The state of Madeira’s finances and “cowardly bloggers” – as reported by the Daily Telegraph 7.4.12

This is verbatim from yesterdays newspaper. Lengthy – but very interesting:

“Tucked beneath towering cliffs on Madeira’s storm-battered west Atlantic coast, the €50 million Marina do Lugar de Baixo aimed to provide the perfect welcome for super-luxury yachts.

Unfortunately, thanks to the huge waves that have fractured the harbour wall three times since it was built in 2005, not even the more adventurous yachtsmen have often been tempted, never mind passing billionaires in floating palaces.

Today it lies abandoned, a chain blocking the road where an Oleg Deripaska or Roman Abramovic might have strode ashore, the white clubhouse empty as the Marie Celeste.

Just as spectacular as the ocean breakers off Lugar de Baixo, however, are the waves of European Union cash that have been splashed around Madeira, a Portuguese-owned island better known for sweet wine and winter sun.

While the marina was financed mainly by the semi-independent Madeiran local government, €3.5 million came from Brussels, which, like the other backers, did not heed warnings that a stretch of coast popular with hard-core surfers might be less ideal for yachters

Similarly, at the nearby promenade and restaurant complex at Frente Mar Madalena, where a rusting plaque marks a €1.2 million EU grant, developers overlooked the risk of rockfalls from the cliffs. Until, that is, a boulder tore a hole through the restaurant’s roof two years ago, since when it too has been empty.

The real big hole though, is the one that such rampant, publicly-backed development has torn in the island’s finances, as it has transformed itself into a resort similar to the Canary Islands further south.

For Madeira is now swimming in debt as deep as the Atlantic waters around it, thanks to a government-backed building spree fuelled in part, critics say, by over-generous Brussels grants. Today, despite a population of just 250,000, the local administration owes some €6 billion, nearly double the per capita public debt of mainland Portugal.

The financial crisis, which only came to light last autumn, is hugely embarrassing for Lisbon’s leaders, who have already had to negotiate an €78 billion bail-out themselves from Brussels and the IMF. The island is now seen as Portugal’s own little answer to Greece, widely considered the most feckless of the southern European debtor club.

"Madeira is like Greece in the Atlantic," said Gil Cana, a councillor in Madeira’s opposition New Democracy Party, which blames years of unhealthily cosy relations between island politicians, developers and Brussels grant-makers.

"The European Union has given money too easily, and the government has borrowed far too much from banks. We are a tiny island, you can hardly see us on any map. To have a debt with so many zeros is crazy."

Sipping coffee in a square in Funchal, Madeira’s balmy capital, Mr Cana looks as relaxed as the elderly British and German tourists wandering past, who like the island’s quiet, yob-free reputation.

Yet in his pocket he has a can of pepper-spray, and when out at night, he takes a Browning 0.25 pistol, both of which he is licensed to carry for personal protection. For within Madeira’s small community of long-term residents, being politically outspoken can have consequences. Mr Cana has been beaten up twice, had his own bar burned down, and had his family’s cars vandalised.

"As a councillor I’ve complained about corruption in building projects, and got a few stopped," he said. "So they use terror against me."

He points the finger at supporters of the island’s president, Alberto João Jardim, 69, who has ruled here ever since 1978, making him one of Europe’s longest-serving elected leaders.

A firebrand throwback to the days of Portugal’s Salazar dictatorship, for which he once wrote propaganda, his popularity has been cemented – quite literally – by the billions he has spent developing the island, which, prior to the end of Portugal’s dictatorship in 1974, was a poverty-stricken backwater.

Today, a 120-mile road and tunnel network links Madeira’s previously isolated mountain communities, cutting journeys around its steep volcanic contours from four hours to just one.

But much of the money came from the €2bn in EU grants handed out over the last 25 years, and when that started to dry up a decade ago, Mr Jardim began borrowing on the open market instead, via publicly-backed development firms.

Thus did construction continue, to the point where today, even small villages boast lavish civic centres, swimming pools, and football pitches.

As the government-owned newspaper, the Jornal, dutifully reports, the president cuts the ribbons at up to 450 opening ceremonies a year, using them for political rallies where he denounces his enemies in lengthy speeches. Spain’s El Mundo newspaper calls him "El Maestro del Insulto" – the master of insults.

"He has accused me of being a Communist, a Marxist, and a member of Opus Dei, among other things," sighed Michael Blandy, chair of the Blandy Group, part of a powerful English business community that settled on the island 200 years ago, when Madeira’s position on the trade winds routes made it a pitstop for both the Old and New Worlds.

Today, as well as making Madeira wine, Mr Blandy owns the island’s main independent newspaper, drawing further barbs from Mr Jardim that he is a "colonialist".

"President Jardim is quite a reasonable character in person, and did a lot of good development work in the old days," added Mr Blandy, who complains that the Jornal – which gets €3 million a year in public funds – is unfair competition.

"Unfortunately, there has been too much chasing of EU subsidies, which have been dished out like no tomorrow, and to which the island got addicted like a drug.

"Then, around 2000, when money from Brussels become more restricted, we saw the start of more creative accounting, when Mr Jardim set up firms borrowing money to build yet more roads and golf courses. The whole thing is out of control."

Indeed, many claim that Madeira has lurched from underdevelopment to overdevelopment. In some areas, the expressways, tunnels and flyovers look more like a suburb of Los Angeles. And white elephant projects abound.

Industrial parks accessible only by steep mountain roads stand largely empty. A helicopter landing terminal has never been used. In Machico village, population 10,000, the seafront is dominated by a vast municipal hall more suited to a large London borough, its theatre and twin cinema screens open only a few nights a year, its two restaurants unused.

"It was built using calculations done on a napkin," said Joseph Freitas, a local hotel waiter. "Jardim is good at standing up for Madeirans’ rights, but he could use his resources better."

While much of the public cash for such projects has come from the Portuguese government, Lisbon claims the EU’s past willingness to offer matching funding encouraged over-building. "The whole country has too much construction, not just Madeira," insists the prime minister Passos Coelho, whose centrist Social Democratic Party Mr Jardim also belongs to.

However, while a spokesman for the European Commission insisted that there were "many good projects co-financed by the EU in Madeira," the German chancellor, Angela Merkel, recently singled the island as an example of how not to spend EU regional development funds.

"There are many beautiful tunnels and highways," she said in February. "But this did not contribute to competitiveness."

Mr Jardim has responded in typically combative style to criticisms of his financial management, describing Mrs Merkel as "ignorant", and the island’s debts as a mere "drop in the ocean".

When the credit agency Moody’s downgraded Madeira’s debt last summer, he even declared that Moody’s inspectors were banned from the island.

Such populist rhetoric goes down well with the Madeiran public, which voted him back in for another four year term last October, albeit with just 48 per cent of the vote, his worst result in 33 years. However, Eduardo Walsh, whose blog is Madeira’s answer to Private Eye, argues that Portugal’s national leaders should have reined him in years ago.

"Jardim is a real dictator," he said. "But nothing has been done at national level to stop him, because they are scared of him agitating for Madeira to become independent."

Like other government critics, Mr Walsh has suffered for his beliefs. The government has brought dozens of libel lawsuits against him, including an ongoing one for a cartoon comparing Mr Jardim to Hitler, in which Mr Walsh was acquitted. The president has now appealed

Mr Waslsh and fellow activists also claim to have been roughed up by Mr Jardim’s bodyguards and supporters while heckling at public openings, which they attend in a hearse with the slogan "bury the corrupt". The one benefit of the debt crisis, he says, is that it brings international scrutiny to Madeira’s problems.

Perhaps with that in mind, the president’s office has been declined recent interview requests from foreign journalists.

However, a man who attends as many public functions as Mr Jardim is not hard to track down, and The Sunday Telegraph caught up with him as he sat down to an anniversary dinner for a local carnival group. Far from summoning his minders, he proved charming – if defiant.

"Madeira was very poor before, and the only way forward was increasing the public debt," he said. "If I hadn’t done that, we’d still be saddled with the rest of Portugal’s debts today anyway."

What about the claims of intimidation? Nonsense, he smiled, the work of "fascists" in the opposition and "cowardly bloggers" like Mr Walsh.

And the white elephants, such as the wave-damaged Marina do Lugar?

"I am not like your British empire, I cannot rule the waves. There has been some structural damage, yes, but we are repairing it."

With that, he turned back to entertaining his dining companions – but just how much longer he will be the toast of Madeira’s grand opening nights is another matter.

Like his mainland counterparts, Mr Jardim has had no choice but to sign up to unpopular austerity measures that will involve slashing public spending by a third and raising local taxes, heralding tough years ahead for residents.

Last Thursday, in a sign of unprecedented dissent in the local party, the mayor of Funchal, Miguel Albuquerque, also declared he would run against Mr Jardim for the SDP leadership.

"Jardim could have been a great national politician, but he just wanted to be Mr Big here," said Mr Walsh.

"Now even that is coming to an end."

Reproduced from the reporting of Colin Freeman in the Daily Telegraph.

41 thoughts on “The state of Madeira’s finances and “cowardly bloggers” – as reported by the Daily Telegraph 7.4.12”

  1. Talk about scratching the surface of the Jardim legacy … there’s enough material to fill that newspaper many times over, much of it very newsworthy indeed.

    Regarding Hiper Sã, there have been various complaints and coverage in recent weeks. One mentioned laying off staff, the others talk of forcing their own employees to shop at Sã, and huge debts to suppliers. One supplier wrote to the Diário, saying that Sã was trying to pay suppliers with vouchers to be redeemed by shopping in the supermarket itself!!!

  2. Further to speculation on supermarkets yesterday – Lidl would be fine for me thank you – some food is rubbish but other items are excellent. What a shame about Sa, let’s hope they can weather the storm and we can have Lidl as well!

  3. To the editor, administrators of this blog

    The Telegraph article: Billions of euros of EU money yet Madeira has built up massive debts: bad, unbalanced journalism

    Publishing the entire Telegraph article was a big mistake and residents, the Islands’ economies will of course be affected by such bad, unbalanced journalism.

    For example, the article states that an individual in Madeira walks around with a pistol and pepper spray to protect themself.

    In reality, how many residents or visitors walk around with pistols and pepper spray to protect themself in Madeira?

    Is this a town or city in the UK with drug crime murders regularly..or drive by shootings?

    Why do so many EU foreign nationals live and work in Madeira?

    Where is safer Madeira or Notting Hill or Kensington in London with much police, CCTV camera surveillance, private security and other security measures?

    Unfortunately for innocent victims bad publications are on the net and in net search engines permanently and therefore can do permanent damage.

    Publishing the Telegraph article yesterday was a big mistake…take this bad, unbalanced journalism down, condemn all bad journalism about our region and publish balanced content including why so many foreign nationals including Brits love Madeira and live and work in Madeira

    From a former contributor to this blog

  4. Fortunately, we have 20 years left to run on our very nice timeshare in Madeira, so a bit of duff journalism will not put us off. Just hope our health holds out that long we will be 85 then.

  5. Do readers want the blog to report only positive news? – I would welcome some feedback here – what do blog readers want to hear?

    Apologies Paul if I have upset you – I know you were always very keen on a positive outlook in all matters, which is to be applauded. I’m sure everybody (me included) would like to thank you enormously for your contributions to the blog – possibly if you had not stepped down as an editor for other reasons prior to this article being reported then it would never have been mentioned. However it was being very widely reported elsewhere.

  6. Agree with JG. Madeira has a lot of positives, the scenery, the climate and for me the wonderfully hospitable and generous Madeirans who are my neighbours and friends, but nowhere is perfect. Obviously Madeira is very safe compared to most places but not immune from drug problems, domestic violence, bribes etc.

  7. Oh dear, I really really hope you do not end up like us Irish, to say we are struggling and broke is an understatement

    but I sill have my 2 weeks in the Royal Savoy and I will be there, it means no social life for 12 months and flying via Lisbon with 2 small kids and less suitcases which means less shoes………but we will be there!

    how we are going to get there next year is anyones guess but we have all suffered from the same thing, total and utter feckin eeejits in government who thought OUR money grews on trees

  8. Sorry Paul feels he has to take his bat home, I have appreciated his contributions.
    Madeira will resolve it’s problems. We now have excellent infrastructure which must in the future bring benefits.
    I much prefer driving in Madeira -no traffic jams,.
    Living in the countywide in a modern house, council tax only 20% of my UK costs, fantastic neighbours, very cheap and excellent wine, great meat from Pingo, a safe environment, no yobos, fresh vegetables from the garden in Winter, cheap water – bill 4e a month! No central heating or air conditioning required – heaven! And fantastic weather equal to the Bay of Islands in New Zealand.
    Keep smiling!

  9. Can’t see why every piece of journalism has to be “balanced”. For example, do we really expect current articles about Syria to include positive comments on (say) its great cooking, climate and scenery? The Daily Telegraph article was primarily about Madeira’s current economic woes and contained next to nothing that has not already been reported in much more detail by the local press. And it did not say that carrying guns and pepper spray is advisable here, just that one local opposition politician feels a need to do so, for specified, pretty obvious reasons (which lots of people here think is bad enough).

    Now, if we think of this blog primarily as a tourism promotion effort, we must of course do our best to suppress, and counteract, this sort of news. Well, do we?

    Finally, and quite apart from the above, I guess we all agree that the fact that an article like this (whether we agree with it or not) appears in a paper like that is itself important news (whether we like that or not). And important news should, in my humble opinion, be reported.

  10. I have to say that the article seemed `balanced` enough to me. Nothing that we didn`t know already. All is not well in Paradise. My (Madeiran) friends parents who used to buy and sell a bit of property are inundated with requests to buy land and property that was given as security to the banks to finance their children`s lifestyles. Everyone I know there has a new car. Drugs are increasingly common. Everyone that I know works directly or indirectly for the state.
    The Sa problem is simple ( to me anyway!) – apples from south America, sugar from Germany, how can that be viable as a business model? Our Lidl in England only sells local fresh meat, and vegetables, despite being a German company.
    Of course things can and will get better Abbo- but denial is not going to help. Leave the propaganda to Bertie – i prefer the truth!

  11. anrian well said. This recession also is lessons to be learned, from man on the street to the Governments and banks. Madeira should produce more local food as you commented as well. Get ride of the two price system on houses as well, and other areas.

  12. Richard I noticed this year where I live more locals are now using land to grow veg this year. Other years they not bothered. Pleased to see more use of the land and its good for the environment as well.

  13. Peter, believe it or not but the govt (with EU money) pays people to grow potatoes. Several years ago we visited the wife`s aunt who grows orchids and bananas. I commented that they must be “doing all right” – but not so. EU rules meant that they were only allowed to sell bananas of a certain size, so the big ones from the top of the bunch and the small ones from the bottom of the bunch were thrown away. EU rules also stopped wine producers (ie everyone!) being able to sell their surplus to local bars and cafes – so people stopped making it. Last time we were there i had to buy wine from the supermarket. I have mentioned before about the compulsory purchase of land to build the (generally empty) theme park that was all productive land previously.
    Heres a radical idea, instead of compulsory purchase of land to cover in concrete, why not identify uncultivated land, purchase that and turn it into allotments for rent. As with the UK model, if the new tenants don`t keep it productive they lose it and new tenants are found.

  14. Good Stuff – nicely put Sven.

    We have certainly seen a “return to the land” here in Gaula, with many unused terraces/terraco being reclaimed and planted, bringing back the “retro” rural look and an amount of self subsistence – all good for the local community.

    We have also followed suit and cleared some adjacent land, added two walls (modern re-enforced, sorry but covering in flower & fruit plants) and now grow our own fruit and veg, including bananas, passion fruit, potatoes, onions, carrots, lettuce and cauliflowers etc. And flowers for the table……Not to mention our two faithfull chicken egg producers doing our guests proud!

    An added bonus in our area is that if we or our neighbours have an excess of produce, then we swop/barter or give as appropiate – our local “mercado agricola” in Gaula now has a few stalls that sell fresh local produce at weekends, just a few but growing also!

    There is a LARGE area of fertile agricultural land adjacent to us that is laying empty and disused (after I stopped some illegal building works on it) and is just begging to be used for allotments Adrian…..brilliant idea.

  15. I have just discovered that the analogue transmitters on Madeira are to be swithed off on the 26 April 2012 and that a DTT (Digital reveiver) is now required to access the 5 free to air channels – Does anybody have any information regarding where to obtain the DTT boxes to contine to receive the free channels ?

  16. adrian I did know about the bananas. This recession has proved how bad governments are doing the job. They should been isolated pockets of countries where they had their act together by running a tight ship. The draw back as well governments like sheep follower each other. adrian did you know in the usa in the 30s when food was short due to weather conditions at the time. The government rise price of food because of farmers complaining they was not making enough money. So the government at the time said plow the crop up. This left people in the city starving. crackers i think the word.

  17. I am not surprised to see the prices of DTV boxes are so high. Here in Essex our analogue signal was switched off last week. I bought our DTV box for£18. We bring all our small electrical equipment with us to Madeira. Simple electric kettle in Uk = £5. In Madeira 30 to 40 Euros. We even brought low energy light bulbs last time as they were 9 euros in Madeira and i bought 5 for £1 in uk. By the way the EU has now banned UK from subsidising price of low energy light bulbs so the price has gone up to about £1.50 each, but still cheaper!

  18. Belated note about Telegraph article.

    The sentence before the ‘pepper spray’ bit refers to English and German tourists attracted by the island being ‘yob free’

    The only place I know in the world where I would be happy for my wife to walk home alone in the early hours and I tell every one I meet that

  19. adrian I managed to buy here a samsung 3d blu ray player here the other week. Clearing them out €55 in uk £100 or more. You can get good offers here, just like every where else catching them on a good day.

  20. The Radio Popular web site lists 34 different DTV (“TDT” is the local term) boxes priced from 18 to 90 euros – probably the best selection on Madeira. Not all of those were on their shop shelves at Forum Madeira, for sure, but I was still pretty impressed.
    So the problem is choosing, not finding. There are a few things one should consider.
    (1) The DTV system here is MPEG-4 (H.264). Don’t bring stuff from elsewhere unless you know precisely what you are doing. (Anything old or foreign may well be MPEG-2 and thus useless – I had to buy a DTV box for my explicitely “digital” 2008 Samsung LCD-TV bought in Funchal!)
    (2)Do you want a box to be put on a shelf or some little thing you can hide?
    (3)How do you plan to connect? HDMI, scart, or analog antenna input? (Maybe better check what’s on the back of your TV set.)
    (4)Do you want video recording facilities?
    A further alternative is of course to buy a TV card (internal or USB) for your HTPC if you have one. (Web TV is very useful for watching whatever goes on back home.)
    Having painfully pondered the above, I bought (at Radio Popular) a “RECEPTOR TDT BEST BUY HD STICK”, “MODELO 7412”, now priced at €29.99. It is a small thing that hangs invisibly on the back of my TV set, connects by HDMI (technically the best alternative), was easy to install (but I had to buy the HDMI cable separately) and works perfectly. In fact, it also claims being able to do time-programmed recording if you just add a USB memory stick. (Haven’t tried that, though – not something I need.)
    So, good luck, Kevin!

  21. Peter – you`re right about the odd bargain. Last time we visited we brought a flatscreen tv with us with a built in dvd so that the kids didn`t get withdrawal symptoms. The local place in Santana was selling off its last Sony CTV`s (old style tvs) which were top quality (much better than flatscreens in my opinion) for about 250 euros. Bigger stuff like cookers and even microwaves can be found at good prices – it`s the small things that are pricey. Most importantly however good whiskey is cheaper than uk. Hooray!

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