The first source of these surprises is the size and speed of our external adjustment. Well after the crisis started, and as a result of a growth of prices systematically higher than that of the rest of the Eurozone, our external deficit was, proportionately, the highest among the surrounding countries.

Without the ability to pursue devaluation policies, it was hard to believe that we managed to adjust our prices fairly. Nonetheless, it is very likely this year to register a surplus for the first time in quite a long time. The cost, in terms of growth and employment, has been very high, but the goal of adjustment has been achieved. Consequently our ability to compete has improved as much as it did during the recession of 1992-1993. Only that on that occasion, the peseta had to be devalued three times. This time, we had to do it within the framework of a single currency.

Secondly, there’s our fiscal adjustment. It’s true that if we take into account the weight of our deficit compared to the GDP, we will find a figure that is just slightly lower. But it has done so within the context of a deep recession. Like in the case mentioned earlier, we are talking of an adjustment without precedents.

Needless to say, this adjustment is possible at a high cost. It’s also true that it would have been preferable to delay the adjustment until growth had been recovered, but that was not a viable alternative due to our dependence on external funding.

The behaviour of exports is a third case in point. Even though they started with the prices against them, during these years, export companies lost less market share than its counterparts in other Eurozone countries (yes, German companies included). And this is not a futile achievement. These companies are indeed at the core of the once famous production model: to be able to give our people top quality jobs, it will suffice that all companies, exporting and non-exporting, operate at the same efficiency than those that grew a reputation in the global market. It will be slow, of course, but we need not create anything from scratch: we already have a solid starting point. It is smaller than one might have wanted, and still subject to risks. With the never addressed debt issue being the largest of them. But it still gives us a path to follow, and therefore it raises a reasonable hope.

Lastly, there’s one less visible but also very important surprise. Outsiders wonder how our society is in peace, despite of the deep crisis. There are some reasons for that. But today I’d like to elaborate a bit more about one reason in particular by giving a real example.

In the Raval district, in the Spanish city of Barcelona, 45.000 people inhabit an area of around 1 square kilometre. Almost a half of them are immigrants. They come from a dozen different countries, with 9 different religions (without counting the agnostics), and there is a 30% unemployment rate. Nonetheless, one can safely walk around the neighbourhood without worrying too much. Something one might never dare to do in some areas in cities like Paris, New York, Mexico or Buenos Aires. Is this a miracle? No. Are we warmer and nicer people? Not either.

The calm reigning there is the result of the silent work by some organizations, mostly private. They work in collaboration with schools and public services, as well as with the valuable help of hundreds of volunteers. The goal of these organizations is to foster the integration of the inhabitants of the district, with a special focus to children. A significant point, because many immigrants come not so much to improve their lives, but to give a future to their children. So they stay put as long as they see their children have real chances of prospering, learning and achieve a good position in life.

Long time ago, when I was a teacher at a school in Barcelona’s Montjuic district, the father of one of my students told me he didn’t wanted anything for himself. Instead he wanted his children to have better luck. He was 29 years old. The day the citizens of neighbourhoods like Raval start having the feeling there’s no hope for the generations to come, social peace will be over.

These organizations struggle with humble budgets and suffer a growing lack of resources, mostly coming from private initiatives. The fact these organizations can keep on with their mission of delivering hope to the underprivileged is as important as adjusting the deficit or changing the structure of our economy. And they must be able to attain their cause not by delivering sermons or giving gifts and promises typical from the welfare state, but offering real options for change through hard-work.

Therefore, since there are a group of companies holding the seeds of the economy that we want; and also there’s those who work to integrate the underprivileged we can be sure the seeds for a more human society exist. Let’s not forget this: it is an integral part of the surprise.

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If Kirchner finds time for Faine, it won’t be the first time they maintain such a conversation. Although there have been no agreement in previous occasions, Argentinian commentators describe Faine as more ‘open-minded’ than Repsol’s president Antoni Brufau, who would favour legal action against the Kirchner government for having seized Repsol-YPF assets.

But time runs against president Kirchner. Her cabinet and the new management of YPF cannot seek partners to operate the Vaca Muerta deposits as Repsol has blocked their exploitation in court. A year after the expropriation, the Argentinian government has been unable to deliver any of the promises with which Kirchner supported it: energy imports are still high, and foreign investors’ confidence has almost vanished.

Rumours had it that Repsol would be offered a 19 percent stake in a company that would be given one third of the Vaca Muerta assets seized in 2012, but the Spanish corporation said in a press release that the offer never happened, even if there had been “contacts at a non-official level.”

Repsol stated that it was willing to maintain talks to reach a solution and receive a compensation or a restitution of the assets. Repsol has challenged the Argentinian government in its national courts, in Spain and in the US, too–the Chevron, Bridas and the Bank of New York Mellon cases.

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Rehabilitation is the only hope of creating jobs in this devastated sector. Last April 3% of the jobs were lost. Since last year it’s been employment in construction has been reduced by 18%. The government is only paying attention to rehabilitation, fueled by European energy saving laws. But only the best workers and technicians will keep their jobs, therefore they need to be specifically trained and adapted to the new technologies. These are the main conclusions of European project Build Up Skills Spain, “Construye 2020″, led in Spain by the Construction Labor Foundation with the Ministry of Development, the National Institute of Qualifications (Incual) and the Technological Construction Institute (Aidico).

The first conclusion is that an annual investment of between 28 and 60 million euros will be needed to form skilled workforce in energy efficiency in construction in Spain. The second, it is urgent to define a global education plan for 2014-2020, with the involvement of the public administrations, aimed to upgrade and requalify workers more directly related to energy efficiency and renewable energy. The third thing would be to establish a road map tailored to the needs and to structural features of Spain.

Build Up Skills Spain proposes to undertake new specific training actions, and makes several recommendations to ensure their gradual implementation: a new training itinerary on biomass installations; the development of competencies and certifiable training associated with geothermal energy; carpentry of aluminum and PVC training; energy efficiency and renewable energy campaigns; and more.

The report details a strategic plan that identifies priorities and actions with a subsequent monitoring and follow-up.

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The value of the contract for TR will be above 1,100 million US dollars and will have an execution period of 49 months until the commissioning of all the units. The high standard conversion STAR Refinery will be the most comprehensive oil downstream project of Turkey, the Spanish corporation said in a press release, with an annual crude oil processing capacity of 10 million tons.

“By adapting the most advanced technologies and applying the most stringent EU regulations and environmental standards,” TR explained, “STAR Refinery will ensure Turkey’s refining sector to substantially reduce its current external deficit of downstream petroleum products by producing naphtha, diesel, jet fuel and LPG.”

The contract has been awarded on a lump sum turnkey basis. The design for STAR Refinery will enable to process different types of crude oil such as Urals, Azeri Light and Kirkuk with an overall capacity of 10 million tons/year. The new refinery will be constructed on Petkim peninsula on approximately 2.300 hectares of area.

The refinery will have a yearly production of 0.48 million tons of ultra-low sulphur diesel, 0.16 million tons of naphtha, 0.42 million tons of mixed xylene, 0.16 million tons of jet fuel, 0.32 million tons of LPG, 0.49 million tons of reformate, 0.69 million tons of petro-coke and 0.16 million tons of sulphur at its full capacity operation. With its 63 tanks, the total storage capacity of the refinery will be of 1.640 million tons approximately.

Turkey is a priority market for Spain’s TR. It has already executed 8 previous projects in Turkey, for companies like TÜPRAS, IPRAS and BOTAS, and two more projects in the field of Nitric Acid and fertilizers for TUGSAS and TOROS GUBRE. This new contract will guarantee a further successful presence in that country in cooperation with Turkish partners and with regard to the substantial new investments to be developed in Turkey.

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The German government has criticize the process of recapitalization of Spanish banks could backfire, questioning again the new effort imposed by the Bank of Spain on refinanced loans. Mariano Rajoy executive has been giving a reprimand for failing to use the 100,000 million euros credit line to clean up the financial system. All this may backfire.

The major listed Spanish banks have closed the first quarter of this year with more than 10% of core capital, complying with the standards of the European Banking Authority (EBA), while the first private bank in Germany, Deutsche Bank, is far from that level (8.8%, according to the new Basel III standards will begin to have some effect at the end of the current fiscal year).

In fact, Deutsche Bank executives have been trying since the middle of last year to improve its capital structure, with an accelerated reduction of risk-weighted assets (RWA) of more than 100,000 million euros. The intention have been to issue another 2,000 million in subordinated debt within the next 12 months to improve its Basel III capital ratio to 9.5% by the end of this year.

That goal have been beaten in most cases by Spanish banks. The only exception is BBVA, with a 9% in its estimate using the new international rules on capital, even if at the end of the first quarter it solvency topped 11.2% (among the highest of large Spanish listed groups).

Ambitious goals

The Santander estimates that it will end this year with a capital ratio of 12%, according to these criteria. It has placed its solvency ratio at 10.67% at the end of March. Even smaller banks have more ambitious goals that the first German banking group. Banco Popular is expected to reach a capital ratio of 10.9% of the Basel III criteria by the end of 2013, while Bankinter will get to 10.6% with not much effort.

Meanwhile, Spanish banks are at a disadvantage when measuring risk-weighted assets, since their main business is commercial banking, while Deutsche Bank has a big investment banking division, a business specially favored by its former chairman Josef Ackermann. The case of Banco Popular is quite significant: after the demanding audits by Oliver Wyman, it had to make a macro-enlargement of 2,500 million that has covered itself without aid of any kind.

The situation is very different in one of the other major German banks, Commerzbank, now immersed in an extension of 2,500 million euros to return some of the aid received since its nationalization in 2008. The German government has just begun to withdraw from the capital of this bank, with losses when selling the 25% of the stock they had: they sold the shares at seven euros, and they bought it at 34.70.

Commerzbank, which at the time received public bail out of 18,200 million, still needs 1,630 million from the Financial Market Stabilization Fund (SoFFin, according to its German acronym) and 750 million from insurance group Allianz, which by the way is the reference shareholder of Banco Popular. The German bank has closed the first quarter of this year with a loss of 94 million euros, in contrast to the 104 million profit of the group chaired by Ángel Ron.

Hypovereinsbank, another major German bank, is in the orbit of the Italian Unicredit since November 2005. And it is not going very well: its market value is 645 million euros, far away from the 2,500 million worth Bankinter, the smallest of Spanish banks today. Late last year it was involved in a scandal for allegedly helping customers to evade from the German treasury about 124 million euros, which triggered an spectacular police raid in its headquarters.

Even more opaque is the situation of the German savings banks (Sparkassen), which control the German financial system, especially in the domestic business. They have survived the liberal reluctance to such entities that have wiped out the savings banks in Spain.

Some Spanish banking executives argue, both publicly and privately, that some German banks, or other European countries´, wouldn’t pass tests as demanding as those imposed by Oliver Wyman on the entire Spanish banking system in 2012. It is true that some French groups do have a similar capital ratios Spanish banks, and even higher expectations for the year-end compliance with Basel III requirements. BNP Paribas has closed the first quarter of 2013 with a core Tier 1 ratio of 11.7% and expects to rise it to 10% at the end of the year with the new criteria. Societe Generale, meanwhile, has a solvency of 10.6% through March and aims 9.5% for the year-end.

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