Global Economy on Edge
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|Kate Willson, Mar Cabra, and Marcos Garcia Rey||October 5th 2011|
Decades of overfishing have left Europeâ€™s fish stocks in peril and its fishermen in poverty. Itâ€™s an impasse paid for by EU taxpayers. Yet a proposed revision of the EUâ€™s fishing law, hailed as a sweeping reform, is rapidly losing momentum.
A look at the industryâ€™s biggest playerâ€”Spainâ€”shows what officials are up against. Billions of euros in subsidies built its bloated fleet and propped up a money-losing industry. All the while companies systematically flout the rules while officials overlook fraud and continue to fund offenders, an ICIJ investigation has found.
â€œSpain has earned its bad reputation,â€ said Ernesto Penas Lado, director of policy and enforcement at the European Commissionâ€™s Directorate-General for Maritime Affairs and Fisheries. â€œThe problem is others donâ€™t have the reputation and deserve it just as much.â€
Spain may not be alone. But as the EUâ€™s most powerful fishing fleet, it is the starkest example of a failed EU policy, critics say.
The Spanish fishing industry has received more than â‚¬5.8 billion (more than $8 billion) in subsidies since 2000 for everything from building new vessels and breaking down old ships to payments for retiring fishermen and training for the next generation, an analysis shows. Subsidies account for almost a third of the value of the industry. Simply put, nearly one in three fish caught on a Spanish hook or raised in a Spanish farm is paid for with public money.
This analysis is the first in-depth look at just how much public aid Spain has received for fishingâ€”primarily from EU taxpayers, but also from Madrid and regional governments. The country has cornered a third of all the EUâ€™s fishing aid since 2000, far more than any other member state. The central government doles out even more for things such as low interest loans and funding for its largest industry associations, which in turn lobby the EU for more industry subsidies, records show. Since 2000, the sector has avoided paying â‚¬2 billion ($2.7 billion) in taxes on fuel to the Spanish Treasury.
Public monies also fund a surprising range of services. More than â‚¬82 million ($114 million) has been spent to promote the fishing sector through advertising and at trade shows. After fishing vessels were hijacked by pirates in the Indian Ocean, Spain in 2009 changed its law to allow vessels to hire private security forces onboard, and then it helped foot the bill to the tune of â‚¬2.8 million.
The root of the problem, regulators say, is that out-of-control subsidies encourage countries to build up already oversized fleets that are rapidly depleting the seas.
â€œFish are not an unlimited resource,â€ said fisheries economist Andrew Dyck of the University of British Columbia. â€œWhen the public purse is the only thing propping this industry up, we are paying for resource degradation.â€
The European Commission itself recently concluded that â€œtoo many boats continue to chase too few fish.â€ It blamed the situation, in large part, on subsidies.
Fish, not human rights
One of the most controversial forms of public aid pays for foreign fishing licenses. With its own waters increasingly empty of fish, the EU buys rights to the fishing grounds of developing countries such as Morocco, Mozambique, and the Ivory Coast.
Green groups, fishing experts and some EU politicians have criticized the agreements, saying European fishermen take advantage of poor countries that often lack knowledge and resources to protect their fish stocks. And key agreements cost more than they return on the value of fish; that is the case with Morocco, where each euro invested returns only â‚¬0.65 in value added, according to a study funded by the EU.
The Spanish industry has received more than â‚¬800 million ($1.15 billion) in foreign licenses over the past decadeâ€”about two-thirds of the EU licenses overall, according to the analysis.
The agreements have the support of Carmen Fraga EstÃ©vez, the EU Parliamentâ€™s most powerful legislator on fisheries issues. A sharp-tongued politician with an encyclopedic knowledge of the industry, Fraga served as fishing secretary in Spain and has held a seat in the Parliamentâ€™s committee on fisheriesâ€”which she now chairsâ€”for 17 years. Her loyalty to the industry appears to be so deep that when she had to choose between human rights and fish, she voted for the latter.
â€œThe Fisheries Committee has to discuss fisheries issues, not human rights,â€ she was quoted in the press as saying when in 2009 the committee for the first time voted down a fishing agreement. Days before the vote, 157 civilians died after Guineaâ€™s totalitarian regime opened fire on pro-democracy protesters. The agreement would have handed the Guinean government â‚¬450,000 ($639,000) a year for fishing licenses.
Fraga EstÃ©vez declined requests for interviews.
Spanish member of the European Parliament (MEP) Josefa AndrÃ©s Barea said the subsidized foreign fishing licenses are vital. When Spain entered the EU in 1986, very few Spanish vessels were allowed in the Unionâ€™s waters. So fishing in foreign waters wasâ€”and still isâ€”the only way for many ship owners to make a living. And if Spain isnâ€™t fishing, she said, less savory global players will scoop up the catch instead.
"There's a fundamental problem here which is that major [fishing] powers like China will be there if we're not. And they don't have any rules,â€ AndrÃ©s said. â€œThey're much more predatory than we are."
Fewer fish, poorer fishermen
EU waters are among the worldâ€™s most exploited. Scientists say three quarters of assessed fish stocks are overfished. Eels once served as a delicacy are so depleted scientists doubt they can recover despite a Europe-wide rescue plan. Irish Sea Cod, Baltic Sprat, and West of Scotland herring are all on the downfall.
The trend stretches across the globe. In 2006, the UNâ€™s Food and Agriculture Organization estimated that 75 percent of the world fish stocks were fished to the very limit ofâ€”or beyondâ€”sustainable levels. In its latest report, from last year, that figure had risen to 85 percent.
â€œEurope has a long and dark history of overfishing,â€ said Boris Worm, one of the worldÂ´s most renowned marine biologists, working at Dalhousie University in Nova Scotia, Canada. In a 2003 study, Worm showed that industrialized fishing has, since 1950, emptied the oceans of nine out of 10 fish longer than 20 inches such as salmon, cod and halibut.
Fewer fish mean fewerâ€”and poorerâ€”fishermen. Across the EU, the sector often costs taxpayers more than it produces. According to a recent report by the environmental group Oceana, at least eight countries received more money in public aid in 2009 than the value of their landed fish.
The fishing industry was the only segment of Spainâ€™s economy that shrunk in the 2000s. The northwestern region of Galicia more than anywhere else in Europe relies on the industryâ€”and the subsidiesâ€”to stay afloat. Yet the area lost a third of its fisheries-related jobs in the decade leading up to 2006.
In the Galician port of Vigo on the Atlantic coast, more fish pass across the docks headed for consumersâ€™ plates than in any other port in the world. Coastal towns are riddled with signs boasting subsidized fishing projects. Politicians include the sector as a central theme in their campaigns.
The industryâ€™s power was propelled by the 1960s push for industrialization by the fascist Franco regime. Franco himself was an avid fisherman and a Galician by birth.
â€œEconomically the [fishing] industry is between the tomato and the potato. But politically it is more important than any other industry,â€ said EUâ€™s head of fisheries control ValÃ©rie LainÃ©. The sector â€œhas always been protected by the governmentâ€”without the industry, Vigo would be dead, Galicia would be dead.â€
The powerful Galician industry group ARVI, which boasts of its close ties to lawmakers, acknowledged that fishing wouldnâ€™t be viable without public funding. In a recent position paper, it encouraged politicians to support subsidies to modernize outdated vessels, fish in foreign waters and build new on-shore cold storage.
Meanwhile, subsidies steadily flow to the region, but sometimes only make things worse.
VÃctor MuÃ±iz has relied on fishing for decades. He used to own vessels, as did his father before him. Not anymore. Now they operate a fish processing plant in the Galician town of MeaÃ±o. The factory was renovated in 2009 with EU subsidies to process and freeze up to 300 tons of fish per hour; it was expected to employ 100 people. But the brand new machinery stands silent.
â€œThere should be 10 trucks with mackerel here,â€ MuÃ±iz said in a bitter tone as he walked through the 8,000 square meter plant in April. But within 20 days of the start of the season, most vessels had already scooped up their entire mackerel quota.
MuÃ±iz said the quota is too low, but his major frustration is that too many factories like his were subsidized in the first place. â€œYou present a â‚¬2 million project, and they give you 60 percent. Youâ€™ve told them how much fish you're going to produce and what kind. Somebody should have told the processing plants: â€˜No, sorry, this is the quota for mackerel.â€™â€
Policy in Shambles
By 2006 it was clear that EUâ€™s fishing policy was in shambles. Fleets were bloated. Stocks were crashing.
Researchers commissioned by the EU drafted a series of reviews of the communityâ€™s fisheries lawâ€”the Common Fisheries Policy, which will govern the fleet for at least a decade. One little-known document is informally called the â€œFrankenstein reportâ€ because of its damning conclusions. It lays the blame squarely on influence-driven subsidies: The sector would be broke without them.
Swedish Green Party MEP Isabella LÃ¶vin said the key problem of the EU fisheries policy is that it was â€œmodeled after agricultural policy. You provide fertilizer and farming equipment, you get more vegetables. So they used the same model in fishingâ€”you increase the number of boats, you get more fish. But it doesnâ€™t work that way,â€ she said. â€œYou end up with less fish.â€
Subsidies over the past decades built a bloated EU fleet that plundered fish stocks. Efforts to reduce the capacity have focused on paying companies to break down old vessels. But that reduction has been undercut by subsidies given to modernize existing vessels, enabling them to catch more and more fish.
According to the 394-page â€œFrankenstein reportâ€, EU-countries need to cut capacity in half and severely restrictâ€”and adhere toâ€”quotas for fish stocks to recover.
But Spanish Fishing Secretary Alicia Villauriz said policymakers must consider more than capacity. â€œYou cannot make a statement saying: If you reduce the fleet everything will be more profitable. You'll also destroy a lot of employment.â€ Any transition, she said, would need to happen slowly.
That the European fleet was bloated was nothing newâ€”calls to cut it down began in the 1980s. But the aid kept rolling in to build new ships and modernize old ones. â€œThe sector has managed to attract more financial resources than would be justified under normal conditions,â€ the â€œFrankensteinâ€ report said.
The EU researchers also found that groups set up to advise the Commission on a new fishing policyâ€”largely made up of industry representativesâ€”consider the platform â€œmainly as a channel for political influence, and secondly as a forum for discussionâ€ of the new law.
In short: They were lobbying for their interests instead of trying to find solutions.
The EU-commissioned â€œFrankensteinâ€ report concluded that EU policy did â€œnot provide the right incentives for responsible fishing, or may even induce irresponsible fishing.â€
Turning a blind eye
Protected stocks worth as much as $23 billon (â‚¬16.7 billion) are illegally traded worldwide every yearâ€”making the black market in fish more valuable than smuggling stolen art. Many of the players in the illicit trade set up shell companies in places that do not adhere to international conventions protecting the oceans.
Spanish nationals register more vessels to â€œflag-of-convenienceâ€ countries than any other besides Panama, Honduras, and Taiwanâ€”which are themselves considered nations where a ship-owner can register its boats without having to adhere to strict tax or safety requirements, and can operate without oversight.
It is rare for the Commission to take a member state to court. The EU Court of Justiceâ€”Europeâ€™s highest courtâ€”has found Spain guilty three times of failing to implement EU fishing laws. Spain has refused to enforce catch limits, police its fleet or impose adequate punishment, the court ruled.
One of Spainâ€™s most widely criticized shortfalls is policing its port of Las Palmas on the Canary Islands off the Moroccan coast. Illegal shipments of fish plundered from West African waters regularly filter into the EU through the port, according to multiple investigative reports.
Fishing Secretary Villauriz said control in Spain is expensive because of the sheer size of its industryâ€”more than 10,000 fishing boats, 3,084 miles of coastline and 47 major ports. â€œBut that doesn't mean we're not taking care of our obligations in control mattersâ€ she added.
The Spanish Ministry of Environment, Agriculture and Fisheries said that inspections have nearly doubled since 2004 to 9,323 in 2010. Thatâ€™s still far from the number of inspections other countries are carrying outâ€”the United Kingdom logged nearly 50,000 inspections in 2004.
But some things donâ€™t appear to have changed. The number of inspectors in the port of Vigoâ€”Europe's largest fishing portâ€”remains the same as in 2003, when EU officials blasted Spain for the measly number of national inspectors at its ports. Today four inspectors oversee more than 700,000 metric tons of fish a yearâ€”thatâ€™s nearly 20,000 kilos of fish per inspector for every hour of every day of the year, including Christmas.
Spanish officials, like those in many other EU countries, do not take into account whether its nationals have been involved in the illegal fishing trade before doling out public aid.
Neither Spain nor the EU will make public information about offenders who have been fined for illegal fishingâ€”also called Illegal, Unreported and Unregulated fishing (IUU). But a sliver of insight can been gleaned from a database of appellate court rulings. There was a review done of every court case adjudicated since 2000 in which subsidized companies unsuccessfully appealed fines imposed by the Spanish government. In more than 80 percent of cases in which the appellant could be identified, firms continued to receive subsidies after the court had upheld penalties, the analysis shows.
Thereâ€™s only one case in which the ministry of fisheries tried to prevent a company from receiving subsidies, according to ministry officials.
That Spanish ship-owner so exemplifies the quagmire as to make it a near clichÃ©. Government officials and international regulators have repeatedly targeted Vidal Armadores for its alleged involvement in a decade-old international network of pirate fishing vessels, court and law enforcement records show. Brussels demanded multiple times that Spain recover subsidies and â€œtake action againstâ€ Vidal Armadores. At least through 2010, however, Spain and the EU continued to pay the firmâ€”at least â‚¬8.2 million ($12 million) since 1996. Last year the government finally fined the company and cut off aid, but the case is pending appeal.
In an interview, one of the firm owners, Manuel Antonio Vidal Pego, denied allegations of illegal fishing and said the company was entitled to the subsidies it received.
Like Vidal Armadores has in the past, seafood giant Pescanova targets Patagonian toothfishâ€”sold in the U.S. as Chilean sea bass. Unlike Vidal Armadores, Pescanova is a member of an association that fights illegal fishing. In Spain, it boasts a trusted motto: â€œLo bueno sale bien,â€ translated as â€œGood things go well.â€ But the company has its own troubles.
Last year Pescanovaâ€™s U.S. subsidiary pleaded guilty to illegally importing $1.2 million worth of toothfish. While that caseâ€”nicknamed â€œOperation Toothlessâ€â€”was pending, the U.S. Department of Justice launched a second investigation into another allegedly illegal importation. The status of the second investigation is unknown.
Pescanova is one of the Europeâ€™s three largest seafood companies, with a fleet of around 100 boats fishing worldwide and annual sales of â‚¬1.53 billion (more than $2 billion). Yet, since 1995 the company has pulled in more than â‚¬175 million ($250 million) in subsidies, according to the analysis.
Pescanova repeatedly declined requests for interviews. â€œWe've had 50 years of positive history,â€ said spokesman Angel Matamoro during a brief phone exchange. â€œI don't think you're asking about themes that will promote our image.â€
Regarding the U.S. investigations, he said, â€œWhatever we had to say, we said it to the U.S. court. The company follows scrupulously the law in every country itâ€™s in.â€
Another firm that broke the law and continued to receive aid is Albacora, one of the largest tuna companies in Europe. The companyâ€™s boat Albacora Uno last year was fined $5 millionâ€”the largest fine in U.S. historyâ€”for illegally placing fishing gear in U.S. waters multiple times during a two-year period. The boat was built with subsidies and used subsidized fishing licenses. And even after the U.S. fined the firm, Spain granted Albacora â‚¬1.8 million ($2.6 million) worth of subsidies to fish in foreign waters.
The Spanish ministry of fisheries said it had fined Albacora but will not deny the company further aid.
Albacora director Jon Uria said the 67 infringements were an â€œisolatedâ€ incident. The company was unaware of the infractions, he said, until the U.S. government alerted executives. In his view, the fine was disproportionate to the offense.
A Radical Reform?
Javier Garat is the Spanish industryâ€™s most visible and eloquent lobbyist. He was born into the family that cofounded Albacora. Garat is now a shareholder of the company, but he says that doesnâ€™t influence his lobbying. In his meetings with officials, he often requests subsidies for the sector. â€œThat money has generated wealth,â€ he said. â€œItâ€™s been used to modernize an obsolete fishing sectorâ€ so that today â€œwe have better, more modern, more secure vessels.â€
Garat heads Spainâ€™s powerful lobbying group Cepesca as well as the Europe-wide industry group EuropÃªcheâ€”both of which operate with EU subsidies. In the halls of the ministry of fisheries in Madrid, the word is that Garat will be appointed Spainâ€™s next fishing secretary.
Following closed-door meetings at the ministry in April, Garat and Spanish Minister of Environment, Agriculture and Fisheries Rosa Aguilar announced that the ministry and Cepesca were devising a â€œcommon roadmap to defend Spanish interestsâ€ in the overhaul of the EU fishing policy.
After two years of deliberation, the European Commission presented its proposed legislation in July. No one but the Commissioner herself appears satisfied with the draft. But the negotiations have just begun. Political alliances and lobbying will determine the final language to be voted upon before the law goes into effect January 1, 2013.
Garat called the reform draft â€œcowardly.â€ He said the Commission succumbed to pressure from environmentalists and biased media â€œwithout taking into consideration the repercussions on the fishing sector.â€ In his view, the state of the fish stocks is not as â€œcatastrophicâ€ as Commission officials appear to believe.
Yet it seems the industryâ€™s efforts have staved off its worst nightmares. Nothing came of ambitions to make overfishing a crime, as happened in the U.S. under the Magnuson-Stevens Act, or to require quotas be consistent with what scientists say is biologically sustainable. There was no proposal on how to limit the oversized fishing fleet or to implement quotas in the fishing agreements with foreign countries.
EUâ€™s top fisheries official Commissioner Maria Damanaki describes her proposal as â€œradical.â€ She said Brussels will stop directly subsidizing the industry. â€œNow we are going to give money in a very prudent way and under very strict conditions,â€ she said. â€œAnd we are going to ask for paybacks in the case of illegal fishing.â€
Damanaki also highlighted proposed changes in the fishing partnership agreements. â€œWe are going to call them sustainable fisheries agreements because we're going to fish only for the surplusâ€”if there is any surplus,â€ she said. â€œAlso, we're going to respect human rights in these areas.â€
Given the hype, Green party MEP LÃ¶vin said, â€œI had expected a clause on human rights.â€ But the human rights clause originally in the legislative text was missing from the final proposal.
LÃ¶vin ran for office on a ticket pledging to change the fishing policy. She said the proposal is a lot less radical than she had hopedâ€”especially as the coming negotiations will water it down even more. â€œThe law canÂ´t allow for politicians to compromise with the environment when long-term environmental goals clash with short-term profit,â€ she said.
Ernesto Penas Lado, director of the European Commissionâ€™s fisheries policy unit, said the mindset in Spain and among fishing nations globally is that no single country feels responsible for the fate of the fish in the sea.
â€œItâ€™s the tragedy of the commons,â€ he said. â€œBecause the resources belong to no one, they belong to everyone.â€ In the EU, 27 countries have to come to a consensus on a common fishing policy. Thereâ€™s no mentality of making a sacrifice for preservation, Penas said. â€œPeople think: Whatever I do not fish, my neighbor will.â€
Kate Willson, Mar Cabra, and Marcos Garcia Rey writes for iWatch News, a project of the Center for Public Integrity, from where this article is reprinted. David Cabo (Spain) and Fredrik Laurin (Sweden) contributed to this article.