| 30 November 2023, Thursday |

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

A request for seaplanes to combat forest fires has been identified as potentially harmful to the environment. Companies requesting assistance after being battered by COVID are need to demonstrate a recent good balance sheet.

According to interviews with business associations, government officials, companies, and consultants, they are among the discordant calls made by Spanish and EU bureaucrats as Spain’s drive to distribute 77 billion euros ($84 billion) in grants from EU pandemic recovery funds becomes bogged down in complexity.

Spain is the EU pilot project for disbursing grants from the largest stimulus package in the bloc’s history, an overall pot of 724 billion euros, including loans. The country was fastest out of the blocks in meeting Brussels’ policy requirements and in receiving its funds, making it a test-case for what Europe can achieve.

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

A year into the disbursement process, about 23.5 billion euros had been awarded as of December last year, according to the latest figures published by the government last month. That’s a sluggish pace, given the EU and Spain have set a deadline of the end of this year to award all 77 billion euros.

Only 16.5% of companies have applied for grants and 7% have been accepted, a Bank of Spain survey of 6,000 businesses in February found. Meanwhile, only about 9 billion euros have actually reached the businesses awarded funds, according to calculations by the Esade Centre for Economic Policy, a Madrid-based think-tank that tracks the pandemic recovery cash.

Meanwhile Italy – which has been allocated roughly 69 billion euros in grants – has deeper problems, with the EU freezing a tranche of the cash and requesting clarification over Rome’s efforts to meet the “targets and milestones” needed to unlock the money.

The travails of the southern European nations, one in unlocking funds and the other in injecting cash into the real economy, could test the resilience of the EU’s stimulus plan, aimed at building a post-pandemic Europe that’s greener, digital and more self-sufficient.

In response to queries for this article, Spain’s government said it was applying EU rules that tried to “combine agile management of the funds together with guarantees of control”, adding that almost 300,000 Spanish projects had been financed.

New Italian Prime Minister Giorgia Meloni has blamed her predecessors Mario Draghi and Giuseppe Conte for the delays.

The European Commission said member states tailored their own schemes to control funds, and that both the EU and Madrid had deemed Spain’s systems adequate. The implementation of the countey’s plan is currently in line with the agreed timetable, it added.

In Spain, on top of the human bureaucrats, there’s now also Minerva, a tech system that Madrid was required to build by Brussels to vet grant applications and was rolled out in February after about two years of development.

The algorithm, named after the Roman goddess of wisdom and justice, can scrape millions of data points to check that companies applying for funds have no conflicts of interest.

Then there’s another system called Coffee to audit applications and keep track of where the money is, often requiring significant amounts of paperwork from companies.

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

“The economic consequences of this could be that companies become disaffected with these forms of help.”

  • Reuters