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Basque Nation-Building Lures Emigrants Home to Bilbao

Photographer: David Ramos/Bloomberg

Pedestrians walk along a shopping street in Bilbao. While Scots and Catalans prepare for back-to-back referendums this year that may redraw the map of Europe, leaders in Bilbao, the business capital of Spain’s northern Basque region, are focused on rebuilding their economy. Close

Pedestrians walk along a shopping street in Bilbao. While Scots and Catalans prepare... Read More

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Photographer: David Ramos/Bloomberg

Pedestrians walk along a shopping street in Bilbao. While Scots and Catalans prepare for back-to-back referendums this year that may redraw the map of Europe, leaders in Bilbao, the business capital of Spain’s northern Basque region, are focused on rebuilding their economy.

Ramon de la Sota returned to Spain to help set up an investment firm -- and work toward making his Basque homeland a fully-fledged European state.

“We’re very Basque nationalist,” de la Sota, 35, a former General Electric Co. (GE) executive who studied at Insead business school in Paris, said over lunch with a group of fellow returnees in downtown Bilbao. “But independence is a long-term project. There are things we have to do first. The dream is to build an international champion based here.”

With a new king, Felipe VI, preparing to take the throne tomorrow and Scots and Catalans readying for back-to-back referendums on independence later this year, constitutional reform has been thrust on to the agenda in Spain. Yet for leaders in Bilbao, the business capital of the northern Basque region, building up the economy comes before joining the rush to redraw the map of Europe.

“We are paying very close attention to what happens in Scotland and Catalonia,” Bilbao Mayor Ibon Areso, a member of the Basque Nationalist Party, said in an interview. “But at the moment our priority is the economy and creating jobs.”

The Basque Country, which already has its own police force and collects its own taxes, was the focus of a separatist campaign by terrorist group ETA until 2011. Despite the shadow of violence, it became the richest region in Spain, with BBVA, the country’s no. 2 bank, and Iberdrola SA (IBE), the biggest power company, both based in Bilbao.

Photographer: David Ramos/Bloomberg

Bilbao and the Basque Country dodged the worst excesses of Spain’s real estate bubble, though the region’s exporters suffered after the global recession of 2009. Close

Bilbao and the Basque Country dodged the worst excesses of Spain’s real estate bubble,... Read More

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Photographer: David Ramos/Bloomberg

Bilbao and the Basque Country dodged the worst excesses of Spain’s real estate bubble, though the region’s exporters suffered after the global recession of 2009.

Bubble Dodged

The Basque Country dodged the worst excesses of Spain’s real-estate bubble, though the region wasn’t able to escape the economic crisis entirely. Exporters suffered after the global recession of 2009, and unemployment in Vizcaya province, which has Bilbao as its capital, jumped to 18 percent in 2012 from 11 percent two years earlier. It reached 19 percent in the first quarter.

Areso, who became mayor this year, and Andoni Aldekoa, City Hall’s chief executive officer, have a plan to counter the new age of austerity. A key plank of their strategy: The city has zero long-term debt. Even as Bilbao used public money to transform its downtown area from a post-industrial wasteland in the 1990s, its officials managed to pay off its debts in 2011.

Now Aldekoa is using the fame of Frank Gehry’s Guggenheim Museum, the centerpiece of the downtown regeneration, to attract talent and promote the region’s companies as he helps the city’s traditional industries such as autos and engineering to find a new place in the global economy.

Photographer: David Ramos/Bloomberg

Bilbao has been a center for trade and commerce since it was founded on the banks of the River Nervion near Spain’s northern Atlantic coast in 1300. Close

Bilbao has been a center for trade and commerce since it was founded on the banks of... Read More

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Photographer: David Ramos/Bloomberg

Bilbao has been a center for trade and commerce since it was founded on the banks of the River Nervion near Spain’s northern Atlantic coast in 1300.

Auto Intelligence

Take the Automotive Intelligence Center outside the city, in Amorebieta. It brings together local companies to pool their resources on research projects for the auto industry, which accounts for about 20 percent of output across the region. Under the center’s umbrella, Basque companies developed an electric drive-train for Daimler AG’s Mercedes-Benz Vito van.

Another consortium is developing carbon-fiber suspension arms to reduce the weight of vehicles by replacing the traditional pressed-steel components. The first prototypes are about to be made on site and may eventually go into production at factories in China, Brazil or Mexico as Basque companies dovetail with global supply chains.

It’s a role Bilbao has been practising since it was founded as a center for trade and commerce on the banks of the River Nervion near Spain’s northern Atlantic coast in 1300.

Industrial Heritage

The leg-irons, or “bilboes,” that Denmark’s Prince Hamlet imagines wearing in Act V of Shakespeare’s 1603 play were named after the city, and the region’s deposits of high-quality ore made it a major supplier to the U.K. during the industrial revolution.

The Basque Country’s output per person today is 132 percent of the European Union average, according to Eurostat, the EU statistics agency.

“We never lost sight of the importance of industry here,” Ines Anitua, the Automotive Intelligence Center’s managing director, said in an interview in Amorebieta, citing help from the government’s industrial strategy.

Collaboration is a key part of the Basque identity, according to Lander Jimenez, 38, an environmental engineer who grew up on a cooperative housing development near Bilbao and returned to the city with his family after living in the U.S. and the U.K.

The Basque word for relationship -- harreman -- is formed from the words for give and take, Jimenez said. His engineering firm is part of Mondragon Corp., the region’s biggest company, which is itself collectively owned and sets limits on how much its bosses can be paid relative to workers.

‘Self-Conscious’

“We are a very self-conscious nation,” said Asier Alea, 41, who has an MBA from the Massachusetts Institute of Technology’s Sloan Management School and joined Jimenez, de la Sota and former Goldman Sachs Holdings Inc. risk manager Jon Recacoechea to discuss the reasons they’d come home.

“That can lead to a degree of clannishness,” he said. “But we’re also driven to help each other.’

Basque identity was suppressed under the dictatorship of Francisco Franco, who bombarded the region during the Spanish civil war: Guernica is about 20 miles from Bilbao. In response, the most radical sector of the nationalist movement created ETA, the guerilla group that killed more than 800 people fighting for independence. While ETA renounced violence in 2011, it still hasn’t disbanded and the legacy of that conflict still colors the debate over a possible secession.

The regional leaders yesterday called on the national government to drop its opposition to a law helping Basques who suffered police abuse under Franco receive compensation, El Pais reported.

The Basque Nationalists reclaimed control of the regional assembly in 2012 from a Socialist-led coalition winning 27 seats in the 75-strong chamber. Bildu, a party pushing directly for independence, claimed 21 seats while the Socialists, the People’s Party and UPD, who want the region to remain part of Spain, got 27 seats and 33 percent of the vote between them.

Human Chain

For all the economic focus among some, the nationalist movement as a whole isn’t shelving its push for independence. About 150,000 Basques turned out this month at an event calling for a vote on the region’s status. Basque Nationalist Party officials also joined to form a ‘‘human chain” from Durango, near Bilbao, to Pamplona in the neighboring region of Navarre, echoing a demonstration in Catalonia last year when more than a million people joined arms across the region.

That mix of tradition, sense of community and the prospect of building a Basque nation-state is pulling back members of their generation who made careers abroad, according to de la Sota and his friends. They in turn aim to make Bilbao a more attractive place for others to return to.

The next episode in the city’s development will center on Zorrotzaure, a mile-long peninsula downriver from the Guggenheim. City Hall has a 20-year program to redevelop the area on a blueprint drawn up by Zaha Hadid, the Pritzker Prize-winning architect. The first phase involves reopening the industrial-era canal that runs down one side, to turn the peninsula into an island. The diggers started work in May.

Meanwhile, Aldekoa flies round the world promoting the city’s companies. Last month he was in Singapore at the invitation of the city-state’s government with a dossier of local businesses. He’s also visited London, Mexico, and Cannes in southern France this year.

“Bilbao is the best chance the Basque Country has of developing an international hub,” said Alea, who returned with his New Yorker wife in 2007. “Had Bilbao not existed, I doubt that I would have been able to come back.”

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Eddie Buckle

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