EU saves Izar

The European Commission has cleared a deal designed to save Spain’s shipbuilding industry that will see Spanish yards focus on making military rather than cargo carrying vessels.

The EU Competition Commissioner has received assurances from the Spanish Finance Minister that the deal brokered last month complies with EU rules on fair competition and that the military shipyards would not be undertaking much civilian activity that would distort competition. Military procurement is largely exempt from EU treaty provisions.

The future of the Spanish shipbuilding sector was thrown in doubt after Brussels demanded that Spanish state shipbuilder Izar repay 300 million euros of government aid that was found to be illegal under EU competition rules. Under the deal between employers and union representatives, Izar will be split into civilian and military production sections. The accord provides for the creation of a new public company for military production at Ferrol and Fene in the northwest, and Cartagena, Puerto Real and Cadiz in the south, where a small proportion of civilian output will also be affected.