CO2 emissions after talks with Brussels.

The official said Brussels prevented sustainable agricultural tractor financing.

Celia Ferrero, ATA secretary general, said many had stopped out of asking for assistance after being expected to present proof of a healthy balance sheet for up to five years, whereas many incurred losses during lockdowns.

Two senior Spanish government workers say work has increased fivefold and exhausted public officials. They alleged burnout drove some high-ranking officials to enter the private sector.

Tragsatec, a state-owned consultancy business, was hired in February for 70 million euros to support regional administrations.

($1=0.9147 euros)