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BANKRUPT

UK newspaper’s ‘Spain is bust’ claim provokes fury

The Daily Telegraph's journalist Jeremy Warner has come under fire after his piece “Spain is insolvent: get your money out while you can” touched a nerve with Spain's general public and political commentators alike.

UK newspaper's 'Spain is bust' claim provokes fury
Screenshot of Jeremy Warner's inflammatory piece on Spain's apparent insolvency

“The latest IMF Fiscal Monitor, published last month, comes about as close to declaring Spain insolvent as you are ever likely to see in official analysis of this sort.”

Jeremy Warner, one the UK’s leading economic commentators, kick-started his article on Spain’s alleged insolvency with these inflammatory words.

He went on to say, “If the Cypriot precedent is anything to go by, a heavy price will be demanded by way of recompense. Confiscation of deposits looks all too possible.”

Warner's opinion piece, which he based on a report by the IMF’s Fiscal Monitor, has been echoed in countless Spanish media since it was published last Friday.

It was soon met by an onslaught of comments by the Spanish general public, who acknowledged Spain’s financial problems but rejected his claims as a self-important outsider.

Spanish daily ABC ran the story on Sunday with the headline "Brutal attack on Spain by The Telegraph", followed by  the line "The British press takes it out on Spain yet again, employing their usual double standards and turning a blind eye to their own financial shortcomings".

Meanwhile, economic commentator for El Mundo Casimiro García-Abadillo titled his opinion piece on the matter "The Telegraph's hispanophobia". The Spanish journalist and blogger described Warner's article as part of an "anti-European campaign" in which "he hopes to make the euro fail by attacking Spain."

Spain’s Embassy in London also voiced their disapproval by sending out an official complaint to the British broadsheet about the “irresponsible, unfounded and self-interested comments” made by the economic commentator.

The International Monetary Fund said that it was “incorrect” to speak about Spain’s “insolvency” on the basis of the projections contained in a recent report by the multilateral institution.

Faced with a barrage of criticism, Warner wrote a follow-up piece on Saturday in which he attempted to justify his calamitous predictions.

But rather than calming tempers, his comments seem to have poured more oil on the fire.

“I've merely taken some quite alarming IMF forecasts and drawn some obvious conclusions from them," he wrote in his blog.

"Perhaps I'm wrong – that there is no solvency problem in Spain.

If so, my words will carry no weight. That's the thing about bank runs. They tend not to happen unless there is genuine reason for concern. So let's get the information out there and let people make up their own minds.”

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BANKRUPTCY

5,700 jobs in danger as fridge firm fights closure

Major Spanish electrical appliance maker Fagor, which employs 5,700 people worldwide, opened talks with its creditors on Wednesday to try to avoid bankruptcy.

5,700 jobs in danger as fridge firm fights closure
2,000 of Fagor's 5,700 workers are based in the Basque Country. Photo: Rafa Rivas/AFP

The maker of everything from small appliances to washing machines, fridges and kitchen furniture said it had started negotiations to restructure its debt, estimated by the Spanish media at €800 million ($1.1 billion).

"The company has up to four months to negotiate an agreement with its creditors," said a statement issued by Fagor, part of sprawling Mondragon group created six decades ago in the northern Basque Country region.

Fagor said it had informed the commercial court in San Sebastian of the negotiations.

Initial talks began weeks earlier between the Mondragon group, the Basque government, creditor banks and other lenders with the aim of enabling Fagor to deal with immediate payments due and to normalise its business activity, it said.

The pre-bankruptcy procedure was recently introduced into Spanish law to give businesses extra time to avoid filing for bankruptcy.

Basque regional government spokesman Josu Erkokera said rumours of a Fagor bankruptcy amounted to the "worst financial news" of the year for the region, where 2,000 of Fagor's 5,700 workers are based.

The Mondragon group was founded in the 1950s by local priest Jose Maria Arizmendiarrieta as a small workers' cooperative and is now an international conglomerate with a mission of maintaining jobs.

Its various branches, present in 20 countries, include industry, distribution and finance.

Foreign sales reached nearly €4 billion ($5.2 billion) in 2011, accounting for two thirds of the corporation's industrial division, which produces consumer electronics, car parts, machinery, sports gear and more.

Despite its international presence, Mondragon's cooperative structure has kept most of its jobs and production in Spain, with 35,000 employees in the Spanish Basque Country, 35,000 elsewhere in Spain and about 13,500 abroad.

Most of its workers are partners in the firm, voting to elect the bosses and make sensitive decisions.

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