Basque-Country-Special-Feature-as-published-in-The-Guardian-09-10-14

October 9th 2014Basque CountryUnited it standsThe Basque Country has long been an industrial hub which has thrivedwhile maintaining a unique regional identity. In recent years, Basqueshave based much of their development on unity and innovation. Astheir region emerges from the Spanish economic crisis and enters anew era of peace, they aim to become a global force in their own right.theguardian.com/the-report/basquecountrythe-report.netAn independent supplement distributed in the Guardian on behalf of The Report Company, who takes sole responsibility for its content.180614regional focusGipuzkoa seeks to unveil its hidden championsinvestmentThe right place at the right timeindustry and innovationMade in the Basque Country10infrastructureA well-connected region“This time ofpeace is anopportunityfor the evolutionof oureconomy”Inigo UrkullutourismGreen and graciousGLOBAL BUSINESS FEATURES: EXCLUSIVE INTERVIEWS. INSIGHTFUL ANALYSIS. ANOTHER LOOK.041222wineriesRaising the profileinterviewInigo Urkullu. President of the Basque Country

4 _ BASQUE COUNTRYSuccess theBasque wayINTERVIEW President ofthe Basque Country sincethe end of 2012, InigoUrkullu is building on theregion’s strong industrialbase, internationalisingits economy and creatingan economic powerhousewithin Europe, while stayingtrue to his political idealsof social cohesionHow has the Basque Country changedsince the days of Eta?Our political, social and economic historyhas been shaped by the phenomenon ofterrorism. Fortunately, there were Basquecompanies, even during the most difficulttime of the years of terrorism, who in spiteof the threats maintained their commitmentto stay here. What this meant wasthat despite the violence, the Basque economygrew. This very committed businessclass assumed the risk, and because ofthat, foreign investment was still possible.There is no comparison between the currentsituation and the unfortunate situationwe lived through in the past. Thistime of peace has to be an opportunityfor the evolution of the Basque economy.If we were able to grow during a time ofviolence, now we are at peace we must beable to grow even more, especially once weget over the economic crisis. On top of ourown industrial and economic culture, wenow offer to all types of investors a guaranteeof peace and calm and absolutelynormal business conditions.What was your reaction to the “no” resultof the Scottish independence referendum?I would express my favourable opinion onthe fact that the process was legitimate andit was possible for Scotland to freely decideits political future. We should value thatat a time of voter apathy we have witnessedan act of political legitimisation. Therewas massive, unprecedented voter participation.For the first time in the history ofthe European Union a stateless nation hasbeen able to decide if it will participate inthe European Union within a state or byitself with the same conditions as the restof the states. The right to consult and toThe Basque Country:a global brandbe consulted and to decide the future is nota political idea. It is a democratic principlethat citizens can choose.What is your outlook for the Basqueeconomy?Our estimates indicate that this year theBasque economy will grow by one percentand in 2015 it will grow 1.7 percent. This isdue in great part to the great effort that ourindustry is making in innovating and in goingout and finding new markets. We have adiversified and internationalised industrialsector that spans areas such as energy, aeronautics,machine tools and automotive. Wewant to consolidate the size of industry to25 percent of our GDP. We are placing priorityon innovation and knowledge: by 2020we want to invest €10 billion in R&D.What is your government’s economicstrategy?Since the beginning of our administrationour intention has been to preserve socialwelfare, education, health and social policybecause our model of society is based onIn a bid to raise the region’s profile on theinternational stage, the Basque governmenthas earmarked €105 million overthe next three years for the launch of its‘Basque Country’ brand. Outlining the planin April 2014, the region’s president, InigoUrkullu, said his government will help to internationalisemore than 1,500 companiesin the period 2014-2016, set up 200 centresacross 25 countries in a “global Basquenetwork”, as well as bring four major“We stand foran economicmodel thatcombinesrigour, investmentstimulus,job creation andsocial welfare”social cohesion. Westand for an economicmodel thatcombines rigour,investment stimulus,job creationand social welfare.We believe that thisis the right way toreturn to growth ina sustainable andcohesive manner.How would you like the Basque Countryto be perceived?Globalisation doesn’t mean we have tolose our individuality. The Basques havetheir own identity and their own culture.I hope that the citizens of the world willbegin to get to know us for the positives,and not for the negatives from the pastwhich have been unfairly associated withus as a people.read the full q&athe-report.net/basque-countryinternational events to the Basque Country,one of which will be in collaboration withthe United Nations. “We need to gaininfluence,” said Marian Elorza, the Basquesecretary of external affairs, who addedthat the region plans to forge alliances withat least eight others, including Aquitaine,Flanders, Bavaria, Queretaro and Jiangsu.Writer: James BadcockA DIPLOMAT’S VIEWDerek DoyleBritish consul and seniorUK Trade & Investment adviser“All iron”UK RELATIONS Basque businesses have largely weathered the economic crisis inSpain by expanding further into international markets. This is a good time, then,to rediscover the region’s close historical relationship with the UKThanks to its “specialrelationship” with Britain’sRolls Royce, Basque turbinemanufacturer ITP is confidentof its futureBilbao’s Athletic Club, one of Spain’smost successful football teams, wasformed in 1898 due to influx of Britishengineers and businesspeople whocame to build railways and steelworks.From heavy industry to hi-tech:the Basque-UK connectionAs well as being the UK government’sdiplomatic representative inthe Basque Country and NorthernSpain, Derek Doyle is the seniortrade and investment adviser at theBritish consulate in Bilbao. His remitis to promote and protect Britishbusiness interests while alsobeing alert to new opportunitieswith respect to inward investment.The club’s origins can still be heard onmatch days when fans chant “Aliron”,a word that derives from “all iron”,which was shouted by miners whenthey discovered a seam of good ore.Beyond the jokes about shared wet weather and thefootball connection with Basque teams such as AthleticBilbao having British origins, there is a long and deeprootedcommercial relationship between the UK andthe Basque Country.Formal commercial links go back to 1474, when a tradecharter was signed by King Edward IV and reciprocatedin Guernica whereby Basque merchants could freelytrade with the protection of the Crown in England,and English merchants could do likewise in the BasqueCountry. But the explosion in UK-Basque connectionscame after the industrial revolution. British steel companieswere interested in the region’s iron ore reserves,building railways to aid exports from Basque ports. Thenlocal businessmen realised that by importing Britishcoking coal they could develop a Basque steel industryand joint ventures flourished.The conflicts of the 20th century made the connectioneven deeper. “A Basque ship owner by the name of SirRamon de la Sota put his merchant fleet at the disposalof the British Crown during the First World War, andwas knighted in return for his services, and that linkcontinues,” says Derek Doyle, the UK consul in Bilbao.Following the bombing of Guernica during the SpanishCivil War, 4,000 children from the Basque Country wereevacuated to the UK.“Basically, everything that triumphed in Britain in theearly 20th century triumphed over here around 30 yearslater. A steel and iron industry developed, as did shipbuilding.Our first steel ships were British,” says Jose AngelCorres, chairman of Bilbao’s chamber of commerce.Now cooperation is focussed on more technological sectors,such as aeronautics. A partnership between Britain’sRolls Royce and Basque engineering firm SENER createdITP, whose CEO Ignacio Mataix is confident of the futurethanks to this “special relationship”. He says that “50 percentof future engines built to fly will have an ITP turbineinside,” owing to Rolls Royce’s 50 percent market share.Energy is also a key sector in the region and power giantIberdrola is a good example of how Basque business hasinternationalised in recent years. CEO Ignacio Galanrecently said that Iberdrola is now “more British, moreAmerican and more Mexican than it is Spanish”, whileannouncing that 41 percent of the company’s planned €9billion investment in 2015 will be in the UK.For Jorge Unda, managing director of engineering firmSENER, opening a UK branch could serve as a steppingstone before crossing the Atlantic. “If you want to get intothe US market from Spain, it’s very difficult. Our historicrelationship with British companies will allow us to arrivein the US already being ‘British’.”Charting trade and industrial relationsbetween the UK and the regionthat go back 500 years, Doylebelieves British companies shouldseize on positive Basque perceptions:“I think we have a privilegedposition with respect to our relationshipbecause we have all thattradition, all that historic connection,and at the end of the day weare liked and we are admired so weneed to take advantage of that.”Doyle believes that the BasqueCountry’s business culture and thesolid support the private sectorreceives from the region’s governmenthave brought about a realsuccess story. He cites the percapitaGDP of around €30,000, thehighest standard of living in Spain.Now that the terrorist violence ofPowering BritishdevelopmentBilbao-based energycompany Iberdrola isteaming up with ScottishPower in a majoroffshore wind powerproject in the NorthSea. Planning permissionwas granted inJune to allow work tocommence on EastAnglia One, a projectwhich will generatecapacity of 1,200megawatts (MW). Itwill create up to 2,700jobs during constructionand could power820,000 UK homes.This is the first of sixplanned 1,200MWphases within theoverall East Anglia UKRound 3 offshore windzone, which couldeventually compriseup to 7,200MW.For Iberdrola, itsannual investment inthe UK has more thandoubled since theintegration of ScottishPowerinto the firmin 2007, up from £600million in 2006 to £1.2billion in 2013.Iberdrola CEO IgnacioGalan told UK energyand climate changesecretary Ed Daveyin June that “the verylarge investments thatIberdrola is making inthe UK are important insecuring energy suppliesfor the country inthe future”.Iberdrola’sUK investmentsarehelping tosecure thecountry’s futureenergysupply“Britain is admiredhere, so we need to takeadvantage of that”Eta has ended, the British diplomatbelieves that the region is ready toreally take off. “The violence distortedthe picture; there were a lotof important things going on thatwere missed.”read the full q&athe-report.net/basque-country

More than a football club8 _BASQUE COUNTRY BASQUE COUNTRY_9ScottishPower Renewables, part ofThe West of Duddon Sands Wind Farm locatedoffshore Cumbria started generating in renewablesLeading togetherBiscay-based Iberdrola, installeda 750kW Pelamis wave energy converterat Bilia Croo, Orkney in 2011.offshore wind farm to be constructed by apower in January 2014. It is the first BritishWriter: Eleanor WraggSpanish company.Josu UrrutiaChairman of Athletic ClubWhat makes Athletic Clubdifferent?This club has its ownparticular way of doingthings, and this is whereAthletic’s strength resides.We invest in playerswho might not be consideredthe world’s best, butto us they are the best becauseof intangible valuessuch as a sense of prideand of belonging andcommitment to this club,which balances everythingelse out. Athletic gets itsstrength from society andit has to give somethingback to society in return.“Athletic has a cohesiveeffect. It bringstogether people withdifferent politicalbeliefs and from differentwalks of life”Writer: Glen JohnsonSPORT UEFA Champions League side Athletic Club only signs playersnative to or trained in football in the greater Basque Country and hasbecome a potent symbol of Basque identity both on and off the pitchIn a world where football has becomebig business, one team stands out forits different approach. Established wellover a century ago, Bilbao’s AthleticClub is owned by its members ratherthan venture capitalists, and until a linkupwith local oil firm Petronor in 2008had refused to carry shirt sponsorship,in stark difference to the majority of Europe’stop teams. By making a consciousdecision to only hire Basque footballers,the club has made a brave commitmentProsperous provinceto nurture local talent. While other clubssign star strikers from overseas, AthleticBilbao seeks out the best and brightestfrom its environs and trains them in itsyouth academy system – tipped as theworld’s finest. This innovative approach,and the club’s pride in its regionalidentity, has paid off: along with RealMadrid and Barcelona, Athletic is theonly club never to have been relegatedfrom the Spanish premier league sinceits inception in 1929.FOCUS ON ALAVA Sound local governance coupled with a powerful manufacturingsector has made this mountainous province a European star. Home tothe vibrant Basque capital of Vitoria and boasting attractions from wineries toadventure sports, Alava is striding confidently into the futureBasque energy giantsWriter: Eleanor WraggENERGY For a small European region, the Basque Country punches far above its weight when it comesto the energy sector, as both Iberdrola and Petronor have their home here. Iberdrola is one of the topelectric utilities in the world, an international leader in wind power and plans to invest £10 billion intothe UK by 2020. Petronor, the Basque arm of Spanish oil major Repsol, owns Spain’s largest refinery inBilbao. It poured €850 million into the Basque economy in 2013 and is the top taxpayer in the region,generating over 6,000 jobsAndreu PunetManaging director of PetronorINDUSTRY LEADERSXabier ViteriCEO of Iberdrola RenewablesThe largest and least populated of theBasque Country’s autonomous communities,Alava is dotted with vineyardsand low-lying valleys fringed bymountain ranges and wooded highlands,featuring ancient trade andpilgrim routes that left an indeliblehistorical mark on the region.Formerly an agricultural hub, the provincehas steadily built its industry-driveneconomy over the past three decades,emerging from under the Franco dictatorshipto become one of Spain’s economicbright spots. Industry – iron andsteel manufacturing; the production ofglass, ceramics, agricultural machineryand cars – clusters around its metropolitancentres. Yet, despite its manufacturingfocus, Alava also has a fine trade in tourism,technology and culture.Brand-name companies maintain a presencein Alava, attracted by its skilled workers; MercedesBenz maintains an assembly plant there where it mostrecently began production of its Vito series of motor vehicles,with a reported investment of €190 million. The RiojaVitoria’s old city centreAlavesa wine region is world-renowned,and cuisine in the province, like thatacross the rest of the Basque Country, istop-notch. Tourists flock to Alava’s pristinelandscapes and nature reserves, andit is fast emerging as a strong adventuresport location.Alava is also home to the Basque Country’scapital city, Vitoria, a place ofcharm and natural beauty. Since 1977it has hosted an international jazz festivalshowcasing the talents of a rangeof internationally respected musicians:Muddy Waters, Ella Fitzgerald, DizzyGillespie and Stan Getz, Chick Corea andBobby McFerrin, and the Buena VistaSocial Club Orchestra. With its refinedrestaurants and grills, natural parks,museums and picturesque cathedrals,Vitoria – made up of three concentric circles– is quickly diversifying its economy,winning widespread international acclaim for its officialpro-environment policies and concerted push towardscreating a sustainable urban location: its citizens all livewithin 300 metres of an accessible green space.Javier de AndresPresident of the provincialcouncil of AlavaHow would you defineAlava’s economy?Alava is the most industrialof the Basque territories,and perhaps of thewhole of northern Spain.We have very high industrialisationrates and aneconomy that is stronglygeared towards exports.How does the economicsituation in the rest ofEurope affect Alava?We depend a lot on thesituation in France andGermany. If those marketsare doing well, we makeprogress. By comparison,we are less dependent onthe national market.What are Petronor’s main aims?Our star project is called PetronorBarria. It seeks to improve ourcompetitiveness and long-termsustainability by optimising crudeselection, reducing operatingcosts, offering added-value products,working more efficiently, puttingan emphasis on safety in ouroperations, protecting our environmentand developing a good relationshipwith the local community.What does the Petronor Barria projectentail?New coking facilities which will allowus to get more out of the crudeoil and make lighter products thatoffer greater value. In 2013 wemade significant savings, and thisyear we have reduced energy expensesby €30-35 million as comparedwith early 2013. Increasingour production by exporting moregasoline and diesel is another importantaim. In early 2014, we wereread the full q&athe-report.net/basque-countryworking at 67 percent capacity;right now we are at 92 percent.We have also started using newraw materials, such as vegetableoil. We have been acquiring palmoil for the last two months andusing it to produce diesel. We arealso now making low-sulphur fuelswhich are basically for export.How would you appraise theBasque Country’s attractivenessas a place to invest?The Basque Country is characterisedby its entrepreneurial spiritand its audacity. It has all the requiredtraits to attract global investment.There is a lot to be saidfor the courage of the Basque people;they have dared to take on theworld in their business activities.“We will invest€13 million inreducing CO2emissions this year”What is Iberdrola doing to reducegreenhouse gas emissions andcurb the use of fossil fuels?Iberdrola has 14,000 MW of capacityinstalled in working windfarms, in ten countries, with anannual output of 32TWh. This istotally without emitting greenhousegases. The work we havedone with regulators has beenvery important. We have providedknowledge and practices ofthe utility, and we have managedto make wind energy a furthersource of electricity.What has been Iberdrola’s impacton the wind power sector?Iberdrola’s big contribution hasbeen to promote wind energyand move it from the margins to apoint where it has become a competitive,reliable fully-integratedenergy source with a very highpenetration rate.How would you assess theBasque Country as a centre forrenewable energy?The Basque country has a technologicaland industrial frameworkthat has allowed companiesto achieve a high status inthe renewable industry at aninternational level. This in turnenables professionals to developtheir skills. In the global market,professionals have to dealwith the challenge of knowingabout and experimenting withdevelopment in other areas ofthe globe to acquire the vision ofother business cultures and takeit back with them, integrating itinto their local practices.“Offshore wind farmsare where there is thepotential for a highlevel of cooperationbetween the BasqueCountry and the UK”

10 _BASQUE COUNTRY BASQUE COUNTRY_11A well-connected regionWriter: Eleanor WraggINFRASTRUCTURE As the uniqueness of its language attests, the BasqueCountry was once isolated from the rest of the world. Today, throughits infrastructure and technology, the region plays an important role inconnecting people, both virtually and physicallytions advances. But the company also looksto build local talent, as chairman AlbertoGarcia explains. “We are committed to creatingtraction among Basque companies so thatwe can increasingly incorporate more Basquesuppliers in the products we buy.”The next step is to look outside the borders ofthe region. “We are looking to see if it is possibleto do something in the regions of Spainthat have similar characteristics to ours,” hesays. He also wants to see more investors comeThe Basque Country isa gateway to Europeinto the region. “The Basque Country is veryattractive. Although we are very ‘local’, ourbusiness concept is very universal and veryprofessional. We’re not about making a fastbuck. The Basque Country is a country thatseeks long-term sustainability.”INDUSTRY LEADERAlberto GarciaChairman of EuskaltelNext-generation connectivityIn the 20 years since Euskaltel’s founding,the company has invested almost €2 billionin deploying its next-generation networkin the Basque Country. Working out atan average of almost €900 per resident,this investment represents the largest everundertaken by a Spanish telecommunicationsoperator into the region. “Our fundamentalidea was that there had to bean alternative network to that of the oldmonopoly, in order to create true competition,”says Alberto Garcia, who adds thatEuskaltel has now rolled out its high-speedfibre-optic network to 85 percent of theregion’s population – no mean feat giventhe mountainous landscape. And from thechairman’s perspective, Euskaltel’s commitmentto bringing the Basque Countrythe latest in communications technologyhas paid dividends: “Since 2008 until thepresent day we have maintained the samelevel of income we had prior to the economiccrisis, while the market has fallenby over 25 percent,” he says.PORT OF BILBAO IN NUMBERSLocated on Spain’s Atlantic coast, the Port ofBilbao is a centre for global sea trade as wellas a key part of Europe’s Atlantic logistics arc.32 metresthe draught of Bilbao’s docks, which allows thelargest vessels to berth€500minvested by the Port Authority of Bilbao since1992 in land reclamation and extension works30m tonnesthe traffic volumes at the Port of Bilbao in 2013,a growth of 2.24 percent over the previous yearAsier AtutxaChairman of the Port Authorityof BilbaoHow important is the port tothe Basque Country?The Port of Bilbao nowadays isa barometer of the economicactivity of the Basque Country.With the resources that wegenerate – around €30 millionper year – we have the capacityand autonomy to carry outthe investments that we need.What links are there betweenthe port and the UK?The UK accounts for ninepercent of the port’s traffic. Wehave at least one sailing perday to the British Isles, whichmakes us the principal Spanishport in terms of entry andexit of cargo originating fromor going to the UK.The Basque Country’s strategic location as a gatewayto Europe, coupled with its vibrant industrial base,has led to it becoming an important logistics centre.Its modern communications infrastructure, made upof an extensive road network, a railway which connectsSpain to France, three airports and two of Spain’s leadingseaports, sees over 400,000 tonnes of goods per daytransported in and around the region.Continually ranking among Spain’s top five portsin terms of traffic volumes and activity, the Port ofBilbao plays a vital role in Europe’s container transportindustry. “We have connections with 900 portsglobally,” says Asier Atutxa, chairman of the PortAuthority of Bilbao, who adds that the port movesaround 30 million tonnes of cargo per year. “This year,we’ve seen a 2.2 percent increase in our traffic, whichmeans we’re slowly but surely reversing the downwardtrend in traffic we have seen in recent years as a resultof the economic crisis.”The United Kingdom remains the port’s main market.It accounts for fully nine percent of the port’s overalltraffic, and around 1.6 million tonnes of cargo annually,while ferry and cruise passengers are also overwhelminglyBritish: 86,000 of the 142,000 touristswho entered the Basque Country via the port in 2013sailed on the ferry linking Bilbao with Portsmouth. Ofthe 44 cruise ships which called at the Port of Bilbaoin 2013, one-third of the passengers were British, followedby Spanish passengers, who made up 20 percentof the total, and Americans, who made up 19 percent.While the Port of Bilbao plays an important role in connectingthe Basque Country to the rest of the world viathe sea, another Basque company is providing virtualconnectivity. Euskaltel, set up in the 1990s with theaim of providing cutting-edge telecommunicationstechnology to the region, is the first independent virtualmobile operator in Europe with its own network.Today, Euskaltel delivers broadband internet, digitaltelevision and mobile telephone service to 300,000customers. Although the Basque Country alonerepresents a small market, the company has takenan innovative approach, offering up its network toglobal technology companies as a testing ground,and in return receiving the latest in telecommunica-From its position in the late 1990s as a new entrant in the Basque telecommunications sector,Euskaltel’s innovative, nimble approach has seen it rise quickly to dominance, displacing theincumbent former monopoly Telefonica in the broadband sector and providing tough competitionin mobile and fixed-line telephonyHow was Euskaltel founded?Euskaltel is an initiative setup by the Basque governmentand Basque savings banks inthe 1990s during the crisis,when we realised we neededto make technological progress.One of the resultinginitiatives was improvingtelecoms infrastructure withthe latest technology at thetime: fibre optics.Later, at the end of the1990s, the Basque governmentand Basque savingsbanks took advantage of thederegulation of the telecomindustry by the central governmentto form a technologicalpartnership calledRetevision. It was the secondbiggest telecom provider inSpain, an alternative to themonopoly held by Telefonica,and Euskaltel was the Basquetelecom operator.What is the vision for Euskaltel?We want to be the leaders intelecommunications in theBasque Country. We wantto meet all the needs of ourusers, be they corporatesor individuals. That meansmaintaining a balance, somethingthat we Basques knowhow to do well, betweenthinking about what is goodfor the country and what isgood for business. By doingthis, we meet the needsof our shareholders, ourcustomers and our people,and Basque society sees usas a net contributor to thecountry’s wealth.What is your approach to R&D?We innovate in two ways. Intechnological innovation,we’ve reached agreementswith the world’s largestmanufacturers in exchangefor carrying out pilot tests ofthe latest technology. We’re asmall country and we can docontrolled tests; the manufacturergives us the latest technology,they see the resultswe get, and in return Euskaltelgets the latest technologysooner than the competition.In terms of non-technologicalinnovation, we have innovatedin terms of our proposition.For example, we launched thefirst flat rate broadband tariff,which has since been followedby others. That said, technologyand products can alwaysbe copied. What can’t be copied,and what sets us apart, isthe general feeling we createamong our customers and ourpeople through our serviceand way of doing business.What makes the Basque Countryattractive for investors?For foreign investors, what’simportant here is our seriousness,the way we strivefor excellence, and ourcommitment to economicefficiency. The BasqueCountry is also economicallyand legally stable.Where do you see opportunitiesfor growth?With the market share wehave, growth in the BasqueCountry isn’t easy. However,we still have more productsand services to offer potentialcustomers. There are morethan 150,000 homes in theBasque Country who don’t usefibre optics. There’s a big opportunitythere for Euskaltel’sfibre optics service. Otherpossible growth areas are innew telecom services. We arelooking at expanding outsidethe Basque Country.“There needed tobe an alternativenetwork so thatthere could bereal competition”read the full q&athe-report.net/basque-country

12 _ BASQUE COUNTRY An independent supplement produced by The Report Company 13Green and graciousWriter: Susana UrraTOURISM AND CULTURE While lacking the dependable weather that draws themasses to the Mediterranean, the Basque Country seduces visitors with itsnumerous opportunities for high-quality tourism based on world-class food,dramatic scenery, outdoor sports, unique museums and famous festivalsview photo gallerythe-report.net/basque-countryCULINARY EXPERIENCESIt has often been noted thatfood and the experience ofeating come close to being areligion in the Basque Country.While the world has come torecognise the region’s culinaryexcellence through the hautecuisine movement led bysuperstar chef Juan Mari Arzak,what is truly remarkable aboutthe Basque Country is the highquality of the fare at regularestablishments. From its famoustapas held together witha toothpick and displayed onbar counters to its cider housesserving codfish omelette, slabsof beef and sagardoa straightfrom the barrel, this is a placewhere any self-respectingBasque will serve up only thebest ingredients.Photos: Basque TourismAgency, San Sebastian CityCouncilARTWhile the Guggenheim Bilbao may representthe heart of global contemporaryart in the Basque Country, Basque artistshave been defining the spirit of their nationsince the middle of the last century. Usinglarge volumes and down-to-earth materials,an entire generation of sculptors suchas Eduardo Chillida, Jorge Oteiza, AgustinIbarrola or Nestor Basterretxea craftedenduring works that sank their roots ina legendary past and quickly becameinseparable from their surroundings. TheComb of the Wind or the Forest of Omasuggest a minimalist rejection of elaborateimagery in favour of simple forms thatplay with matter and empty spaces. Morerecently, people like Txomin Badiola andCristina Iglesias have built on that legacyto create new art forms that have met withsignificant international success.Photos: Irekia-Basque Government| Mikel Arrazola, Basque Tourism AgencyVITORIAThe de facto capital of the Basque Countryhouses more than executive and legislativepowers: it is also home to wild deer livingwithin city limits. Declared European GreenCapital in 2012, Vitoria is surrounded by aring of parks connected by corridors wherelocals go to walk, ride their bikes andtake in the special beauty of the Salburuawetlands. Already noted for its internationaljazz festival, Vitoria recently claimeda new victory when it was designated 2014Gastronomy Capital of Spain.“Vitoria is Spain’s Switzerland, where tramsrun through beautiful green spaces”Javier MarotoMayor of VitoriaPhotos: Basque Tourism Agency, Vitoria City CouncilSAN SEBASTIANOnce a summer retreat for royals,elegant San Sebastian hasredefined itself as a forward-lookingcity that respects its belle époquepast. Its international allure willonly increase when it becomes2016 European Cultural Capital,uncovering a world where strollingalong the picture-postcard bay of LaConcha and dining on world-classpintxos is not so much a rare treatas a way of life.Photos: San Sebastian City Council, Basque tourism agencyGAZTELUGATXEMore than 200 stone stepsseparate the Basque mainlandfrom the islet of Gaztelugatxe,but thousands of visitors willagree that it is worth the effort.The rocky isle is crowned by ashrine to Saint John the Baptist,where shipwreck survivors cameto express gratitude and localsrang the church bell to make awish. An alternative to climbingGaztelugatxe is admiring it fromthe sea, an option that affordsclear views of this rugged stretchof the Biscay coastline and itsendemic vegetation. Boat tripsare available in nearby Bermeo,a fishing village with a noblehistory whose economy oncerested on whaling. Rides alsopass by Cape Machichaco and itslighthouse, a very popular spotfor underwater diving.Photos: Irekia-BasqueGovernment | Mikel ArrazolaECO TOURISMThe rolling green hills of theBasque Country take on a painfullybright hue on sunny days, asthough wilfully dazzling visitors.The small territory offers manypossibilities for nature tourism:from the climber-friendly peakof Txindoki to the coastal flyschdeposits of Zumaia-Deba, consideredof international geologicalsignificance, and the Urdaibai biospherereserve, which encapsulatesthe region’s environmental diversitythrough its cliffs, forests, rivers,beaches and wetlands.Photos: Irekia-BasqueGovernment | Mikel Arrazola

TechnologycentresA fundamental part of the Basquepush for competitiveness inrecent years has been its technologicalcentres. In keeping withthe cluster ethos, many of theseare grouped together to poolknowledge and resources whilemaintaining their autonomy.The resulting technologies andproducts are passed on to the relevantbusinesses. IK4 is a typicalexample: an alliance of nine technologicalcentres in Gipuzkoa,employing a total of 1,300 staff,340 of who hold PhDs.“Technology and industrygo hand in hand”Joseba JauregizarManaging director of Tecnalia1,377Companies received R&Dsubsidies in 2013€246 millionThe Basque government’s researchand development budget for 20143%The target for Basque R&D investmentby 2015 as a portion of GDP€637The amount spent per person onBasque R&D, the highest in SpainIn numbersA smart approach“We underwent a great transformationinto clusters rather than sectors as oureconomic foundation. We used clustersto redefine technical policy, fiscal policy,socio-economic policy, diversificationand internationalisation”Jon AzuaChairman of e-novatingcept, with many of the smaller businesses on whichit has traditionally relied seeing the potential benefitsof linking up.With Harvard business school professor and competitivestrategy expert Michael Porter on board, bythe mid-nineties the Basque industrial landscapehad been transformed.The clusters redefinedeverything from economicand fiscal policyto technical and socialstrategy. The regionnow has 11 consolidatedclusters in strategicsectors. They cover halfof its industry, includingaeronautics, whitegoods, paper, maritimeproduction, energy andtelecommunications.“The mainthing is the potentialof sucha tight-knitenvironment”Ines AnituaManaging director ofACICAEIn 2013, the Inter-American Development Bank(IDB) underscored the pioneering status of theBasque use of clusters, including it as an exemplarymodel in its annual report.Keeping up with ambitionsThe aerospace cluster HEGAN has been one of thestandout successes of recent years, with its inclusionof major players in the sector such as ITP andAernnova, which makes components for Airbusand Embraer, amongst others. As Jon Larrinaga,who is Aernnova’s director of institutional relations,points out, the formation of clusters allowsthe government to see how the industry is organised,but also enables the industry’s smaller playersto learn from their larger, more successful counterparts.“Small businesses always find it hard. Thecluster spurs them on to continuously improve andget involved in cooperative programmes with otherbigger companies.” With growing numbers of thecluster’s SMEs now taking the first steps towardsexporting, Larrinaga believes Aernnova’s rhythmof globalisation is being followed by its suppliers –a plus point for the future of the sector in the faceof international competition. “The best situationfor us is to keep working with the suppliers wehave, as we already know their qualities and howthey work,” he concludes.Alejandro BengoaManaging director of IK4-TeknikerWhat is IK4?We are nine technological centres. We’reall non-profit, we’re all from the BasqueCountry and we all have the same mission:developing technology to makefirms more competitive.How should the Basque Country positionitself?What we can never do is compete when itcomes to cheap labour. We have to positionourselves in terms of high added value. As asmall country we have to find niche markets.Euskadi is an inherently industrial country.That’s the foundation of our economy andit’s more solid than other models.How do you see the future?We want to be a significant agent in ensuringthe Basque Country remains industrial.Perspective“We need toremain in theresearch loop”Francisco J. RiberasMeraChairman of GestampDespite the Spanisheconomic downturn, automotivefirm Gestampclosed 2013 withturnover of €5.7 billion,having continued toinvest both abroad andin R&D at home.Made in the Basque CountryWriter: Guy HedgecoeINDUSTRY By sticking to its industrial principles and introducing the cluster businessmodel, the region has boosted competitiveness and innovation and reachednew marketsTwo decades ago, the Basque car industry was strugglingamid a broader economic dip in the region and acrossSpain. Many feared the Basque industrial model itself wasobsolete. “The academic world said we had to move on to aservices-based economy,” says researcher and politician JonAzua, who was advising the Basque government at the time.“Industry was seen back then as something for the thirdworld.” But Azua’s message that Basques should recovertheir “taste for elbow grease” took root and the region’sfirst cluster, the ACICAE, was created, bringing togethercompanies from the automotive industry.Concentrating the resources of one particular economicactivity in a geographical area – the theory behind clusters– stimulates competitiveness and innovation, as well ashelping businesses reach new markets. Its merits are nowwell documented, although in the early nineties, clusterswere relatively uncharted territory.For the car industry, the model has been an undisputedsuccess. “In 1993, we had 40,000 workers in the sector, allbased in the Basque Country; now we have almost 80,000,half of whom are outside Spain,” says Ines Anitua, managingdirector of ACICAE. She adds that the 300 companiesthat make up the sector have gone from having no plantsabroad to 200 over the last 15 years. “We always try to bringpotential partners here to visit us,” she explains. “The mainthing is when they see the potential we bring together insuch a tight-knit environment.”The Basque region was fertile ground for the cluster con-Joseba JauregizarManaging director of TecnaliaTecnalia is an alliance of eighttechnology centres, whose missionis to transform knowledge in orderto generate wealth and create asocial impact.What areas of research does Tecnaliasupport?We have business divisions thatinclude aerospace, automotive, energy,metal casting, shipbuilding,railway, sustainable construction,environment, information technologyand health, particularly ageing.What does the Basque Countryhave to offer?We have opened up a door to theterritory as an economic asset initself, which we view as a flow ofeconomic relations. We often saythat the Basque Country is like alarge city, or a city-state, a bit likeSingapore. From that viewpoint, theeconomic world, the world of culture,the world of urban regeneration withBilbao as a prime example, the worldof gastronomy and wine, all createeconomic flows in the territory, andit becomes an asset in itself.What would you like the rest ofthe world to understand about theBasque Country?We have a virtuous triangle madeup of an industry with a competitiveadvantage, qualified workersgraduating from competent highereducation and vocational trainingprogrammes, and continuous supportfrom the authorities.read the full q&athe-report.net/basque-country

16 _ BASQUE COUNTRYBASQUE COUNTRY_17World beatersWriters: James Badcock and Eleanor WraggCEO INSIGHTS Whether they head up big or small companies, Basque Country business leadersmake a point of striving for excellence in whatever they do. Increasingly, the global marketplace hasbecome the backdrop to this commitment to innovation, professionalism and client care nurturedamong the region’s family firms and larger operationsMan of valuesFernando QuerejetaChairman of IdomHaving started out in the iron industry, thisengineering and architecture company hasnow been in business for over 50 years.Its chairman Fernando Querejeta saysit is his firm’s Basque principles whichhave allowed it to diversify internationallyto escape Spain’s crisis. “Staff training,dedication to the client and a good workingatmosphere with mutual trust,” is Querejeta’ssummary of those core values. Idomis today a leading multidisciplinary groupwith 2,500 professionals united by commonownership of the firm, located in 34offices spread over 16 countries across fivecontinents. Back home, Idom’s architecturaloffice offered technical assistance inthe construction of the Guggenheim Bilbaobefore building Bilbao Arena and AthleticBilbao’s new stadium.The high flyerIgnacio MataixCEO of ITPEngineering riskJorge UndaManaging director of SENERSENER managing director Jorge Undaadmits that his leadership is of theconservative kind when it comesto financial risk. That said, he likesnothing better than an engineeringchallenge, especially in a newsector. “The first wind turbinemanufactured in Spain was madeby SENER in Tarifa in 1981. We havealways taken risks with technologyand tried different things.” Asidefrom its involvement in the ITP jointventure with Rolls Royce, SENER’sareas of expertise are many, takingin solar energy, liquefaction andregasification of natural gas, urbantransport projects, satellites andship construction.Outside Spain, the company has aA joint venture by Basque aeronauticsfirm SENER and the UK’sRolls Royce, ITP is celebratingits 25th anniversary. Set up in1989 to work on the Eurofighterproject, today it is a partner in allkey international civil aviationprogrammes. Thanks to its participationin Rolls-Royce’s Trentengines, ITP holds a 50 percentshare in the twin-aisle fleet. “Wehave specialised in one specificpart of the engine, the low-pressureturbine, and no other companyin the world has developedas many such components overthe last 15 years,” says CEO IgnacioMataix. A key factor in ITP’srise is the company’s investmentof €1.2 billion over the past 10years, some 80 percent of whichon R&D. “We went through aperiod of developing many newproducts that were launched inthe last ten years, like the Airbus380, Airbus 350 and the BoeingDreamliner, and we participatedin all of those planes.”Driven by successJose Manuel OrcasitasCEO of IrizarIrizar started out in 1889 as afamily cart-making businessbefore moving on to manufacturevehicles such as the firstwooden buses on the streetsof Bilbao. The 21st century hasseen the company make boldmoves into the internationalcoach market from its positionas leader in Spain. In Mexico,Irizar has a 60 percent marketshare, while in Morocco itboasts 100 percent thanksto its new plant near Rabatwhich will soon also be used toconsolidated presence all over Southand Central America, besides officesin Portugal, Algeria, Abu Dhabi,Poland, China, India, South Korea,Japan and, now, Manchester in theUK. Unda stresses the need to integrateinto a foreign market, ratherthan try to impose a solution fromafar. “To carry out a project like theSao Paulo underground for example,you need to be Brazilian. You can’tdo it 100 percent from Spain. That’swhy we call ourselves a multi-localorganisation. Because we’re globallyintegrated, 80 to 90 percent of a projectis handled by the local team, butwe channel technology used in otherlocations with equipment from othercountries in an integrated manner.”manufacture vehicles for salein Europe. After record resultsin 2013, with total income of€556 million, 88 percent ofwhich was earned abroad,CEO Jose Manuel Orcasitas iseyeing an assault on the USmarket, as well as new technologicaladvances. ”We havedeveloped our own integralelectric bus, which is ready togo, and are work on our owntechnological safety developmentssuch as a driver fatiguedetection system.”“The very firstwind turbine to bemanufactured inSpain was madeby SENER in Tarifa,Andalusia, in 1981.We have alwaystaken risks withtechnology and trieddifferent things”Cooperative championInigo UcinManaging Director of DanobatGroupHome builderJose Luis PerezChairman of OrkliHeadquartered in Ordizia,Gipuzkoa, Orkli’s business isthe manufacture and sale ofcomponents for central heating,water heating systems anddomestic appliances. Part ofthe Mondragon cooperativegroup, Orkli has manufacturingplants in China and Brazil, and aglobal network of offices. ChairmanJose Luis Perez stresses,however, that his priority is tocreate jobs and wealth in theBasque Country. “For every eurowe invest in China or Brazil, weTools for growthInaki GarmendiaChairman of EGA Masterinvest 20 or 30 here. Aroundseven percent of our workforceis involved in R&D, working toboost manufacturing technologyand to improve the productsthemselves.” Perez says that ofglobal turnover of €150 millionover the last two years, €130million was made in Ordizia,with reinvestment in manufacturingtechnology the strategyfor future success. “In 2012, weinvested €16 million and thisyear we are planning to invest€20 million or more.”Agent of changeChairman Inaki Garmendia -left- with his sons Aner & Inaki Garmendia“We have always been acooperative and this has allowedfor beneficial mergers to keep thecompany alive and jobs intact”More than half a centuryhas passed since Danobat-Group manufactured its firstmachines, and its commitmentto innovation means that itsturnkey solutions and standaloneapplications crop up ina wide variety of sectors, fromaerospace and railways toenergy and healthcare. “It istrue that we don’t make trains,planes or cars; instead, wemake machines that becomekey pieces inside trains, planesand cars. We have our owntechnology centre, which worksCarlos GarciaManaging director of Inbisa ConstructionWith over 30 years of experiencein all aspects of the constructionsector, Inbisa Construction hasmade its mark on many of Spain’surban centres, with work includingthe remodelling of the MutuaMadrilena building in Madrid andthe Inbisa tower skyscraper inBarcelona. But where its work hashad the most tangible impact isin its home town, Bilbao, whereit has revamped the San Mamesstadium, home to Athletic Club,as well as carried out work for thealmost exclusively for us,”explains managing directorInigo Ucin, adding that thegroup invests ten percent of itssales into R&D. DanobatGroupensures that all workers haveaccess to training and has ascheme whereby universitystudents can work part-time,helping managers to identifynew talent. “We have been acooperative from the word goand this status has allowed forbeneficial mergers and associations,fighting for jobs and thesurvival of the company.”town hall and provincial government.Despite a rocky few yearsfor Spain’s construction sector,Inbisa Construction has remainedstrong, something managingdirector Carlos Garcia attributesto its integrated structure: “Weare not merely builders; we havea real estate branch and can offerclients a complete package thatincludes the land, the constructionwork and all the paperworkinvolved in obtaining the necessarypermits and licenses.”“Our titanium tools are used at theCERN particle accelerator”The deep thinkerMaria Lasa IrizarManaging director of Irizar ForgeIrizar Forge, a specialist in crane hooks,has been in the same family for 92 years,with Maria Lasa Irizar representing thefourth generation of her clan in the firm’smanagement. Today, the managing directoris rapidly taking the company along a newpath of diversified production.“Throughout our company’s history, wewere very much tied to cranes as we focusedon making this critical component, thehook. I started to think, why only cranes?Hooks can be put to other uses as well,surely? That is how we began to get involvedwith the offshore and subsea market. Nowour goal is to reach a 50:50 balance betweenour lifting and our mooring projects by2016,” she explains. Exploration and extractionoperations at increasing depths arebeing targeted by Irizar Forge as opportunitiesdue to their hooks’ reputation fortoughness. “When you take material 4,000metres below sea level, you don’t want to beforced to review it for safety every two years– you want to forget about it for the next 20years. That is where we come in, althoughour products are not cheap.”On land, too, Irizar Forge’s forged productsare put to the test in the most demandingcircumstances, including nuclear powerplants. Irizar Forge has logistics centresin Germany, United States and Australiaand exports now account for 90 percent ofsales. Not bad for a family company fromLazkao in Gipuzkoa province. “We havebeen through three successful successionprocesses. Coexistence in our case hasbeen easy; we are a simple, down-to-earthfamily and that has helped.”“We’ve been through threesuccessful family successionprocesses in which coexistencehas been easy because we are asimple, down-to-earth family”Small and beautifully designed, EGA Master,founded in 1990, is a prime example of how afamily company from the Basque Country candevelop a global reputation by striving forexcellence. EGA Master makes high-qualityhand tools, with its innovative and worldrenowned“Basque wrench” now part of arange of 13,000 different products, used insome of the most demanding sectors, fromaeronautics to oil exploration and mining.“Due to our philosophy of working closelywith our clients, we have been able to satisfythe needs of the European Organization forNuclear Research. Our titanium tools areused at the CERN particle accelerator,” sayscompany chairman Inaki Garmendia. Toremain at the cutting edge, EGA Master investsseven percent of revenue in R&D, fivetimes higher than the sector average andpowering its expansion into 150 marketsaround the world.EGA Master has achieved a high degree ofmarket diversification to provide protectionfrom economic developments aroundthe world. With exports having reached 90percent of total sales, the company worksto ensure that no market accounts for morethan 15 percent of its business and that noindividual client represents more than eightpercent. “Today 40 percent of our exportsgo to emerging economies, where demandis growing and there is less competition asmany of our competitors haven’t even consideredentering the majority of these markets.”

Gipuzkoa seeks to unveil itshidden championsWriter: James BadcockDespite its status as the cradle of Basque identity, this north-eastern province has a modernoutlook on business, while its political leaders are pursuing innovative ways of governingALAVABISCAYBilbaoSAN SEBASTIANVitoriaGIPUZKOAThe three provinces that make up the Basque Country eachhave their own, unique identityTucked between the south-western corner ofFrance and the Bay of Biscay, Gipuzkoa maybe a small province but it is one of many parts.The lush landscape of rolling mountains tothe south gives way to a coastline to the norththat includes sleepy towns and the buzzingcultural hub of San Sebastian. The province isthe heartland of Basque nationalism, and todayit has the highest proportion of speakers of theBasque language, Euskara, of the three Basqueprovinces in Spain.It has also created a strong economic identity.While Biscay has traditionally relied onlarge-scale business, Gipuzkoa has built itseconomy on small- and medium-sized companies,with 80 percent of its firms employingfewer than ten workers.“We’re all Basques, but we’re different,” explainsMartin Garitano, president of the provincialcouncil of Gipuzkoa. “Biscay has its own character,while the Gipuzkoan is more reserved –we’re talking about small, self-made businessowners who came from a rural backgroundand who have developed industrial careers.”As well as having a reputation for being lessextrovert than their neighbours, Gipuzkoansare known for their reliability and determination.This region, like Alava and Biscay, hasinvested heavily in research and developmentin recent decades, spending just over two percentof GDP on this sector – nearly double theSpanish average.Stability through unityThis entrepreneurial drive contributed enormouslyto the Basque region’s economic expansionduring the 20th century, when it establisheditself as one of Spain’s main industrialmotors. Although the famously robust Basqueeconomy could not avoid the economic crisiswhich has swept over Spain over the last fiveyears, it has sidestepped the worst of it. Gipuzkoa’sjobless rate of around 14 percent is thelowest in the country. “Why do we have lowerunemployment?” asks Pedro Esnaola, chairmanof the Gipuzkoa Chamber of Commerce. “Ourmarket is in just as bad a condition as any other.But entrepreneurs have decided to keep jobs, inmany cases by becoming personally indebted inorder to keep the business going.”That determination to prioritise jobs can alsobe seen in the cooperative culture, whichhas thrived in Gipuzkoa, most famouslyat the Mondragon group (see inset). Set upnearly 50 years ago as a pioneering corporatescheme, it now includes around 290 companiesaround the world. While the group hasgone through financial difficulties recently,it prides itself on having managed, throughoutits history, to save jobs through its labourredistribution formula.“The main goal of a cooperative model is notprofitability, although obviously you also needthat, or else you will be forced to shut down,”says Jose Luis Perez, who is chairman of Orkli,The cooperative model in practiceMondragon GroupA Biscayan priest who wasdriven by the importance ofeducation and democraticideals is seen as the drivingforce behind the creation ofthe Mondragon group. In 1956,Father Jose Maria Arizmendiarrietablessed the creation ofa company, Ulgor, which wasbased on the cooperativeethos. This company wouldlater become white goods firmFagor. He also upgraded the EscuelaProfesional, a vocationaltraining school, and by 1959,credit provider Caja LaboralPopular had been created, alsoon the basis that its staff werepart-owners of the business.As the Mondragon group’scompanies expanded theiractivities abroad, cooperativesin other areas were set up andan autonomous welfare systemoffering workers healthcare andjob protection was developed.At the end of 2012, the Mondragongroup was employing80,000 people in finance,retail, industry and knowledge.“There are lots of clichés about theBasques, but clichés tend to exist fora reason,” says Joseba Engana, CEO ofKendu, a Gipuzkoa-based firm whichspecialises in visual communication.a cooperative within the Mondragon group.“The main thing is to keep jobs here, and youdo that by reinvesting.”Although Fagor, the Mondragon group’s flagshipfirm and one of Europe’s largest consumerappliance companies, was forced into bankruptcyin 2013, advocates of the cooperativemodel believe it is here to stay. “We are a verycollectivist society,” says Jon Altuna, vice-rectorof Mondragon University, which is closely associatedwith the group. “Just look at the gastronomicsocieties we have.” Mondragon alonehas 30 of these dining clubs, which regularlybring together friends, relatives and colleaguesto cook and eat, reflecting the tight-knit natureof Gipuzkoa’s social and business life.This cooperative ethos has also helped companiessecure financing when credit has beentight in recent years. Firms collectively approachedthe government to ask it to guaranteetheir financing through so-called SGRs,or reciprocal guarantee companies. “We wereable to solve the problem through cooperation,while retaining our individual corporateindependence,” Esnaola says.“I think what we can do is representgood things like hard work, responsibilityand reliability, things which Spainis perhaps not internationally famousfor.” Jose Luis Perez of manufacturingfirm Orkli says “reliability, technology,innovation and customer service” are alltypical of the province and the wider region.“When you have a lot of businessesacting in this way, it conveys an image.”Casting off the Gipuzkoan reserveSince 2011, businesses have been free of a verydifferent burden, following the announcement byterrorist group Eta of a definitive ceasefire. Thiswas a particular relief for this province, whichhad been a focus of much of its violence. However,one concern that does remain within the businesscommunity is that the famous Gipuzkoanreserve has held back the province’s ability to sellitself and its products within the global economy.Orkestra-Basque Institute of Competitiveness,a centre for the analysis of Basque industrialpolicy and strategy that partners with DeustoUniversity, has drawn up a roster of what it calls“hidden champions” – successful yet relativelyunknown companies. Irizar Forge, which manufactureshooks for winches and cranes, wasincluded as one such case.“We have been silent for a long time, partly dueto our nature and partly due to our recent historyof terrorism,” says the company’s managingdirector, Maria Lasa Irizar, speaking of the businesssector as a whole. “However, I think that weneed to acknowledge that times have changedand start doing more to ensure that people onthe outside know about all the good things thatwe are doing. I think we need to sell ourselves alittle better and believe in ourselves.”New policies and new politicsThe Basque region has seen a seismic politicalchange in recent years with the arrival of Bildu,a new, leftist, nationalist coalition. In 2011, itcame a close second to the Basque NationalistParty (PNV) in regional elections and sweptto power in many town halls, particularly in“We have beensilent for a longtime, partly dueto our recenthistory”Maria Lasa IrizarManaging director of IrizarForgeGipuzkoa.In contrast tothe Spanish centralgovernment,Bildu’s leftist ideologyhas seen itbattle the tailendof the economiccrisis withrelatively heavyinvestment in thebusiness sector,social spending and culture. San Sebastian,which Bildu governs, raised investment in entrepreneurialprojects from €1 million to €7.5million between 2011 and this year. Unusually,the city has also become involved in investmentpolicies related to the labour market,which would normally be under the controlof regional and central administrations. SanSebastian city hall has apportioned €20 millionover three years to job creation projects.For Juan Karlos Izagirre, mayor of San Sebastian,this is all part of Bildu’s efforts to bringpolitics closer to the Basque people.“We are trying to implement a bigger policyat a social level against the economic crisisthan anyone else has done, either here in theSpanish state or in many other Europeancities,” he says.read the full q&athe-report.net/basque-countryEntrepreneurviewpointsMartin GaritanoPresident of the provincial councilof GipuzkoaWhat are your main aims as head of theprovincial government?We came into the provincial governmentthree years ago and our main objective was,and still is, to establish a different way ofgoverning. We wanted to be involved withcitizens permanently. Secondly, we wantedto guarantee that in the face of the economiccrisis, Basque society wouldn’t fall apart, tomake sure that the weakest people in Gipuzkoansociety maintained what we believeshould be a basic quality of life.What are Gipuzkoa’s competitive advantages?Gipuzkoa is essentially an industrial territory.We have powerful industries such asmachinery and transport and it’s also a territorythat exports. The majority of Gipuzkoa’sproducts are exported. Our businesses havetaken the laudable decision to innovate. Wehave to innovate all the time, because we’rea very small territory and if we’re not at thecutting edge of innovation, of research anddevelopment, we’ll be swallowed up; we’llbe wiped off the industrial map.What is the biggest challenge looking ahead?Unemployment in Gipuzkoa. I’d also like tosee a more participative society, the moreso the better. In the first years of transitionafter the death of Franco, the socialeuphoria led people to participate ineverything. But then people get comfortableand they stop participating and theydelegate responsibility to the politicians,and that’s no good.

20 _BASQUE COUNTRY“There are few cities in the world so happily situatedas San Sebastian,” noted the Irish writerPaddy Woodworth of Gipuzkoa’s capital. Onceyou have set eyes upon the sweeping bay of LaConcha, which is lined by a picturesque beachlapped by the waves of the Bay of Biscay, it’s hardto argue. Inland, meanwhile, the gloriouslyantiquated hotels and mansions of the city’sold quarter and its neo-Gothic cathedral are areminder of its longstanding status as one ofSpain’s most prized resorts.But present-day Donostia, as San Sebastianis known by Basques, offers much more thanstunning views and charming architecture. Theunmistakeable Eduardo Chillida sculpture,‘The Comb of the Wind’, which perches on therocks at nearby Ondarreta beach, is a reminderthat culture is at the heart of this city.The annual San Sebastian Film Festival, nowover half a century old, has become not just amajor supporter of Basque and Spanish cinema,but a genuinely international event and a keystop on the global festival circuit. It has boostedthe careers of directors such as Francis FordSan Sebastian:2016 EuropeanCapital of CultureIn 2016, the Basque city will share thetitle of European Capital of Culture withWroclaw in Poland. Under the slogan“Waves of energy”, San Sebastian hopes toSan Sebastian’s year-round appealWriter: Guy HedgecoeCITY FOCUS Gipuzkoa’s capital has an illustrious history as a picturesque summer resort. But itscinema and music festivals and thriving food scene have also given it a reputation as an innovativeand internationally-minded hub of cultureCoppola, Joel Cohen, Pedro Almodovar andDanny Boyle by screening and rewarding theirwork. While relying heavily on independentfilms, the festival has always prided itself onhaving Hollywood on speed-dial; this year is noexception, with Denzel Washington the recipientof a lifetime achievement award.The Horror and Fantasy Film Festival caters to amore niche audience, but spills out of the movietheatres to offer performances on the streets.Meanwhile, the summer jazz festival has builtup a formidable reputation, with artists rangingfrom Ella Fitzgerald to Diana Krall gracing itsvenues down the years.Beyond all that jazzAnd yet, according to mayor Juan Karlos Izagirre, there is more to the city’s cultural fabricthan this. “San Sebastian is a living city,” hesays. “Associating its cultural activity exclusivelywith the film festival, the jazz festivaland the horror festival is a mistake, we think,because, for 185,000 inhabitants, there are 12cultural centres and immense cultural activityTHE COMB OF THE WINDThis sculpture by EduardoChillida is one of his bestknown. Embedded into therock on San Sebastian’s LaConcha Bay, its three steelpincers “comb” the windthrust up as the waves ofthe Cantabrian sea batterthe coast.Photo: San SebastianCity Counciluse the opportunity to show that “ways ofunderstanding and practicing culture mustchange, and that this change must comefrom people and their civic commitment.”every day of the year.”He cites initiatives such as Tabakalera, a massiveold tobacco factory which is being converted intoan international arts centre. Its inaugurationis scheduled for 2015. Financed by the Basqueregional government, the Gipuzkoan provincialauthority and San Sebastian city hall, it has thelofty aim of eventually becoming “a platform forcollaborative work between assorted organisationsand the general public.”San Sebastian is enjoying a steady growth intourism and a two percent rise in 2013 saw thecity receive around 500,000 visitors. Just overhalf of these were foreigners, a growing trendwhich the city is actively encouraging – plans arecurrently under way to expand nearby Hondarribiaairport and give it international status.Ensuring San Sebastian has a year-round buzz isimportant for the city authorities, who are keento broaden the city’s traditional image as a summerresort and magnet for surfers. Their effortsseem to be paying off, with a gradual increase inlow-season visits in 2012 and 2013.A culinary capitalFortunately, gastronomy is immune to the notoriouslyfickle Basque weather. Chefs such asJuan Mari Arzak, Andoni Luis Aduriz and MartinBerasategui have contributed to the BasqueCountry’s reputation as one of the finest, mostinnovative culinary areas in the world. Accordingto a recent ranking, five of the world’s best 50restaurants were Basque – San Sebastian alonewas home to three of those – and the region hasthe highest concentration of Michelin stars ofanywhere in the world. Meanwhile, even the city’sless celebrated bars and restaurants take pridein offering a sumptuous range of pintxos, theBasque tapas, from prawns skewered on eggs toartichoke hearts with ham.“Spanish cuisine and Basque cuisine haveevolved tremendously in the last 15 years orso,” says Joxe Mari Aizega, managing directorof the Basque Culinary Center (BCC). “Ratherthan cook the way their forebears did, today’schefs are developing new technologies, partneringwith artistic projects, and becoming partof a field of knowledge with a cultural side anda technological side.”The BCC is a response to the increasinglyspecialised, multi-disciplinary nature ofhaute cuisine, particularly as Basques understandit. Set up in 2009 and linked toMondragon University, it trains around 500students at a time in culinary excellence. Notonly is it an educational centre, it is also a researchand innovation hub and the venue forfood-related events. Meanwhile, its master’sdegrees focus on areas such as restaurantand kitchen management and marketing.“Cuisine now has its own Harvard,” was howFrench newspaper Le Monde put it.However, despite the swelling prestige of theregion’s gastronomy, this is no hotbed of localmethods. “We don’t teach Basque cuisine here– unless you specifically sign up for the threecreditcourse on that subject,” says Aizega.“What students learn here is modern cuisine.Except we teach much more than just cooking.Our goal is not to produce cooks, but toproduce head chefs, restaurant managers andfood industry leaders. I firmly believe thatthe future of gastronomy lies in innovation.”Any visitor who witnesses the festivities ofSaint Sebastian, the city’s patron, every 20thJanuary, would be struck by the depth of traditionhere. For 24 hours, from the momentthe mayor raises the saint’s flag, the air isfilled with the sound of drumming, as localsdressed as 19th-century cooks and soldiersparade around in what is known as the “Tamborrada”.The festival is one of many thatcontribute to the unique character of oneof Spain’s most fascinating and lively cities.And yet, San Sebastian is determined toensure that as well as appreciating its moreestablished attractions, the world discovers atruly 21st-century capital.NEW BASQUE CUISINEThe Basque Country is knownaround the world for its innovativecuisine. Juan Mari Arzak,who holds three Michelin stars,received the “Universal Basque”award in 2008 for “adaptinggastronomy, one of the mostimportant traditions of theBasque Country, to the new timesand making of it one of the mostinnovative of the world”.BASQUE CULINARY CENTERArchitects at the Vaumm designfirm looked to stacks of bowlsand plates for inspiration whendesigning the Basque CulinaryCenter building, which won thirdprize in the Building of the Yearaward 2011.An independent supplement produced by The Report CompanyJuan Karlos IzagirreMayor of San Sebastianread the full q&athe-report.net/basque-country21How would you describe San Sebastian?It’s a city that we’re trying to transform in asocial sense, in terms of getting people involvedin politics and working with cultureas tool for cohabitation. San Sebastian hasbeen hit very badly in the last few decadesby violence and at this exciting moment,it’s contributing a lot to the building ofpeace. It has become a reference point interms of opening the region up to tourism,gastronomy and culture, as well as thebuilding of peace.What role does San Sebastian play indeveloping a Basque Country brand?San Sebastian has an office that is dedicatedto seeking new boundaries for tourismand in the last few years it has focusedon looking abroad. That same office hasworked on “de-seasonalisation” so thatpeople don’t just come during a threemonthperiod but rather all year round forculture, food, activities related to the filmfestival, and sporting activities.What makes San Sebastian different fromother places?San Sebastian is the capital where peoplespeak Basque the most. It’s also full ofsmall businesses, which adds character tothe city. Recently we’ve been trying moresocial policies to counteract the crisis. Nobodyis doing that in the rest of the BasqueCountry or indeed, in the rest of Spain;only a few cities in Europe are. We’re tryingto become a model city with regard to inhabitantsparticipating in political decisionmaking. These aren’t things that interesttourists, but they keep the city alive.“We’re trying tobecome a model city”FESTIVAL CITYSan Sebastian offers an extensivecalendar of events to suit alltastes. From the world-renownedInternational Film Festival toInternational Jazz Festival oreven the Horror and Fantasy FilmFestival, it is easy to see why thiscity was named European Capitalof Culture 2016.Photos: San Sebastian CityCouncil

22 _BASQUE COUNTRY BASQUE COUNTRY_231. MARQUES DE RISCALThe Frank Gehry-designedMarques de Riscal hotel,opened in 2006 as partof the company’s City ofWine project, stands inbold contrast with the traditionalvillage of Elciego,itself a major centre forwine production since the16th century.2. YSIOSAt Ysios winery, Spanisharchitect SantiagoCalatrava made one ofhis trademark artisticstatements with a ripplingaluminium roof above along wood-clad structureevoking a row of barrels.Ysios is one of the RiojaAlavesa’s most innovativeproducers, focusingentirely on reserve wines.3. LUIS CANASBodegas Luis Canas produceshigh-quality redsand whites at its Villabuenade Alava winery.Star chefs such as theUK’s Gordon Ramsay andCatalonia’s Ferran Adriahave placed their faithin this family company’sproducts, includingAmaren, created as atribute to the chairman’slate mother.2 31133Raising the Basque Country’s wine-making profileWriter: James BadcockWINERIES The Basque Country’s segment of the Rioja wine region is taking viticulture to a new levelwith a strong focus on innovation while carefully maintaining the vineyard traditions that brought itits fame in the first placeRioja is known to wine lovers all over theworld as a place of old vineyards producingrich, warm reds. Now, especially in the Basqueportion of the territory, it is witnessing apioneering quest to create new wines usinga blend of modern technology and timewornskills, as well as seeking different ways tobring viticulture closer to people and breathingfresh life into a tradition that stretchesback thousands of years.Rioja as a designation-of-origin wine areastraddles three Spanish regions: La Rioja, Navarreand the Basque Country, with the latterpart being known as Rioja Alavesa after thesouthernmost Basque province of Alava. TheMarques de Riscal winery is Rioja’s oldest and,as its chairman Alejandro Aznar explains, thefirm is responsible for the development ofthe region as a world-renowned producer ofexcellence. “The Marquis of Riscal, who wasexiled in Bordeaux, learned the techniquesof ageing wine that he brought back to hisvineyards, transforming wines from Riojainto a modern concept: aged, French-stylewine in the 19th century.”Anxious to lead the way into the 21st century,Aznar’s firm reacted to the stunningsuccess of the Frank Gehry-designedGuggenheim Bilbao art museum by askingthe Canadian-American architect to workon a project. The aim would be to involvevisitors in a celebration of Rioja winemakingtechniques, the Alava landscape and vineyards,great Basque cuisine and, of course,the wine itself. “When we saw what was goingon in the New World and how they presentedviticulture to the public, we knew we neededto move from the 19th to the 21st century,”says Aznar. “We needed to start from zero.The Guggenheim put Bilbao on the map.Why not try to bring Riscal to the wholeworld through architecture too?”The spectacular ribbon-roofed City of Winehotel was opened in 2006 and offers gueststhe opportunity to breathe in the still air inMarques de Riscal’s old cellars, combine localwine with Michelin-starred cuisine at the restaurant,and even enjoy beauty and anti-stresstreatments based on the natural propertiesof the grape and wine in a vinotherapy spa.The Ysios winery, where Luis Zudaire iscommitted to a range of research activities,including the development of experimentalblends and investigating different oakvarieties for barrels, also took the plungeinto modern architecture. Its bold designby world-famous architect Santiago Calatravaevokes a row of barrels under a wavyaluminium roof.This emergence of modern aestheticsamidst ancient vineyards and beautifulhilltop villages such as Laguardia createsan attractive environment that the region’sbusiness community is eager to exploit. GregorioRojo, chairman of the Alava Chamberof Commerce and Industry, recognises thata “world-class tourism experience” is beingcreated in the Rioja Alavesa, a patrimonywhich the Basque Country government hasrecently awarded protected status.For his part, Juan Luis Canas, the chairmanof Bodegas Luis Canas, accepts thatinnovative techniques are important, butargues that it is even more vital to pamperthe vines that are the basis of his winery’sinternationally renowned reserves.“What really distinguishes us is our faithin the vineyard rather than in the winery.VIEWPOINTThat is to say, we believe more in the grapeitself than in the process that comes afterit,” Canas says, adding that no herbicidesor synthetic fertilisers are used in his vineyards.Bodegas Luis Canas’ standout productis Hiru Tres Racimos, a wine madewith grapes from vines which are at least60 years old. “We look for vines with as fewas one, two or three grape clusters. Thiscreates a wine for connoisseurs,” says thewinery chief, who also acknowledges theimportance of tie-ups with top chefs suchas Ferran Adria.A world-class tourismexperience is beingcreated in the RiojaAlavesaGregorio RojoChairman of the Alava Chamber of Commerceand IndustryJuan Luis CañasChairman of BodegaLuis CañasWhat is your best-selling wine?Our Crianza red. Combining allof our brands, we sell aroundtwo million bottles a year.What countries have the biggestgrowth potential for you?We export to around 40 countriesbut I would say Germanyand Britain.Do you have plans to boostonline sales?No, we are very respectful ofour 58 or so distributors. Theyare the ones who do all thefield work, and we don’t wantto bypass them. We establishmonthly quotas. If we didn’t,an entire year’s productionmight be consumed by August.Where do you see this companyin the next four tofive years?My goal is not to sell more,but to work better so clientswill be even happier. Wedon’t have a business partnerpressuring us into obtaininggreater cash flow. We’re notambitious that way.“What distinguishesus isour faith in thevineyard ratherthan the winery”Alejandro AznarChairman of Marquesde RiscalWhat is your current productionvolume?One million cases, of which fivemillion bottles are from Rueda,where they make white wine.Seven million are Rioja.How well does Spanish wine doon the export market?Because of the crisis, all Spanishproducers are focusing on exports,although they’re doing it the wrongway and focusing on prices. I thinkthat Spain’s strong point is itsprice-quality relationship.What relationship do you havewith the UK?It’s the biggest market for Riojawine. But there’s a lot of competition;people buy wine cheaplyand there are wines from all overthe world, which means tightprice margins.

Bilbao’s bounceCrisis-hit post-industrialBilbao’s fortunes changeddramatically followingthe arrival of the GuggenheimMuseum. Today, themuseum has succeededin breathing life back intothe dying city and becomean example of a modernapproach to cultural andeconomic regeneration“Initially there was scepticism.Nobody had usedcultural infrastructure todrive economic growth”Juan Ignacio VidarteManaging director ofthe Guggenheim museum“The Guggenheim is like an alienin the middle of Bilbao,” saysAlfonso Martinez, managingdirector of think-tank BilbaoMetropoli-30. “But Jeff Koons’‘Puppy’ flower sculpture, whichsits outside, gives it meaning. Itattracts children to the museum,and children are the drivers ofinnovation, because they areunafraid of change.” And it isthis innovation which is todayembodied by Frank Gehry’s ripplingtitanium structure on thebank of the river Nervion.It was in 1991 that the Basqueauthorities, after several yearsof discourse around the region’sredevelopment, put forward theidea for the museum to the SolomonR. Guggenheim Foundation.Juan Ignacio Vidarte, managingdirector of the GuggenheimMuseum Bilbao, remembers howit all started in what was thena city badly in need of a break.“Initially there was a lot ofscepticism,” he recalls. “Bilbaowas in a serious economic crisisbecause traditional industrieswere in decline. There were noprevious examples of using culturalinfrastructure as a driver ofeconomic growth.”But six years later, in October1997, the alien landed and, asVidarte points out, it provedto the people of Bilbao thatchange did not necessarily haveto be bad. “That approach iswhat helped rebuild people’sself-confidence.”Bilbao’s mayor, Ibon Areso,freely admits that his city owesa lot to the Guggenheim. “It putus, a medium-sized city, on theworld map.” He says that in itsfirst year, the museum attracted1.33 million visitors, three timesmore than had been expected.“The impact on the Basqueregion’s GDP in the first year ofthe museum being open was€144 million. It paid for itself inless than a year.”