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Interview

Carlos Espinosa de los Monteros – High Commissioner, Marca España, Spain

Carlos Espinosa de los Monteros, high commissioner of Marca España, a long-term state-sponsored project aimed at strengthening the image of Spain at home and abroad, describes the shifting perceptions of the country as it re-emerges from the financial crisis and the key specificities that Spaniards and Spanish firms bring to international projects, especially in oil and gas.

Given your long and varied career, can you begin by giving our international readers a brief introduction to yourself?

“Our goal is to be interconnected: Algeria, Morocco and Libya on the one side and Portugal and France on the other in order to have the possibility of receiving gas coming from both Russia and Northern Africa.”

I have a degree in Law and Business from the University of Madrid and an MBA from the Northwestern University of Chicago. I worked with the government for a number of years at the Instituto Nacional de Industria (INI), then I was appointed President of Iberia, Spain’s flagship airline carrier. After this I worked extensively in the automotive sector in Spain and Portugal and held a number of positions on the boards of various organizations and companies, ranging from the engineering to textile and the chemicals sector. When I retired five years ago, the Prime Minister offered me this job of promoting the image of Spain.

The image of Spain, certainly in Northern Europe, is one of sun, sea, and sand. Beyond this stereotype, what is the image of Spain you are trying to convey internationally?

Spain underwent a big transformation over the last 30 years and for some people the image of the country is still very much linked to the clichés of the past, whereas for many others it is only a holiday destination. Over the last 30 years, the country experienced a huge process of industrialization to the point of having many leading companies in a variety of sectors including construction, technology, automotive, chemicals, defense and aerospace. The image that we try to promote is that of a country that is both traditional and modern.

Over the last 40 years Spain has moved from dictatorship to booming economy, to a major financial crisis and high unemployment. How has the perception of Spain changed regarding these elements on an international level?

Of course, we had some milestones during those years. The first and most important was when we joined the EU in 1986 – it was a big challenge for our economy. It was a major challenge for entrepreneurs as well as they had to learn how to become more competitive. Another challenging event was when we decided to comply with the Maastricht Treaty. Then we had the crisis which started, in our case, in 2009, particularly affecting the real estate sector as prior to the crisis, we were building more houses than France, Germany, Italy and the UK put together. This led to the collapse of the savings and loans institutions which represented more than 50 percent of the Spanish economy and forced the government to come up with a rescue plan. This was the time during which the EU was rescuing bankrupt countries like Ireland and Greece. While Spain was a candidate for bailout, we issued a number of reforms, most of our negative numbers turned positive, and as a result we are moving much faster than the European average and over the last two years we have been creating more jobs and reducing unemployment.

How do you explain the fact that the unemployment rate in Spain is still so high?

It is a combination of factors. In most developed countries when you have an unemployment rate of five percent it is still considered to be full employment, because you always have people that for some reason are not interested in working. For instance, this is the case of the US which considers full employment a five percent rate. This occurs in countries in which the demand of jobs is equal to the supply of jobs. In our case this happens when we have an unemployment rate of eight or nine percent. This is mainly due to the fact that women have been incorporated into the labor market and some of them are not ready to work. Maybe they work for a number of years while they have no children. Another factor is the black economy, some people’s activities fall outside of the country’s rules and regulations. The combination of the two economies brings us close to a full employment rate of nine percent. Even when the economy was booming we never came under nine percent. The figures of the second quarter will be published soon and you will see that our employment is just below 18 – a big improvement from 2006 considering the rather short period of time.

What do you think Spain needs to do to capitalize on the recently announced 3.5 percent growth for 2017?

The answer is always the same – be competitive! In order to be competitive you need to offer the international market quality products and prices below your competitors and this is an area in which companies are working since the crisis. In this fight, some of course have disappeared. In this effort of modifying the way of doings things many companies have become very competitive and now our export rate is the second biggest in Europe – only Germany has a higher percentage of the total GDP exported. We need to continue this fight for competitiveness and this requires reforms. We made a significant labor reform, financial reform and a real estate reform. However, this is not a onetime effort – it is more about trying to do things a little bit better every day.

Can you give us an example of Spanish companies that were able to modify their actions to be more competitive globally?

For instance, Telefónica. They used to have the monopoly over telephones in Spain. When the domestic market was open to competitors they had to adapt to competition in their own protected market. The second step was trying to go away and become a telephone service provider worldwide – at which they have been successful in countries like the UK, Brazil or Germany. Of course, you also have midsize and small companies that were able to do the same. In the automotive sector, we have a number of suppliers that were originally only serving the local manufacturers and have now moved away and have factories in more than thirty countries, providing the factories of Toyota, Volkswagen, Ford and others in five continents.

In which sectors is Spain most competitive?

The automotive sector – we are the number one producer in Europe of industrial vehicles such as vans and pick-ups. Another sector is textiles – we have companies that currently have more than ten thousand points of sales in the world. In construction and engineering Spain is also very much in a leading position, building up projects of high-technology – such as the enlargement of the Panama Canal or the high-speed trains in Saudi Arabia linking Mecca to the Capital in very challenging circumstances, as well as some petrochemical plants. Out of the ten biggest construction works around the world, discounting those taking place in China, Spanish companies are currently working on six.

How do you characterize the key attributes that Spaniards and Spanish firms bring abroad?

The first selling point is our expertise. This was acquired in almost two decades during which we were building our country as it has always been a poor country with a poor infrastructure. Spain made a bet on infrastructure thinking that in order to grow we had to invest in the quality of our infrastructures and only when we had them we could think of growing fast. In those 20-25 years of investment, also thanks to the funds we received from the EU, we created a number of companies and thousands of people at different levels who acquired this expertise. This is the very advantage that we have. The second selling point is that from the very beginning our approach was based on collaboration with local people. Our companies abroad, unlike some American companies for instance, try to incorporate local people. This is what we did from the very beginning – we had to count on the local people in order to avoid mistakes. The third element is that we were able to provide financing to projects in developing countries. Our government took the risk to finance this.

In a time of global political uncertainty to what extent does Spain, along with Merkel’s Germany and Macron’s France, stand as a bastion of stability and a favorable investment destination?

In order to better understand our position vis-à-vis Europe one has to bear in mind that we were isolated from the construction of the EU for forty years. We were in need of Europe more than any other member state. This is why when we went through the EU treaties we tried to be among the leading countries. Today, stats show that Spain is one of the member states that has the highest number of pro-EU citizens. We have benefited from free trade, we have received funds for infrastructure, we have many reasons to feel that the best place where we can be is in Europe and we want it to be as strong as possible. When we get attacked from overseas and when we realize that some want to make Europe weaker, we react in the way anyone who believes in this project would do. We are very much in line with France and Germany and whoever wants a prosperous European Union. I am positive that Brexit will have a positive impact on uniting Europe even more.

What role can Spain play in oil and energy at the European and global level?

We are a country with no oil & gas resources, so we must admit that we have to get those resources from somewhere else or take advantage of those that we do have, such as the sun and the wind. Our energy policies have always tried to guarantee enough energy to the country, providing the resources through agreements with other countries as in the case of gas – from the very beginning in the 70s we had an agreement with Algeria and with Libya to guarantee the supply of gas in times which we had the Yom Kippur War and the Second Oil Crisis.

We developed a strong gas pipeline network to guarantee that the gas coming to the Mediterranean could supply the different industries in all the areas. When the technologies were available we started to develop alternative energies that today are known as renewable energies. Little by little we started to be a strong manufacturer of windmills (Gamesa). We were able to improve more and more and we ended up having not only a large number of windmills in Spain but also the technology to sell and manage them. For instance, we currently sell it in Australia. Concerning exploration, I would say that this is the only area in where we were not successful in Spain. Our oil companies built up refineries and devoted their efforts in explorations abroad – mostly South and Central America.

We also have a number of companies at the EU level (e.g. Repsol). Our goal is to be interconnected: Algeria, Morocco and Libya on the one side and Portugal and France on the other in order to have the possibility of receiving gas coming from both Russia and Northern Africa. During the Yom Kippur War in 1973 we were at risk of production being interrupted because of lack of supply. In time, things change and what is important is to have alternatives and not to depend on just one source.

What does it mean to be Spanish in 2017?

My job is not always a beautiful one, but it is very rewarding. The Spanish, with a few exceptions, are overall very positive towards their country – plus we do not have enemies. Everyone has a nice image of Spain, where people like going out, eating, drinking and resting. This is only the first approach. My task is to show that we have something more. To be Spanish today is much easier than five years ago during the crisis. People are more willing to invest in Spain now. We have the tenacity to fight for things, we do not give up and we like taking challenges as a country.

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