Analysis: Basque economy has lessons for Spain

Thu Jun 28, 2012 7:42am EDT
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By Amanda Cooper

MONDRAGON, Spain (Reuters) - Spain's dash into tourism in the 1970s and its property boom last decade largely passed by the Basque region, a cool, damp corner of the north with a reputation for separatist violence. Instead the Basques stuck with industry, by force of circumstance.

Euskadi, the Basque name for the hilly province of 2 million bordering France, now outshines the rest of Spain with a better credit rating than central government, the lowest regional unemployment and borrowing costs half those of other areas.

The success of Mondragon Assembly, one of the world's top producers of solar-panel manufacturing equipment, reflects the region's ability to weather a euro zone debt crisis that has forced Spain to ask for up to 100 billion euros of EU aid for its banks.

In a factory set in a forest, a multi-armed robot hisses behind a glass screen, lights flickering as it prepares to take in cobalt-blue tiles to stitch into solar panels. The machine could be shipped anywhere, from Germany to Kazakhstan, and business is flourishing.

The Basque region's secret has been in sticking to manufacturing over the property and tourism industries that ended in economic misery elsewhere in Spain when a real estate bubble fuelled by easy credit burst in 2009.

Tourism was always going to be a difficult sell for the Basques because of the separatist violence that only ended in October 2011 when ETA, Europe's last armed guerrilla group, called an end to its 50-year struggle.

"If we didn't export, we'd be having a hard time," said Mikel Lezamiz, a director at Mondragon. "It's thanks to exports that we survive or this whole thing would come crashing down. Survival comes from not depending on a single market, but on a number of markets.

Mondragon Assembly, part of the unlisted Mondragon group, is the world's largest cooperative and employs nearly 100,0000 people. Around 80 people work in this plant. It also has factories in France, Germany and Mexico.   Continued...

The offices of Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) are illuminated by the late afternoon sun in central Bilbao May 4, 2012. REUTERS/Vincent West