On US trip, Spanish PM seeks to soothe investment funds, touts progress of Covid-19 vaccination campaign

Pedro Sánchez met with executives from Blackstone, Bank of America and Morgan Stanley, many of which have real estate interests in Spain, to discuss their concerns about housing and labor laws

Spanish PM Pedro Sánchez (center) visiting New York on Wednesday as part of his US tour. Video: Foto: EFE | Vídeo: MSNBC
Carlos E. Cué

During the first day of his visit to the United States on Wednesday, Spanish Prime Minister Pedro Sánchez came face to face with the harsh reality of some of the biggest investment funds in the world’s biggest economy: they are not happy about a new housing law in Spain because it could limit rent rises, and they are also wary of labor reforms being prepared by the Spanish government after a deal was reached by Sánchez’s Socialist Party (PSOE) and its coalition partner, the leftist Unidas Podemos.

According to several sources present at the meeting, Sánchez had to make efforts to convince a number of fund managers and bank executives – from Blackstone, Providence Equity Partners, JP Morgan, Soros Fund Management, Bank of America and Morgan Stanley, all of whom had been brought together by AmCham, the US chamber of commerce in Spain – that these reforms would not affect their investments.

The prime minister explained to the business leaders that the labor reform – negotiated with Brussels as well as Unidas Podemos – would see Spain move toward a German model of labor relations, where there is social harmony but also flexibility so that employers can adapt to their circumstances via furlough schemes known in Spain as ERTEs, without having to fire workers.

Pedro Sánchez in New York during an interview on the television program 'Morning Joe.'
Pedro Sánchez in New York during an interview on the television program 'Morning Joe.'MSNBC

Sánchez also explained that Spain is a country with few strikes, with social harmony and constant negotiations between businesses and labor unions. The new housing law was questioned by some who have interests in the Spanish real estate market, because they are concerned about limits on rent rises and the reduction of sanctions for illegal occupation of properties. But Sánchez insisted that this would be legislation similar to that in other European countries and that there was also no cause for concern.

According to the same sources present at the meeting, the encounter was a success and the prime minister managed to calm these concerns. The PSOE and Unidas Podemos are currently engaged in complex negotiations over the housing law. Yolanda Díaz, who is from the latter party and is one of Spain’s deputy prime ministers as well as the labor minister, has accused the PSOE – in particular Economy Minister Nadia Calviño – of being too sensitive to pressure from these major international investment funds, which bought up thousands of housing units from troubled banks during the financial crisis and are now important players in the Spanish real estate market.

Sánchez was subject to these pressures at his meeting on Wednesday, but according to the same sources, he also managed to draw their attention to the major Spanish recovery project that is backed by the €140 billion coming from the European Union coronavirus recovery fund.

The prime minister explained that the idea is for this huge amount of public money to be accompanied by another €500 billion in private investment to launch innovation, technological transformation and green energy projects. The government has a lot of money to invest, more than ever before, but it needs private partners to carry out these projects and multiply the effect of the public investment. That is the idea of the fund approved in the EU, and the main reason for Sánchez’s trip to the US.

Sources present at the meeting stated that Sánchez has got there before other European leaders thanks to this trip, and that this could help given that these business leaders have not had any face-to-face contact with presidents or prime ministers for months now due to the pandemic. All of them expressed their gratitude to Sánchez for making the visit.

The Spanish prime minister has now seen the two sides of the coin: in Spain, his coalition partners Unidas Podemos are pressuring him to be more bold with the housing law and the new types of labor contract in a bid to reduce temporary hirings, while in the financial heart of the US they are pushing him in the other direction.

Spanish PM Pedro Sánchez outside Grand Central station in New York.
Spanish PM Pedro Sánchez outside Grand Central station in New York.MONCLOA (Europa Press)

While the aim of Sánchez’s visit was primarily to discuss the economy, he also took advantage of the visit to make media appearances. The US, like Spain, is seeing a new spike in coronavirus cases and the prime minister used an interview to tout the fact that his country does not have an anti-vaccination movement, and that this will help Spaniards to overcome the health crisis. Speaking on the Morning Joe show on MSNBC, the prime minister made clear that his country is not experiencing the same problem as the US, where millions of people are refusing to get vaccinated against Covid-19.

“Fortunately, we are not having any kind of rejection movement against the vaccination,” he said in English during the interview. The situation in Spain is in stark contrast to that of the US, and even other European countries that have seen the anti-vaccination movement gain strength – in France, for example, President Emmanuel Macron has said that those who refuse to get vaccinated will not be able to go to restaurants.

Sánchez went on to explain that the problem right now in Spain is that the non-vaccinated population – in particular young people – are getting infected with the coronavirus. The presenter asked him whether there was an issue with the distribution of the vaccines, given that in the US practically everyone who wants the inoculation has now received it. Sánchez explained that Spain is progressing with its campaign at a good speed and is already moving on to younger age groups, and the target of 70% of the population is due to be met by the end of August.

Sánchez went on to insist during the interview that this is a public health issue and that it should not become a political debate. “The major mistake that us politicians could do is to ideologize [sic] this pandemic fight that we are facing. This is not a question of progressives or conservatives, this is a public health matter, a public health question. And it’s very important to tell our people, our citizens that we need to be prudent, that we need to be safe, because the vaccine is safe and it protects us against the virus.”

The prime minister was asked indirectly why he was not going to Washington to meet with Joe Biden on this trip, but he avoided answering. He did, however, make many references to the new US president and said that it was very good news that he had arrived after Donald Trump, given that the former president had abandoned the Paris Agreement on climate change and also viewed the EU “as a kind of enemy,” something that Biden does not do, Sánchez explained.

The Spanish government, for its part, explained that this was not the appropriate moment to seek a meeting at the White House, and as such the focus was on this economic tour without making a visit to Washington.

English version by Simon Hunter.

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