As distributed with Basque Country

October 9th 2014 the-report.net United it stands The Basque Country has long been an industrial hub which has thrived while maintaining a unique regional identity. In recent years, Basques have based much of their development on unity and innovation. As their region emerges from the Spanish economic crisis and enters a new era of peace, they aim to become a global force in their own right. theguardian.com/the-report/basquecountry

18 regional focus Gipuzkoa seeks to unveil its hidden champions

06 investment The right place at the right time

12 tourism Green and gracious

“This time of peace is an opportunity for the evo- lution of our economy”

InigoInigo UrkulluUrkullu 22 wineries Raising the profile

14 industry and innovation 10 infrastructure 04 interview Made in the Basque Country A well-connected region Inigo Urkullu. President of the Basque Country

GLOBAL BUSINESS FEATURES: EXCLUSIVE INTERVIEWS. INSIGHTFUL ANALYSIS. ANOTHER LOOK. , who takes sole responsibility for its content. An independent supplement distributed in the Guardian on behalf of The Report, who takes sole responsibility for Company As distributed with

2 _ BASQUE COUNTRY An independent supplement produced by The Report Company 3

The Basque people

INNOVATION

Robust investment in born architect Frank Gehry, research and development has not only awed visitors has become crucial to the but also helped transform region’s quest to compete. the city. At just over two percent of GDP, Basque investment in this area is well above that of The history of the Basque as a whole and higher people has been the than the EU average. Educa- subject of many, later discredited, theories down tion is a key part of that strat- IN NUMBERS egy, with 43 percent of young the centuries, including Basques holding university the notion that the Basque qualifications. “We have 2,500 people are descended Researchers working on had to be very competitive in from Turks or Magyars, or Basque industrial policy order to survive,” points out that the , in the public and private the regional premier, Inigo Euskara, was once spoken sector Urkullu. While the backing across Europe. One more of different regional govern- outlandish theory is ments for research centres 26,500 that Noah was Basque. and new technology projects People employed in the The roots of the Basque has been fundamental in life sciences sector people remain shrouded in the innovation drive, so mystery, and as anthro- too has the involvement of pologist Joseba Zulaika 11 wrote, “Basque identity is the private sector. Perhaps Strategic industrial clus- the most visible example of founded on an acute sense ters have been set up in of their enigmatic past.” Basques’ willingness to em- the Basque Country brace innovation is ’s Euskara, however, has pro- Guggenheim art museum, vided some clues to Basque whose design, by Canadian- history. Its utter distinction from other Indo-European tongues reinforces the idea that the Basques who settled in the north of the Iberian Peninsula were among the first inhabitants of western Europe. A creative people, a hi-tech future The territory known as Writer: Guy Hedgecoe Vasconia, a precursor to the present-day Basque rest of Spain. With an unemployment rate that is well dishes of its chefs, who have taken global haute cuisine Country, existed in the mid- below the national average – and around half that of by storm. Such cultural energy, allied to the region’s dle ages in the western Pyr- OVERVIEW As the curtain opens on a new era of peace, the Basque Country is determined to enees, although it would be Andalusia – and an industrial sector which in many business character, made the creation last year of a fragmented and re-shaped keep industrialising its resilient economy and reinforce its status as a hotbed of innovation, cases has successfully reached abroad during Spain’s “Basque Country brand” a logical step, even though it down the centuries due downturn, Urkullu’s optimism seems justified. ruffled the feathers of those in Madrid who are leading to pressures from France, education and culture Castile and Aragon. In the The region has long been famous for its ability to in- the equivalent “Spanish brand”. late 19th century, a young novate and this trait can be seen in the business sphere. Given its impressive record on employment, technol- Biscayan called Sabino Many smaller Basque firms have pooled their resources ogy and education, the Basque Country can approach Arana became the driv- ing force behind modern It may be a small region of only two million in- the autonomous community of the Basque ists – would like. From the late 1960s, the sepa- by forming cooperatives and taking part in clusters. the social, economic and environmental targets the Basque nationalism, help- habitants, but the Basque Country represents Country, the focus of this report. ratist group Eta waged a terrorist campaign for The region is also home to corporate giants, such as EU has set out for its members in the Europe 2020 ing standardise the Euskara many different things to different people. Its The region has provided some of Spanish his- an independent state, killing over 800 people BBVA in banking, Iberdrola in energy and SENER in strategy with confidence. Another challenge for the language and bolstering rich rural life and wealth of traditions reflect tory’s most illustrious figures, such as circum- and deeply dividing Basque society. Police ac- engineering and construction, all of which have relied region is to consolidate the peace that arrived in 2011 the notion that the region’s people were of a separate its status as home to one of Europe’s oldest navigator Juan Sebastian Elcano, Jesuit founder tion and legal pressures would help weaken heavily on new ideas to develop their business. and leave the trauma of the Spanish economic crisis race from the French and peoples, who speak the enigmatic Euskara lan- Ignatius of Loyola and the philosopher Miguel Eta until it declared a definitive ceasefire in behind. “The Basque tradition is that desire to offer Spanish. However, Arana’s guage. Meanwhile, its factories and businesses de Unamuno. But down the centuries, the October 2011, a move former UN Secretary- A creative brand an excellent product and this is something that goes more extreme ideas have since been disregarded, es- are testament to its history as an industrial Basques have had a complex relationship with General Kofi Annan described as “a victory This creativity makes the Basque Country “a living pecially as the arrival of im- heartland. And yet, the extravagant design the rest of Spain. In medieval times they enjoyed for dialogue and peace”. Three years on from lab of innovation and strategy development,” accord- migrants has significantly of the Guggenheim art museum in Bilbao of- special status, being allowed to uphold many of that landmark development, the region has ing to Joseba Jauregizar, who as managing director of altered the Basque region’s “This time of peace ethnic make-up. Many of fers yet another view: a region that cherishes their ancient laws in return for respecting the adjusted to a new climate of peace which has Tecnalia, an alliance of technology firms, is at the heart today’s inhabitants of the culture and which is prepared to launch itself sovereignty of the Spanish monarch. Centuries benefitted not only ordinary Basques, but of the Basque Country’s efforts to expand its industry. has to be an economic Basque Country come from into the future. later, during the centralising dictatorship of also tourism and other industries. Once one of the world’s biggest iron ore producers, North Africa, South America Even pinning down the exact geography of , Basque autonomy was reined “This time of peace has to be an opportunity the region is now renowned for its diversification into opportunity” and Eastern Europe. One thing has not changed the Basque Country can be difficult. Many of in and its culture was repressed, a policy that for the development of the Basque economy,” areas such as renewable energy, nanotechnology and Inigo Urkullu the region’s nationalists regard the territory would both provoke a resurgence of nationalist says Inigo Urkullu, the Basque regional premier, biotechnology and industry currently represents a over the centuries: Basques President of the Basque Country are known for being of Navarre and the three Basque provinces in pride and have violent repercussions. or , of the moderate Basque Na- quarter of its GDP. industrious, reliable and south-western France all as part of what they tionalist Party (PNV). “If we were able to grow The Basque pioneering spirit is not confined to busi- right back to the traditional small businesses here – the honourable. The Spanish call Euskal Herria, or the Basque homeland. during a time of violence, now we must be able ness. It can be seen in the earthy sculptures of Eduardo local workshop,” says Jose Manuel Orcasitas, CEO of saying “palabra de vasco”, Three years of peace or “word of a Basque”, is But only the three provinces in Spanish terri- In the democratic era, the Basque region’s au- to grow even more, especially once we get over Chillida, the eerie “painted forest” of artist Agustin coach manufacturer Irizar. “Now, in modern times, still used to describe the tory that sit between the Pyrenees and the Bay tonomy has been restored, although not as the economic crisis.” Ibarrola, the experimental novels of Bernardo Atxaga the region’s big focus is on innovation, so providing a solemnity of a promise. of Biscay – Alava, Biscay and Gipuzkoa – form much as many – both moderates and extrem- That crisis has hit Basques less hard than the and, perhaps most famously, in the envelope-pushing high-quality result is what it is all about.”

Editorial Coordinator: Gonzalo Portas Illustrations: Martin Leon Barreto For suggestions on a feature on your country or any Photos: Basque Tourism Agency, Vitoria City Council, specific theme, contact us on: [email protected] Unity in a diverse While the moderate Basque scape has opened up in recent (PP). Then in 2011, a new coali- Nationalist Party (PNV), which years. In 2009, the Basque tion of leftist parties, Bildu, Writers: Guy Hedgecoe, James Badcock, San Sebastian City Council, Irekia-Basque Government For an expanded version of this feature: - Mikel Arrazola www.theguardian.com/the-report and political spectrum dominated the region for three Socialists (PSE) formed a ran the PNV a close second in Eleanor Wragg, Susana Urra www.the-report.net decades after the advent of groundbreaking, three-year regional elections, heralding Copy Editor: Eleanor Wragg 81 Oxford Street democracy, is back in govern- governing partnership with the arrival of a powerful pro- London W1D 2EU, UK Art Director: Joana Pessanha The Report Company takes sole responsibility for the ment again, the political land- the conservative Popular Party independence movement. Tel: +44 (0) 207 903 5079 Graphic Design: Carlos Robledo content of this feature. Follow @TheReportCo on Twitter As distributed with

4 _ BASQUE COUNTRY Bilbao’s Athletic Club, one of Spain’s The club’s origins can still be heard on “All iron” most successful football teams, was match days when fans chant “Aliron”, formed in 1898 due to influx of British a word that derives from “all iron”, engineers and businesspeople who which was shouted by miners when Success the came to build railways and steelworks. they discovered a seam of good ore. Basque way Powering British INTERVIEW President of From heavy industry to hi-tech: development the Basque Country since the Basque-UK connection Bilbao-based energy the end of 2012, Inigo Writer: James Badcock company Iberdrola is teaming up with Scot- Urkullu is building on the tish Power in a major offshore wind power region’s strong industrial UK RELATIONS Basque businesses have largely weathered the economic crisis in project in the North Sea. Planning permis- base, internationalising Spain by expanding further into international markets. This is a good time, then, sion was granted in June to allow work to its economy and creating to rediscover the region’s close historical relationship with the UK commence on East Anglia One, a project an economic powerhouse which will generate within Europe, while staying capacity of 1,200 panies were interested in the region’s iron ore reserves, megawatts (MW). It will create up to 2,700 true to his political ideals building railways to aid exports from Basque ports. Then jobs during construc- of social cohesion local businessmen realised that by importing British tion and could power coking coal they could develop a Basque steel industry 820,000 UK homes. and joint ventures flourished. This is the first of six The conflicts of the 20th century made the connection planned 1,200MW phases within the How has the Basque Country changed even deeper. “A Basque ship owner by the name of Sir overall East Anglia UK since the days of Eta? Ramon de la Sota put his merchant fleet at the disposal Round 3 offshore wind Our political, social and economic history of the British Crown during the First World War, and zone, which could has been shaped by the phenomenon of was knighted in return for his services, and that link eventually comprise up to 7,200MW. terrorism. Fortunately, there were Basque continues,” says Derek Doyle, the UK consul in Bilbao. companies, even during the most difficult Following the during the Spanish For Iberdrola, its annual investment in time of the years of terrorism, who in spite Civil War, 4,000 children from the Basque Country were the UK has more than of the threats maintained their commit- evacuated to the UK. doubled since the ment to stay here. What this meant was “Basically, everything that triumphed in Britain in the integration of Scot- tishPower into the firm that despite the violence, the Basque econ- early 20th century triumphed over here around 30 years in 2007, up from £600 omy grew. This very committed business later. A steel and iron industry developed, as did shipbuild- million in 2006 to £1.2 class assumed the risk, and because of ing. Our first steel ships were British,” says Jose Angel billion in 2013. that, foreign investment was still possible. Thanks to its “special Corres, chairman of Bilbao’s chamber of commerce. Iberdrola CEO Ignacio There is no comparison between the cur- Now cooperation is focussed on more technological sec- Galan told UK energy and climate change rent situation and the unfortunate situ- relationship” with Britain’s tors, such as aeronautics. A partnership between Britain’s secretary Ed Davey ation we lived through in the past. This Rolls Royce, Basque turbine Rolls Royce and Basque engineering firm SENER created in June that “the very time of peace has to be an opportunity be consulted and to decide the future is not social cohesion. We ITP, whose CEO Ignacio Mataix is confident of the future large investments that for the evolution of the Basque economy. a political idea. It is a democratic principle stand for an eco- thanks to this “special relationship”. He says that “50 per- Iberdrola is making in manufacturer ITP is confident the UK are important in If we were able to grow during a time of that citizens can choose. “We stand for nomic model that of its future cent of future engines built to fly will have an ITP turbine securing energy sup- violence, now we are at peace we must be combines rigour, inside,” owing to Rolls Royce’s 50 percent market share. plies for the country in able to grow even more, especially once we What is your outlook for the Basque an economic investment stimu- Energy is also a key sector in the region and power giant the future”. get over the economic crisis. On top of our economy? model that lus, job creation Beyond the jokes about shared wet weather and the Iberdrola is a good example of how Basque business has own industrial and economic culture, we Our estimates indicate that this year the combines and social welfare. football connection with Basque teams such as Athletic internationalised in recent years. CEO Ignacio Galan now offer to all types of investors a guar- Basque economy will grow by one percent rigour, invest- We believe that this Bilbao having British origins, there is a long and deep- recently said that Iberdrola is now “more British, more antee of peace and calm and absolutely and in 2015 it will grow 1.7 percent. This is is the right way to rooted commercial relationship between the UK and American and more Mexican than it is Spanish”, while Iberdrola’s normal business conditions. due in great part to the great effort that our ment stimulus, return to growth in the Basque Country. announcing that 41 percent of the company’s planned €9 UK invest- industry is making in innovating and in go- job creation and a sustainable and Formal commercial links go back to 1474, when a trade billion investment in 2015 will be in the UK. ments are What was your reaction to the “no” result ing out and finding new markets. We have a social welfare” cohesive manner. charter was signed by King Edward IV and reciprocated For Jorge Unda, managing director of engineering firm helping to of the Scottish independence referendum? diversified and internationalised industrial in Guernica whereby Basque merchants could freely SENER, opening a UK branch could serve as a stepping secure the I would express my favourable opinion on sector that spans areas such as energy, aero- How would you like the Basque Country trade with the protection of the Crown in England, stone before crossing the Atlantic. “If you want to get into the fact that the process was legitimate and nautics, machine tools and automotive. We to be perceived? and English merchants could do likewise in the Basque the US market from Spain, it’s very difficult. Our historic country’s fu- it was possible for Scotland to freely decide want to consolidate the size of industry to Globalisation doesn’t mean we have to Country. But the explosion in UK-Basque connections relationship with British companies will allow us to arrive ture energy its political future. We should value that 25 percent of our GDP. We are placing prior- lose our individuality. The Basques have came after the industrial revolution. British steel com- in the US already being ‘British’.” supply at a time of voter apathy we have witnessed ity on innovation and knowledge: by 2020 their own identity and their own culture. an act of political legitimisation. There we want to invest €10 billion in R&D. I hope that the citizens of the world will was massive, unprecedented voter partici- begin to get to know us for the positives, A DIPLOMAT’S VIEW pation. For the first time in the history of What is your government’s economic and not for the negatives from the past the European Union a stateless nation has strategy? which have been unfairly associated with As well as being the UK govern- tions: “I think we have a privileged Eta has ended, the British diplomat been able to decide if it will participate in Since the beginning of our administration us as a people. ment’s diplomatic representative in position with respect to our rela- believes that the region is ready to the Basque Country and Northern tionship because we have all that really take off. “The violence dis- the European Union within a state or by our intention has been to preserve social Spain, Derek Doyle is the senior tradition, all that historic connec- itself with the same conditions as the rest welfare, education, health and social policy read the full q&a trade and investment adviser at the tion, and at the end of the day we of the states. The right to consult and to because our model of society is based on the-report.net/basque-country British consulate in Bilbao. His re- are liked and we are admired so we “Britain is admired mit is to promote and protect Brit- need to take advantage of that.” here, so we need to take ish business interests while also Doyle believes that the Basque advantage of that” the next three years for the launch of its international events to the Basque Country, being alert to new opportunities Country’s business culture and the The Basque Country: ‘Basque Country’ brand. Outlining the plan one of which will be in collaboration with with respect to inward investment. solid support the private sector a global brand in April 2014, the region’s president, Inigo the United Nations. “We need to gain receives from the region’s govern- torted the picture; there were a lot Urkullu, said his government will help to in- influence,” said Marian Elorza, the Basque Charting trade and industrial rela- ment have brought about a real of important things going on that ternationalise more than 1,500 companies secretary of external affairs, who added tions between the UK and the re- success story. He cites the per- were missed.” In a bid to raise the region’s profile on the in the period 2014-2016, set up 200 centres that the region plans to forge alliances with Derek Doyle gion that go back 500 years, Doyle capita GDP of around €30,000, the international stage, the Basque govern- across 25 countries in a “global Basque at least eight others, including Aquitaine, British consul and senior believes British companies should highest standard of living in Spain. read the full q&a ment has earmarked €105 million over network”, as well as bring four major Flanders, Bavaria, Queretaro and Jiangsu. the-report.net/basque-country UK Trade & Investment adviser seize on positive Basque percep- Now that the terrorist violence of