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Monday, 5 September 2011

Sketches of Spain: a country being so much more than only the problem child of the Euro-zone.

I have seen the faces that no bullet can hurt
I have seen the spirit that no bomb can shatter

It is always difficult to start up in the real world again, after you’ve been on holiday, albeit for only two weeks. For this blogger, ‘it ain’t different’, as I was on another planet, called Spain and on the island of Mallorca in particular.

And that meant in my case: no internet, no smart phone usage, no television, no newspapers, no telephone calls, but just me, the mrs and the kids having a ball in the warm Spanish sun. You could call it ‘celibacy’, but this one was very much desired by me: to refill the battery, to fuel up the tank, to reset the computer; whatever you call it.

And what a beautiful country it still is. Of course, extrapolating Mallorca to describe Spain is just as useless as extrapolating Los Angeles to describe the US. But I visited Spain many times and in many places in the past and every time I fell in love with this country and it’s people.

The beautiful people, the warm seas, the dry and hot landscape, the language, the relaxted mediterranean life and the delicious food are always exactly what the doctor ordered for stressed North-Western European people being on holiday leave. Being there for two weeks saves you a half year of your life and helps you to put things in perspective.

But this is not ‘Lonely Planet’s guide to Spain’, but an economic blog. Therefore a number of impressions in random order of importance; just to start up again. And from tomorrow, I’ll be back totally, bringing you the news on the Dutch and European economy and much, much more.

1.     The hotels and tourist homes looked like they could use a paint-job. Is Spain losing the battle for the tourists?

After staying last year October in one of the 4000+ guests, hi-tech, factory-like Turkish hotels and resorts, the appartment where we stayed on Mallorca looked like it needed a touch of paint; actually, a LOT of paint. And mortar. And plumbing. And a general restoration and redecoration. 

And looking at the other hotels and apartment buildings from a distance, this seemed to be no exception. Is this a sign that Spain is losing the battle for the tourists? Or just a sign that Spanish hotels don’t want to spend top dollar on keeping their hotels and resorts up-to-date, which eventually would lead to the first conclusion after all.

It’s the kind of jumping to conclusions that you need to be careful of, but it did FEEL a bit like it when we walked through the streets of El Arenal and Palma de Mallorca. All buildings looked like they had better days behind them and this might scare tourists away in years to come. I don’t know how this is in the rest of Spain?!

Figures from the Spanish national statistics institute ( show that tourism in 2009 was back on a pre-2005 level. Unfortunately, there are no more recent figures available from INE, but I suspect that these might not be much better:

Yields of tourism in Spain (2000-2009); figures courtesy of
Click to enlarge

2.     The excess amount of policemen on Mallorca is a sign of… what?!

One of the most striking impressions of this holiday was the staggering amount of policemen that were crowding the streets of El Arenal and Palma de Mallorca. Policemen on horses, on mopeds, on motorbikes and in cars. Standing at every corner at the street or cruising through the streets. And there seemed to be no reason for it whatsoever: there were no tensions between tourists and locals or between different groups of tourists. No fights, no acts of aggression. During this whole holiday I heard one (!) siren and that was of an ambulance. The policemen themselves behaved very relaxed and were more than pleased to help tourists around.

I couldn’t help, but thinking that these people became police agents to give them a job, not because their duties were desperately needed. Spain, suffering from extremely high unemployment currently, might see this as a way out of the unemployment, but this isn’t a sustainable solution. And when tourism is lagging too, the future for Spain remains difficult, as this is a very important driver for direct, but also indirect jobs.

3.     General price levels in Spain showed that the Dutch Guilder (NLG) might have been sacrificed when The Netherlands entered the Euro-zone.

You cannot help thinking that the general price level in Spain would show the right price level for The Netherlands, had the Dutch Guilder (NLG) not been sacrificed during the introduction of the Euro.

It is a commonly heard opinion that the exchange rate of the Dutch guilder to the Euro should have been about 2 to 1, instead of the 2.20371 that it actually was. I subscribe to this opinion. However, would the former have happened, than this would have put pressure on the Deutschmark (GED). This currency was actually too expensive, compared to the NLG, if you looked at the economic strenght of both countries at the time. For political reasons this didn’t happen and the exchange rate got set on the current rate.

The results of this political horse trade for the Dutch consumer was a price explosion in Residential Real Estate, in prices for hotels, café’s and restaurants and for daily (especially food-related) consumer goods, like bread, potatoes, rice, vegetables and meat.
In many cases, the purchasing power (pp) of a NLG in 2001 is about equal to the pp of a EUR in 2011; an effect that cannot be explained by normal inflatory pressures. Although loans and salaries went up too, many people felt they lost purchasing power over the years; a fact always denied by the powers-that-be.

Walking in a large super market in Spain reminds you of this: a (non-representative) basket of consumer goods seems to cost 70% of the price you would pay for it in The Netherlands. When visiting restaurants and café’s the difference is even bigger: where an average meal for four persons, including drinks, costs you about €90 in The Netherlands, the same meal costs you about half of this amount in Spain.

4.     Salaries in Spain seem to be much lower than in The Netherlands. Why is there still so much unemployment?

On a job advertisement for jobs in the aforementioned supermarket (40h p. week) the gross monthly salary offered for starters was €1100. This would be considered a welfare level in The Netherlands (see bullet 3). Although totally unrepresentative, this figure gives an impression on Spanish basic salaries for starters.

This makes you wonder why there is still so much unemployment in Spain, as this salary level IMO would enable opportunities for companies to move production facilities to Spain: a western country with a modern infrastructure, well-educated people and above average facilities, like roads, railroad infrastructure, ports and waterways. Who will run the gauntlett (the Chinese ?).

5.     Sticking with your own people: at home and abroad. The silent segregation in tourist zones.

Was Spain in the past a country where the locals, local culture and local food and beverage companies ruled (with a few exceptions); in 2011, it seemed a different situation in Mallorca and especially El Arenal where we stayed.

The place was divided in a Dutch zone with Dutch discotheques, café’s, restaurants and hotels and a German zone where German-oriented companies ruled. Segregation almost seemed total, with the Russian tourists (a new, but very important tourist group) aiming at developing their own zone and tourists from other countries almost being non-existant. Instead of sniffing up the local culture, tourists from Germany and Holland stayed in their own zones, café’s, restaurants and hotels.

Bartenders from German and Dutch café’s and restaurants were taunting their Spanish colleagues, stating that the quality of their products was below average and concluding that people could better trust their own countrymen. Dutch and German people seemed to support this point-of-view wholeheartedly.

From a socionomic point-of-view, this is understandable in the current circumstances, but it remains puzzling why people visit another country when they don’t want to taste the culture of this country.

6.     Main drivers for restaurants and café’s in Spain are increasingly foreign investors.

Totally in accordance with bullet 5, it seemed that the most succesful companies at Mallorca were the companies, owned by foreigners, that aimed at one customer group, often being the Germans or the Dutch. Café’s and restaurants, run by local Spaniards, seemed to be struggling for their existance.

7.     Germans heavily involved in problematic drinking. Not just the teens, but also the 40+ German visitors.

If there was one group involved in problematic drinking at Mallorca, it would be the Germans (see bullet 5). And (to my surprise) it were not only the teenagers and youngsters, but also German men in their 30’s and 40’s, that were never to be seen without a beer or ‘schnapps’( German shots of liquor).

The results were people that were already totally drunk and sleeping during daytime and that came back to the hotel, singing and shouting loudly at 4.00 am in the morning, boozed up by too many beers and wodka’s.

Local speciality on Mallorca were half a gallon vessels filled with a mixture of Wodka, Gin, Tequila and soft drinks, that were drunk by a few people through straws. This phenomena even had its own road sign, leaving new visitors puzzled (see picture).

New and puzzling road signs reveils problematic drinking; 
picture courtesy of Diario de Mallorca 

Although problematic drinking is not something new, unfortunately, the old age of the drinkers was for me. And for me there is a strong socionomic smell to this phenomena.

All-in-all, my family and I had an extraordinary holiday in an extraordinary country. When I’ll write on the difficult situation in the PIIGS-countries in the coming weeks, I’ll think of Spain with much love and compassion.

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