00:00So I'd like to start there, Mr. Cuervo, if we could, about basically what has the communication been from the
00:05United States?
00:05He arrived in Ankara, the President of the United States. He says he's going to cut off all trade with
00:09Spain,
00:09going to cut off effectively relations to a certain extent with Spain.
00:13By the end of the meeting, we were somewhere completely different.
00:15What are the conversations that have been transpiring over the last three days?
00:17Well, you know, the main message I think that has transpired is that Spain is making good on its commitments
00:23towards defense spending.
00:25Actually, President Sanchez was very clear at this stock-taking meeting of NATO
00:30that Spain is the seventh largest defense spender amongst the 32 NATO members.
00:36So that actually positions us, as we've always said, amongst those countries that are fulfilling their commitments,
00:44that are covering for the capabilities that we did commit to, and therefore being a reliable partner.
00:49I think that's the main message, again, that transpires from the data that is actually speaking for itself.
00:54And the President made some allusion, though, that Spain would say that they made
00:59and they will honor requests for lots of payments, and that if they didn't, you know, we wouldn't even talk
01:02to them.
01:03Did anything change in Spanish policy, you know, from Monday to Thursday?
01:07Well, again, last year we increased our defense spending by more than $10 billion.
01:13Again, making good on all the commitments and being a reliable partner.
01:17That's the message that we've been trying to convey all along,
01:21and that I think now is finally getting there, as we see that we made good on that pitch by
01:28actually proving it with the numbers.
01:31So that's good news.
01:32But the 5% commitment is still off the table for Spain.
01:36Nothing has changed on that front.
01:38As we said already, we will cover for the capabilities that are assigned within NATO.
01:44You know how this goes.
01:45We have an update of the threats that all members will be facing,
01:48and then you assign capabilities to cover for those threats,
01:52and our share will be covered by Spain for sure.
01:56But then I want to talk more broadly about the sort of approach of the President of the United States
01:59now,
01:59you know, threatening the tariffs against Spain.
02:01He's done similar things to France about just sort of digital taxes.
02:04I'm sure you're thinking about a lot of different scenarios about if these things were to materialize,
02:09if there were an effectuation of a tariff threat on Spain, if he were to impose it,
02:14would that automatically kill the Turnberry deal?
02:17Well, let's go back somehow to the last 18 months,
02:21where there's been somehow a lot of discussion on the new tariff context,
02:28and we've been actually negotiating from the EU side because, as you know,
02:32it's an EU negotiation that goes on.
02:35All member states are dealt with in trade terms by whatever the EU or the Commission agrees upon.
02:42So the August agreement is the one that is valid for French companies,
02:46for Spanish companies, or for German ones.
02:48And what has gone on despite all the uncertainty, for example,
02:51is that investment from American companies in Spain in 2025 grew by around 18%.
02:58So somehow the relationship is so strong that it's actually still ongoing.
03:05There's a strong inertia around it, and we have to make the best out of that existing relation.
03:11And that's what we're trying to do also from the Spanish perspective,
03:14trying to help our companies navigate this new situation,
03:18opening new trade offices in the U.S.,
03:20having 10 times in the last 18 months to the U.S.,
03:23again, trying to really strengthen that relationship.
03:26But I think for those companies, it's important for them to try to understand
03:29what the reaction function will be from the European side
03:32if we do see unilateral tariffs with a single member state.
03:35So I guess the question is, if the United States imposes tariffs on Spain,
03:40have you spoken to the Commission?
03:41Does that, in their mind, there are a lot of clauses that were added to that trade deal,
03:44basically kill the U.S.-EU trade deal?
03:47Well, we don't have – let's not speculate on what can happen.
03:52There is no specific executive order or measure against any specific country within the European Union.
03:58But the Commission has been very clear also this week on the fact that they would,
04:03of course, always protect the interests of the Union and of each and every one of its member states.
04:08And, again, trade is an European policy, European Commission policy,
04:14and I think a message to the business community as well.
04:17We want to give them predictability, stability going forward.
04:21So the reaction function somehow should be that we will make good on the agreement that we signed.
04:26From the European side, everything is set so that we can go on with it.
04:30We expect also the same from our U.S. peers in the next few weeks.
04:34Let's give that positive message to businesses.
04:37And so trade falls under the European remit.
04:39You would like to see more debt fall under the European remit.
04:41You'd like to see a third of debt issued from the major European economies come from the EU.
04:46This, obviously, debate of joint debt is one that's always been heated here within Europe.
04:49You've renewed it.
04:50You've come out in the Bloomberg opinion pages to explain it.
04:53Give us your pitch.
04:54So somehow it's about efficiency in how we issue debt.
04:57So it's reducing fragmentation.
04:58This is not about new debt or increasing the overall level of debt in the European Union.
05:04What we're proposing, what we're putting on the table, is the fact that fragmentation is costing us dearly.
05:10So we need a safe asset to back our capital markets union within the European Union.
05:16And that safe assets need to be liquid enough, need to actually have a deep market so that we can
05:22cover for the demand.
05:23There's a strong demand, but there's no supply of jointly issued assets.
05:27So it's a very short, small market.
05:31And what we're proposing is to increase that market by substituting part of the upcoming national debt,
05:37one-third of annual redemption and whatever is allowed by European fiscal rules.
05:43So we keep this moral hazard concern in check by saying that we have to comply with fiscal rules in
05:49any case.
05:49So that would help the joint issuance to reach the $5 trillion threshold, which is what is considered as a
05:56genuine benchmark going forward.
05:58And that would reduce financing costs.
06:01And we estimate, and I will finish with this, that the overall savings would amount to up to $25 billion
06:07on a yearly basis.
06:09This is taxpayers' money being saved.
06:11But, of course, there will need strong political consensus on that.
06:14How is that message cutting through, particularly in Germany?
06:17Well, we know that this discussion historically has been a difficult one.
06:22But there is a new window of opportunity, and the context is completely different.
06:26We're not talking about new debt.
06:28We're not talking about the fiscal union or a mutualization of risks.
06:31We're talking about efficiency in debt issuance.
06:35We're talking about reducing fragmentation costs, as we're doing on other areas.
06:40And, you know, also, for example, the firms could benefit from us having a safe asset and, therefore, lower financing
06:47costs being translated also to lower financing costs for businesses.
06:50So it's a no-brainer, and we really have to circumscribe that discussion to the current context.
06:56And another sort of difficult conversation is one around China at the European level.
06:59You're one of the nations in Europe that is advocating a much stronger relationship with China, yet you acknowledge some
07:05of the issues with the trade imbalances.
07:06How does Spain suggest that we should deal with those imbalances, and what are the next steps, you think, at
07:10the European level?
07:11Well, we need to be a key player going forward, and that means engaging on a par basis with both
07:19the U.S., China, or other key players.
07:21And so engaging means negotiating, having a fully-fledged open dialogue with Chinese authorities, both to try to solve these,
07:30as you said, trade imbalances,
07:32but also to see how we can have a win-win situation in terms of attracting investment towards the EU
07:38within our security agenda.
07:41But that also produces value-added within Europe that generates technological transfer also to Europe, because we have to admit
07:47it, in some sectors, there is a technological gap or lag in Europe with respect to China.
07:54And so we need to, again, foster these investments that are productive for the European Union and rebalance trade.
08:00And I want to get your perspective also, because another piece of news we got over the last few days
08:03is potentially the restart of the war in Iran.
08:05Obviously, this will have consequences for the European economy. Inflation is still very high in Spain.
08:11What do you anticipate the impact is going to be on the economy? How should the European economy prepare?
08:16Well, somehow, as you said, we had some piece of good news over the past few weeks, although over the
08:22past few days, volatility has come back.
08:25But prices of oil are still way below what they were around a month ago.
08:31What we'll be doing in Spain is putting in place specific measures to protect the industry, to protect sectors like
08:38transportation or the agricultural sector as well, and to protect citizens.
08:42Five billion programs, fully-fledged ones, to protect during the first three months.
08:47And now we extended that program to protect also citizens up until September, although there is a phasing out understanding
08:54that somehow the situation will slowly also be better in the next few months.
09:00But in case it's not, we're still ready to come back to the previous level of support.
09:05And one quick final question. We've talked a lot about very important topics. One final important topic.
09:09I spoke to your counterpart, Deputy Prime Minister of Belgium, earlier this week. He predicts a win for Belgium, 2
09:16-1 tonight with Spain. What is your prediction?
09:18Well, you know, I don't want to jinx it, so I won't say a specific score, but I'm very confident
09:24that we can make it and that Spain has one of the best teams and we will all be rallying
09:29behind our national team.
Comments