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Spain Fishing Fleet Fueled By Major Subsidies, Report Finds

First Posted: 10/ 2/2011 2:14 pm Updated: 12/ 1/2011 5:12 am

Policy in Shambles

By 2006 it was clear that EU’s fishing policy was in shambles. Fleets were bloated. Stocks were crashing.

Researchers commissioned by the EU drafted a series of reviews of the community’s fisheries law — the Common Fisheries Policy, which will govern the fleet for at least a decade. One little-known document is informally called the “Frankenstein report” 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 Lövin said the key problem of the EU fisheries policy is that it was “modeled after agricultural policy. You provide fertilizer and farming equipment, you get more vegetables. So they used the same model in fishing — you increase the number of boats, you get more fish. But it doesn’t work that way,” she said. “You end up with less fish.”

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 “Frankenstein report”, EU-countries need to cut capacity in half and severely restrict — and adhere to — quotas for fish stocks to recover.

But Spanish Fishing Secretary Alicia Villauriz said policymakers must consider more than capacity. “You cannot make a statement saying: If you reduce the fleet everything will be more profitable. You'll also destroy a lot of employment.” Any transition, she said, would need to happen slowly.

That the European fleet was bloated was nothing new — calls to cut it down began in the 1980s. But the aid kept rolling in to build new ships and modernize old ones. “The sector has managed to attract more financial resources than would be justified under normal conditions,” the “Frankenstein” report said.

The EU researchers also found that groups set up to advise the Commission on a new fishing policy — largely made up of industry representatives — consider the platform “mainly as a channel for political influence, and secondly as a forum for discussion” of the new law.

In short: They were lobbying for their interests instead of trying to find solutions.

The EU-commissioned “Frankenstein” report concluded that EU policy did “not provide the right incentives for responsible fishing, or may even induce irresponsible fishing.”

Turning a blind eye

Protected stocks worth as much as $23 billon (€16.7 billion) are illegally traded worldwide every year — 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 “flag-of-convenience” countries than any other besides Panama, Honduras and Taiwan — 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 Justice — Europe’s highest court — 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 Spain’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 industry — more than 10,000 fishing boats, 3,084 miles of coastline and 47 major ports. “But that doesn't mean we're not taking care of our obligations in control matters” she added.

The Spanish Ministry of Environment, Agriculture and Fisheries told ICIJ that inspections have nearly doubled since 2004 to 9,323 in 2010. That’s still far from the number of inspections other countries are carrying out — the United Kingdom logged nearly 50,000 inspections in 2004.

But some things don’t appear to have changed. The number of inspectors in the port of Vigo — Europe's largest fishing port — 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 year — that’s nearly 20,000 kilos of fish per inspector for every hour of every day of the year, including Christmas.

Subsidized offenders

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 fishing — also called Illegal, Unreported and Unregulated fishing (IUU). But a sliver of insight can been gleaned from a database of appellate court rulings. ICIJ reviewed 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.

There’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 cliché. 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 “take action against” Vidal Armadores. At least through 2010, however, Spain and the EU continued to pay the firm — at least €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 with ICIJ, 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 toothfish — 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: “Lo bueno sale bien,” translated as “Good things go well.” But the company has its own troubles.

Last year Pescanova’s U.S. subsidiary pleaded guilty to illegally importing $1.2 million worth of toothfish. While that case — nicknamed “Operation Toothless” — 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 Europe’s three largest seafood companies, with a fleet of around 100 boats fishing worldwide and annual sales of €1.53 billion (more than $2 billion). Yet, since 1995 the company has pulled in more than €175 million ($250 million) in subsidies, according to the ICIJ analysis.

Pescanova repeatedly declined requests for interviews from ICIJ. “We've had 50 years of positive history,” said spokesman Angel Matamoro during a brief phone exchange. “I don't think you're asking about themes that will promote our image.”

Regarding the U.S. investigations, he said, “Whatever we had to say, we said it to the U.S. court. The company follows scrupulously the law in every country it’s in.”

Another firm that broke the law and continued to receive aid is Albacora, one of the largest tuna companies in Europe. The company’s boat Albacora Uno last year was fined $5 million — the largest fine in U.S. history — 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 €1.8 million ($2.6 million) worth of subsidies to fish in foreign waters.

The Spanish ministry of fisheries told ICIJ it had fined Albacora but will not deny the company further aid.

Albacora director Jon Uria said the 67 infringements were an “isolated” 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 industry’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 doesn’t influence his lobbying.

In his meetings with officials, he often requests subsidies for the sector. “That money has generated wealth,” he said. “It’s been used to modernize an obsolete fishing sector” so that today “we have better, more modern, more secure vessels.”

Garat heads Spain’s powerful lobbying group Cepesca as well as the Europe-wide industry group Europêche — 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 Spain’s next fishing secretary following the November elections.

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 “common roadmap to defend Spanish interests” 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 “cowardly.” He said the Commission succumbed to pressure from environmentalists and biased media “without taking into consideration the repercussions on the fishing sector.” In his view, the state of the fish stocks is not as “catastrophic” as Commission officials appear to believe.

Yet it seems the industry’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.

EU’s top fisheries official Commissioner Maria Damanaki told ICIJ her proposal is “radical.” She said Brussels will stop directly subsidizing the industry. “Now we are going to give money in a very prudent way and under very strict conditions,” she said. “And we are going to ask for paybacks in the case of illegal fishing.”

Damanaki also highlighted proposed changes in the fishing partnership agreements. “We are going to call them sustainable fisheries agreements because we're going to fish only for the surplus — if there is any surplus,” she said. “Also, we're going to respect human rights in these areas.”

Given the hype, Green party MEP Lövin said, “I had expected a clause on human rights.” But the human rights clause originally in the legislative text was missing from the final proposal.

Lövin ran for office on a ticket pledging to change the fishing policy. She said the proposal is a lot less radical than she had hoped — especially as the coming negotiations will water it down even more. “The law can´t allow for politicians to compromise with the environment when long-term environmental goals clash with short-term profit,” she said.

Ernesto Penas Lado, director of the European Commission’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.

“It’s the tragedy of the commons,” he said. “Because the resources belong to no one, they belong to everyone.” In the EU, 27 countries have to come to a consensus on a common fishing policy. There’s no mentality of making a sacrifice for preservation, Penas said. “People think: Whatever I do not fish, my neighbor will.”

David Cabo (Spain) and Fredrik Laurin (Sweden) contributed to this story.

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