Giving the Balearics to Italy: How the value of the islands has changed

In his memoirs that were written in exile, Araquistáin explains that this Italian loss of prestige reinforced a view (more than just a view in fact) that both Mussolini and Hitler would have preferred to pull troops out of Spain; they were still of this view at least a year later. The Republican government sensed a means of providing the Italians and the Germans with an exit strategy, and one that would have stopped Franco. The feeling was, and there was substance to this, that neither Mussolini nor Hitler were ideologically bent on supporting Franco. They were more interested in a spot of colonialism.

The plan was complex, but in essence it involved ceding parts of Spain. Those parts were the Balearics and the Canaries; the Balearics for Italy, the Canaries for Germany. Mussolini in particular was very attracted to the idea.

Nothing of the sort happened of course, but this plan, which was clearly given a great deal of thought, did perhaps reflect a perception of the islands by the mainland politicians. They were peripheral, they were expendable. Moreover, a financial drain (such as it was) would have been eliminated. The value of the Balearics was mainly strategic. This had been the case for centuries. Extraordinary though it may seem, the government was seemingly prepared to forego this. The circumstances were of course extreme, but the very notion that Spain might have handed the archipelago to Italy says much about a mainland-islands relationship that was to only change fundamentally - and economically - with the onset of mass tourism in the 1960s.

This relationship nowadays is one that has been characterised by a Balearic view that Madrid perceives the islands as home to the wealthy who spend their days swanning around on yachts. The Balearics are rich enough, so much so that for many years the islands have been the only region of Spain except Madrid (and sometimes Catalonia) to make a net contribution to the system of regional financing. There is still intrinsic value in a strategic sense, but the true value lies with tax revenue generation and a vast tourism industry that accounts for something like 20% of the national total.

Wealthy but at the same time with a great imbalance of wealth and inherent geographical disadvantages. The Balearics are detached, and it has been all too easy for Madrid to treat the islands as though they were out of sight and so out of mind. This is an exaggeration but it is a view that has nevertheless held currency among Balearic politicians and businesspeople. The Balearics are peripheral, but unlike the Canaries they aren’t considered to be peripheral either by Madrid or Brussels - officially, that is.

This official stance is in the process of changing. In June 2022, the European Parliament recognised that island territories suffer from permanent natural disadvantages compared with other regions. However, not all islands are classified in the same way. The Canaries are not considered to be a continental territory. This is on account of the distance from the European continent. The Balearics, on the other hand, are treated as continental territory. The islands therefore have a double geographical disadvantage; they are detached but not detached enough. The third disadvantage comes from not qualifying for the types of cooperation programmes and specific funding that the Canaries enjoy.

The parliament made the first move in altering this situation more than two years ago, and Spain’s Congress is now urging the European Commission to amend the continental territory distance criterion. This would apply to all island regions that are sufficiently remote, not just the Balearics, so that they would have the same or similar benefits as the Canaries.

Leading this drive is a Congress deputy from Més, Vicenç Vidal; Més are part of the Sumar grouping that is in coalition with Pedro Sánchez’s PSOE. Vidal is a one-time Balearic environment minister. Since first becoming a member of the Senate and now Congress, it’s doubtful that there has ever been a Balearic politician who has been as persistent in making demands on behalf of the Balearics as Vidal has been. Broadening his approach to take in all islands, he stresses that there are many islands that have to assume additional costs due to their island status. They also compete at a disadvantage for EU funds.

The European Commission is therefore being called upon by Congress to create an additional budget item to help islands overcome the challenges they face and to cover the additional costs by comparison with mainland regions. These additional costs are well enough known, e.g. transport that means higher prices for consumers. There is the higher cost of housing, while climate change is bringing its own special demands. The Balearics are among the most vulnerable territories in Europe, and the geographical detachment makes the transition towards a climate-neutral economy more difficult.

Of key importance here is the fact that it is Congress making a demand, in effect, on behalf of the Balearics. Not so out of sight, out of mind any longer, the rest of Spain has come to realise that the islands are different and are subject to stresses not shared by parts of the mainland. Overpopulation is one, and overpopulation creates a host of issues.

The Vidal initiative has coincided with the announcement of what financing the Balearics can expect in 2025. This will be a record 2,986 million euros, eight per cent more than in 2024, a figure that rises to just over 4,000 million because of settlement of the 2023 financing. The Balearics are in the meantime in the process of receiving 1,472 million euros from the Covid-provoked national recovery, transformation and resilience plan.

This is record financing approved by a Spanish Government with a different political complexion to that of the Balearic Government. But then this has never really been an issue determined by political friends or foes. Regardless of who has been running the Spanish Government, the feeling has been that the Balearics have been disadvantaged, which is why so much attention has been given in Palma to securing more beneficial arrangements, such as that under the so-called Special Economic Regime (REB). That in itself is supposed to address matters like the additional costs of transport, but psychologically - for both Madrid and Palma - there has been a distance, one actually enshrined in regulations that take distance in kilometres into account.

Not being continental territory might seem to make this distance even greater, but then it hasn’t really harmed the Canaries, as the distance and its implications are well understood. At the same time, the value of the Balearics is becoming more and more appreciated. It’s in Madrid’s interests to add further value, and Madrid may just be thankful that Mussolini never got his hands on the islands.