Contents

• Introduction and Issues for Congress
• Domestic Overview
• Political Dynamics
• Economy
• Response to the Migration Crisis
• Regional Issues
Regional Issues and the Catalonia Crisis
• The Basque Region
• Catalonia
• Catalan Independence Efforts
• Spain's View
• October 2017 Crisis and Article 155
• December Election and Aftermath
• U.S. Views
• EU Views
• Counterterrorism
• Relations with the United States
• Defense Relations
• Economic Ties

Summary

The United States and Spain have extensive cultural ties and a mutually beneficial economic relationship, and the two countries cooperate closely on numerous diplomatic and security issues. Spain has been a member of the North Atlantic Treaty Organization (NATO)NATO since 1982 and a member of the European Union (EU) since 1986.

Given its role as a close U.S. ally and partner, developments in Spain and its relations with the United States are of continuing interest to the U.S. Congress. This report provides an overview and assessment of some of the main dimensions of these topics.

Domestic Political and Economic Issues

The government of Spain is led by Prime Minister Mariano Rajoy of the center-right Popular Party (PP). The PP won an absolute majority in the general election of November 2011. From 2004 to 2011, the government of Spain was led by José Luis Rodríguez Zapatero of the center-left Socialist Workers' Party (PSOE).

The next election is scheduled for December 20, 2015. Economic conditions, austerity policies, and corruption scandals have fueled public backlash against Spain's political establishment in recent years. Two new parties, Ciudadanos and Podemos, are challenging the PP and PSOE for votes. Polls indicate that the election is likely to result in Spain's first coalition government since the current constitution was adopted in 1978.

The global financial crisis of 2008-2009 ended a decade of strong economic growth and plunged Spain into a prolonged recession. The government budget deficit and debt increased, and unemployment rose dramatically. Intervention in 2012 by Spain's Eurozone partners and the European Central Bank helped restore confidence in the country's economy and stabilize the banking sector. Although economic conditions remain difficult and unemployment remains above 20%, there are signs of improvement, including forecasts for sustained economic growth over the next several years.

Regional Issues

The Spanish government is firmly opposed to a long-standing independence movement in Catalonia, a region of northeast Spain that includes Barcelona. In November 2015, Spain's constitutional court blocked an attempt by the regional Catalan parliament to begin the process of forming an independent state. Catalonia held a non-binding referendum in November 2014 that returned a large majority for independence, but such a referendum would only be legally binding under the country's constitution if convened by the central government.

Counterterrorism

The United States and Spain cooperate closely on counterterrorism issues. An estimated 50 to 100 Spanish citizens and approximately 1,200 Moroccan nationals with Spanish residency cards are thought to have joined jihadist groups fighting in Syria and IraqRajoy began his second term as prime minister in 2016 at the head of a minority government, after a 10-month political deadlock caused by two inconclusive general elections. He initially became prime minister after the PP won an absolute parliamentary majority in 2011.

Economic conditions, austerity policies, and corruption scandals have fueled public backlash against Spain's political establishment in recent years. This dynamic fractured Spain's two-party system, dominated for more than 30 years by the PP and the center-left Socialist Workers' Party (PSOE), with the emergence of two new parties, Ciudadanos and Podemos.

Over the past several years, Spain's economy has experienced a relatively strong recovery, with growth averaging more than 3% annually, a decreasing government budget deficit, and stabilized financial conditions. The global financial crisis of 2008-2009 plunged Spain into a prolonged recession and has had a lasting impact on the country. Unemployment has decreased to 15% after peaking at 26% in 2013.

Catalonia Crisis

A crisis over Catalan independence efforts has been the predominant issue in Spain since late 2017. Spain's central government invoked Article 155 of the Spanish Constitution to dissolve the regional assembly and executive and take direct control of the region after the Catalan parliament held a vote for independence in October 2017. The issue remains deadlocked after separatist parties retained a majority of seats in the regional parliament following a new regional election in December 2017. Spain has charged 13 separatist leaders with rebellion and misuse of public funds, offenses which could carry a lengthy prison sentence. Catalonia accounts for about 15% of Spain's population and one-fifth of its economy.

Counterterrorism

The United States and Spain cooperate closely on counterterrorism issues. Spanish authorities have dismantled numerous recruiting networks over the past several years, many of them based in Ceuta and Melilla, Spanish enclaves on the north coast of Morocco. In March Africa. In 2015, the Spanish Parliament adopted new legislation to strengthen counterterrorism laws and police powers in response to the foreign fighter threat.

U.S.-Spain Defense Relations

Spain plays an important role in U.S. defense strategy for Europe and Africa. Four U.S. destroyers equipped with the Aegis Ballistic Missile Defense system are stationed at the Rota naval base as part of the European Phased Adaptive Approach for missile defense in Europe. Additionally,based at Rota naval base, and Morón air base is the headquarters for a rapid reaction force of 2,200 U.S. Marines that protects U.S. interests and personnel in North Africa.

Spanish armed forces participate in numerous international peacekeeping and security operations, including the United Nations peacekeeping mission in Lebanon, the international coalition countering the Islamic State in Iraq and Syria, NATO's Enhanced Forward Presence mission in Latvia, EU and NATO maritime security missions, and EU operations in the Sahel region. Spain's defense spending was cut during the economic crisis but has been increasing since 2015. With the acquisition of new Eurofighter combat aircraft nearly complete, additional spending is focused largely on planned naval acquisitionsin Afghanistan, Lebanon, Mali, and Somalia. In the context of longstanding U.S. concerns about low European defense spending, Spain's budget austerity has included considerable cuts to the defense budget in recent years.

U.S.-Spain Economic Relations

Investment flows between the United States and Spain totaled nearly $80more than $105 billion in 2013, and the trade relationship totaled nearly $25 billion in 2014. Approximately 1,2002016, and Spanish foreign direct investment in the United States has increased every year since 2002. Annual U.S.-Spain trade in goods and services totals nearly $40 billion. Approximately 1,100 U.S. firms operate subsidiaries and branches in Spain. Affiliates of Spanish companies account for approximately 7383,000 jobs in the United States. Spanish officials have supported the proposed Transatlantic Trade and Investment Partnership under negotiation between the United States and the EU.

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Spain and Its Relations with the United States: In Brief

Introduction and Issues for Congress

Many U.S. officials and Members of CongressCongress consider Spain to be an important U.S. ally and one of the closest U.S. partners in Europe. Political developments in Spain, cooperation between the United States and Spain on security issues and counterterrorism, and U.S.-Spain economic ties are possible topics of continuing interest during the 114^115th Congress. Members of Congress may have an interest in considering the dimensions and dynamics of current issues in U.S.-SpanishSpain or U.S.-European relations, or with regard to NATO, in the course of oversight or legislative activities, or in the context of direct interactions with Spanish legislators and officials.

The Congressional Friends of Spain Caucus is a bipartisan group of Members of Congress who seek to enhance U.S.-Spain relations and promote political, economic, and social ties between the two countries.¹ The U.S.-Spain Council brings together U.S. and Spanish leaders to promote economic, educational, and cultural ties. Since the council was founded in 1996, five of the six chairmen have been Members of the United StatesU.S. Senate.²

Domestic Overview

Political Dynamics

The government of Spain is led by Prime Minister Mariano Rajoy of the center-right Popular Party (PP).³ The PP won an absolute majority in the general election of November 2011, taking 187 of the 350 seats in the Congress of Deputies. From 2004 to 2011, the Prime Minister of Spain was José Luis Rodríguez Zapatero of the center-left Socialist Workers' Party (PSOE).

The next general election is expected to take place on December 20, 2015. Although economic indicators have shown signs of considerable improvement, the economic difficulties faced by Spain since 2008 have led to a shift in the country's political dynamics. In a political system long dominated by the PP and PSOE, two new parties have emerged as contenders in the 2015 election.

Podemos ("we can"), an anti-establishment, left-wing party that grew out of Spain's anti-austerity protest movement, experienced a dramatic surge in popularity starting in 2014. After support for Podemos rose to as high as 28% in late 2014 and early 2015, putting it in first place in polls surveying voter intentions, improvements in the economy appear to be contributing to a decline in support for the party in recent months. At the same time, Ciudadanos ("citizens"), a new centrist party that has made anti-corruption one of its main campaign themes, has gained substantial support in 2015 and moved into third place in preelection polls.

One poll conducted in mid-November 2015 indicated support for the PP at 26.4%, the PSOE at 24.0%, Ciudadanos at 21.1%, and Podemos at 10.8%.⁴ Analysts expect that a coalition government is likely to emerge from the December election. The leading possibility is that the winner between the PP and PSOE would seek a coalition with Ciudadanos. A PP-PSOE "grand coalition" or a PSOE-Podemos coalition are considered possible but less likely. Since the current constitution was adopted in 1978, Spain has had five single-party majority governments and six single-party minority governments that relied on smaller parties for various degrees of support, but never a formal coalition government.

Over the past several years, widespread public discontent in Spain has been driven by economic conditions and austerity policies, and many observers are69.84%. a. Results for Unidos Podemos incorporate the electoral alliance of Podemos, United Left, and EQUO (a merger of green parties), as well as regional coalitions of left-wing parties in Catalonia, Galicia, and Valencia. b. Results from 2011 for United Left-The Greens. c. Comprising "All Others," five regional parties (from Catalonia, the Basque region, and the Canary Islands) won between one and nine seats each. More broadly, the emergence of Podemos and Ciudadanos as significant political actors indicates a decided shift in a political system long dominated by the PP and PSOE. Between the 2011 and 2016 elections, widespread public discontent was driven by economic conditions and austerity policies, and many observers grew deeply concerned about the social impacts of high unemployment, including youth unemployment overthat spiked above 50%, as well as cuts to health and education spending (see below). Over the past several years, largeLarge public demonstrations and protest movements have conveyed an angry backlash against the financial sector and politicians' management of the economy. The public view of the country's politicians has been further soured by corruption allegations, including a scandal over campaign finance violations by leading figures in the PP.

Economy

Spain is the world's 14^th largest economy, and the fourth largest economy in the Eurozone.⁵ Economic difficulties have been the dominant issue in Spain for the past seven years. The global financial crisis and recession of 2008-2009 hit Spain especially hard, and the crisis has had a lasting impact on the Spanish economy. The global financial crisis and recession of 2008-2009 hit Spain especially hard. The crisis has had a lasting impact on the Spanish economy, and the country's economic challenges have been a central issue over the past decade. Although Spain's economic conditions remain difficult, there have been signs of considerable improvement over the past three to four years. Spain is the world's 14^th-largest economy and the 4^th-largest economy in the Eurozone.⁵ Prior to 2008, Spain experienced more than a decade of strong economic growth relying largely on a housing and construction boom and fueled by private sector access to cheap credit. The credit and real estate bubbles collapsed in 2009, however, and the Spanish economy contracted sharply. Spain subsequently experienced a prolonged recession as the economy shrank 0.6% in 2011, 2.1% in 2012, and 1.2% in 2013, before a return to modest growth in and entered a prolonged recession that lasted until 2014.

The government budget deficit jumped from 4.5% of gross domestic product (GDP) in 2008 to 10.35% in 2012, and public debt has increased from about 40% of GDP in 2008 to nearly 10095% of GDP in 2015. Unemployment has increased dramatically since 2008, estimated to be 22.4% this year after reaching 26.1% in 2013peaking at 26% in 2013 and remaining at 17% in 2017.⁶ .⁶

Spain became a focal point of the wider Eurozone crisis in 2012, facing heavy market pressure in the form of high borrowing costs. Pressure eased considerably after the September 2012 announcement of, but pressure eased after a European Central Bank (ECB) bond-buying program restored market confidence. Spain also received approximately €41 billion (approximately $45about $50.8 billion) in emergency loans from its Eurozone partners to stabilize and recapitalize Spanish banks after a banking crisis emerged in 2012. The PP took office at the end ofin 2011 with an emphasis on maintainingbudgetary austerity, while implementing structural reforms to increase competitiveness and make the labor market more flexibleflexibility. The Rajoy government has remained committed to austerity as necessary to reduce the country's deficit and regain the confidence of financial markets, and has taken and undertook measures including cutting spending on education and health care, reducing unemployment benefits and pensions, selling off state-owned properties, and increasing the value-added tax.

Overall, Spain has broadly supported closer European Union integration as a way of resolving some of the underlying causes of the Eurozone crisis, including steps such as establishing centralized European Union (EU) fiscal and banking authorities and expanding ECB intervention in the form of bond purchases or low-cost loans to banks. Spanish officials have also argued that EU stability funds should be able to aid banks directly.

Although Spain's economic conditions remain difficult, there are signs of improvement. The economy appears to be in a relatively strong recovery, with growth expected to be 3.2% in 2015 and forecast to average nearly 2% per year over the period 2016-2019state-owned properties, and increasing the value-added tax. Since 2015, the economy has experienced a period of relatively strong recovery, with average annual growth of 3.2% over the period 2015-2017, and 2.7% growth expected for 2018. Analysts assert that Spain's austerity and reform efforts have been relatively effective in that the country's budget deficit is forecast to decrease over the next several yearshas decreased to an expected 2.6% of GDP this year and the country's borrowing costs appear to have stabilized at a manageable level. Conditions in the banking sector stabilized to the extent that Spain was no longer receiving Eurozone assistance as of 2014. With unemployment declining but expected to remain above 20% for the next several years, however, Spain will continue to face considerable economic challenges.

Unemployment is expected to be 15% this year.

Response to the Migration Crisis⁷

In 2014, Spain experienced a surge in the number of sub-Saharan and North African migrants and refugees attempting to reach Spanish territory, either by gaining entry to the Spanish enclaves Ceuta and Melilla on the Moroccan coast or crossing the Strait of Gibraltar from Morocco to the Spanish mainland. The Spanish government opposed the initial proposal by the European Commission (the EU's executive) in May 2015 to relocate from Greece and Italy a limited number of asylum-seekers throughout the rest of the EU under a mandatory quota system.

As the flows of migrants and refugees into Europe climbed significantly higher over the summer, however, the government reversed course and announced in September 2015 that it would support a mandatory relocation strategy and accept its share of the 160,000 refugees included in the plan. Spanish officials indicated that the change came about because the main pressure of the migration crisis appears to have shifted definitively eastward, now focusing largely on Hungary, Greece, and Italy as entry and transit countries for migrants and refugees hoping to reach Germany or Sweden.

Regional Issues

The Spanish state consists of 19 provincial territories referred to as "self-governing communities" or "autonomous communities."⁸ Two Spanish regions in particular, Catalonia and the Basque region, maintain a distinctive cultural identity, and politics in these regions features the strong presence of nationalist independence movements. The Basque Region

The Basque region is in north-central Spain, on the Bay of Biscay near the border with France. The separatist terrorist group Basque Fatherland and Liberty (ETA) waged a violent campaign against the central government starting in the 1960s, killing approximately 800 people. In recent years, ETA was weakened by arrests of key leaders and declared a cease-fire in 2011. All Basque nationalist parties now appear to have renounced violence in favor of pursuing independence through politics. In April 2017, ETA moved to formally disarm, handing over the locations of eight weapons caches to French authorities.

Catalonia Catalonia is in northeast Spain, on the Mediterranean Sea and the border with France, and includes Barcelona, Spain's second largest city. The Basque region is in north-central Spain, on the Bay of Biscay near the border with France.

-largest city. With a population of approximately 7.45 million, Catalonia has about 15% of Spain's population. In Catalonia, the independence movement has been additionally fueled by an economic argument that Catalans unfairly support the country's other regions because they pay far more in taxes than they receive back in state spending. Catalonia is one of Spain's wealthiest regions, accounting for approximately one-fifth of the country's economy, but it is also one of the most indebted regions.

Catalan political parties organized a referendum on independence in November 2014, with 80% of voters (about 1.6 million people) answering that they wanted Catalonia to be an independent state. According to the Spanish Constitution, however, such a referendum would only be legally binding if convened by the central government, and officials in Madrid have been consistent in their strong opposition to the idea. With the referendum non-binding in nature and no coherent campaign waged against independence, analysts note that turnout was below 40%, suggesting that many of those opposed to independence likely did not participate.

The issue resurfaced following the election for the regional Catalan parliament that was held on September 27, 2015, in which a coalition of separatist parties plus a far-left pro-independence party won a combined majority of seats (72 out of 135), despite falling below 50% of the popular vote. Separatist leaders declared the result an endorsement of plans to proclaim independence within 18 months, and the Catalan parliament adopted a resolution on November 9, 2015, to begin the process of creating an independent Catalan state by 2017. On November 11, 2015, however, Spain's constitutional court suspended the resolution and warned that Catalan leaders could face criminal prosecution if they attempt to implement it. Some analysts maintain that the long-term goal of separatist leaders is to convince Madrid to agree to a legally binding referendum on Catalan independence.

The separatist terrorist group Basque Fatherland and Liberty (ETA) waged a violent campaign against the central government starting in the late 1960s, killing approximately 800 people. In recent years, ETA was weakened by arrests of key leaders, and it declared a ceasefire in 2011. All Basque nationalist political parties now appear to have renounced violence in favor of pursuing independence through politics.

Counterterrorism⁹

Cooperation between Spain and the United States on counterterrorism issues is strong. In past years, Spain has been a base for Islamist extremists, including some of those involved in the 9/11 attacks. In March 2004, terrorists inspired by al-Qaeda killed 191 people in a series of bombings on the Madrid train system just GDP, generating approximately one-quarter of its exports, and receiving approximately one-quarter of its foreign investment.¹⁰ It is also one of the most indebted regions, with the regional debt-to-GDP ratio tripling since 2009, to 35%.¹¹ Catalan Independence Efforts

On October 1, 2017, the regional government of Catalonia attempted to hold a unilateral referendum on independence. The referendum was the third vote in three years declared by pro-independence leaders as a plebiscite on Catalan independence. In a similar effort in November 2014, with turnout below 40%, about 80% of those who voted (about 1.6 million people) answered that they wanted Catalonia to be an independent state. With the referendum nonbinding in nature and no organized campaign against independence, the low turnout suggested that many of those opposed to independence did not participate.

Catalan leaders subsequently sought to portray the result of the September 2015 election for the regional Catalan parliament, in which a coalition of separatist parties won a combined majority of seats (72 out of 135) despite receiving less than 50% of the popular vote, as an endorsement of plans to proclaim independence within 18 months. In November 2015, the regional parliament adopted a resolution supporting independence within the 18-month time frame and calling on the regional government to begin preparations to separate from Spain.

Spain's View

The government of Spain has strongly opposed the organization of independence referendums in Catalonia, condemning them as illegal. Spain's courts have supported this view, ruling such referendums unconstitutional. Spain's constitutional court suspended the November 2015 resolution by the Catalan parliament and warned that Catalan leaders could face criminal prosecution if they attempted to implement it.

The Spanish Constitution makes no provision for provincial territories to legally separate from the state. The document states that, "The constitution is based on the indissoluble unity of the Spanish nation, the common and indivisible homeland of all Spaniards; it recognizes and guarantees the right to autonomy of the nationalities and regions of which it is composed, and the solidarity among them all."¹²

Spanish authorities assert that the central government cannot therefore agree to allow a legally binding independence referendum (as was the case with the 2014 Scottish independence referendum in the UK, for example), because such an agreement would in itself be illegal and unconstitutional. They argue that under the constitution a decision about Catalonia separating from Spain is a matter for all of the people of Spain—that is, the constitution would need to be changed to allow the possibility of such a procedure.

October 2017 Crisis and Article 155

The Spanish government vowed to prevent the October 1, 2017, vote from taking place and to take legal action against its organizers. National police attempted to disrupt the vote and seize ballot boxes, resulting in large public protests and violence between police and protesters, in which 900 civilians were reported injured by police. In the end, organizers estimated voter turnout at 42%, with 90% of participants in favor of independence. Analysts again suggested that many of those opposed to independence did not participate in the vote.

On October 10, 2017, the president of Catalonia's regional government, Carles Puigdemont, made a speech in which he "assumed a mandate" to declare independence but immediately suspended the declaration to allow for negotiations with the central government. Madrid subsequently asked for clarification about whether Catalonia had declared independence, indicating that if the regional government of Catalonia did not retract any such declaration and/or agree to hold new regional elections, the central government of Spain would move ahead and invoke Article 155 of the Spanish Constitution. Article 155 allows the central government to take direct control of an autonomous region if it " ... does not fulfil the obligations imposed upon it by the Constitution or other laws, or acts in a way that is seriously prejudicial to the general interest of Spain.... "¹³

On October 27, 2017, the Catalan parliament held a vote for independence, with 70 members voting in favor and 10 against, but with 55 abstentions after opposition representatives walked out of the chamber. The Spanish central government (with the support of main opposition parties) subsequently received permission from the Spanish Senate to trigger Article 155, dissolving the regional government and assembly of Catalonia on October 28, and taking direct control of the regional police force.

Puidgemont and four other former regional ministers fled to Brussels in an attempt to appeal to EU leaders and avoid arrest on charges of rebellion and misuse of public funds, offenses which could carry a sentence of up to 30 years in prison. Eight other separatist leaders who stayed in Spain are facing the same charges, including former deputy leader Oriol Junqueras, who remains in pretrial custody.¹⁴ On November 8, Spain's constitutional court annulled the Catalan parliament's independence declaration.

December Election and Aftermath

The Spanish government set new regional elections in Catalonia for December 21, 2017. Although Prime Minister Rajoy hoped the election would end the crisis by installing a unionist government, it did not appreciably change the dynamics of the regional parliament. Ciudadanos came in first place in the election (36 out of 135 seats), but three pro-independence parties again won a combined majority of seats (70 out of 135), with 48% of the popular vote.¹⁵

In defiance of the central government, the separatist parties reelected Puigdemont as the regional leader and sought to swear him into office from his self-exile in Belgium via teleconference. Spain's constitutional court ruled that Puigdemont could not be sworn in by teleconference or proxy, however, and that he must receive judicial permission to attend the required parliamentary session in person, given his presumed arrest to face charges upon returning to Spain. On March 1, 2018, Puidgemont announced he was abandoning attempts to be reappointed as the regional leader.

Acting on a European arrest warrant issued by Spain, German authorities arrested Puigdemont on March 25, 2018 as he attempted to return to Belgium from Denmark. Puigdemont's arrest triggered renewed public protests and clashes with police in Barcelona. On April 5, a German court released Puigdemont on bail after finding that Spain's case for charges of rebellion was not admissible under German law. His extradition has been suspended while the court considers Spain's case for charges of misappropriation of public funds. Spanish authorities have also presented additional material to German prosecutors in an attempt to convince the court to re-consider its dismissal of the rebellion charge.

The Catalonia crisis appears to have entered a period of stalemate. Spain's imposition of Article 155 and prosecution of separatist leaders, as well as related Spanish court rulings, appear to have sapped momentum and enthusiasm from pro-independence forces, but have not definitively resolved the crisis. Separatist parties, meanwhile, face an increasingly difficult challenge in convincing moderate and anti-independence Catalans to shift their views. Article 155 remains in force until Catalonia is able to form a regional government.

U.S. Views

The U.S. State Department long declined to take a position on the issue of Catalan separatism, characterizing it as an internal matter for Spain to decide. Following the regional parliament's independence vote on October 27, 2017, however, the State Department released a statement that, "Catalonia is an integral part of Spain, and the United States supports the Spanish government's constitutional measures to keep Spain strong and united."¹⁶

Earlier, in the press conference following Prime Minister Rajoy's visit to the White House on September 26, 2017, President Trump spoke out in favor of maintaining a united Spain, stating " ... I bet you if you had accurate numbers and accurate polling, you'd find that they love their country, they love Spain, and they wouldn't leave. So I'm just for united Spain.... I really think the people of Catalonia would stay with Spain. I think it would be foolish not to."¹⁷

EU Views

European Union (EU) officials and officials from EU member state governments have declined to intervene in support of separatist arguments or calls for negotiations, framing the issue as an internal matter for Spain. EU leaders have indicated that an independent Catalonia would not automatically become an EU member but would need to reapply for membership, with approval requiring unanimous support from all current member states (including Spain). Following the October 27, 2017, independence vote, European Council President Donald Tusk wrote on Twitter, "For EU nothing changes. Spain remains our only interlocutor. I hope the Spanish government favours force of argument, not argument of force."

Counterterrorism

Cooperation between Spain and the United States on counterterrorism issues is strong. In past years, Spain has been a base for Islamist extremists, including some of those involved in the 9/11 attacks. In March 2004, terrorists inspired by Al Qaeda killed 191 people in a series of bombings on the Madrid train system three days before national elections. On August 17, 2017, a terrorist attack in Barcelona killed 14 people and injured more than 100 when a van drove through a crowded pedestrian area. The Islamic State claimed responsibility for the attack, and Spanish authorities subsequently identified a terrorist cell of 12 people, all of whom were either arrested (4), shot by police (6), or killed attempting to make explosives at a house (2). Analysts agree that the cell was inspired by the Islamic State, but authorities were unable to determine that its members had direct links to the Islamic State organization.

The members of the Barcelona terrorist cell were all born in Morocco. (About 70% of the approximately 1.18three days before national elections.

The International Centre for the Study of Radicalisation and Political Violence has estimated that 50 to 100 Spanish citizens have joined jihadist groups fighting in Syria and Iraq.¹⁰ Additionally, Moroccan authorities have estimated that at least 1,200 Moroccan nationals with Spanish residency cards have joined the Islamic State group.¹¹ At least 100 fighters from France and Morocco are thought to have transited through Spain in order to reach Turkey and travel on to Syria. About 70% of the over 1 million Muslims living in Spain have their origins in Morocco.

Over the past two years, Spanish police have conducted raids to dismantle jihadist recruiting networks active in Ceuta and Melilla, Spanish enclaves located on the coast of Morocco, as well as in Madrid. In December 2014, a joint Spanish-Moroccan operation dismantled a network active in recruiting women to travel and join the Islamic State terrorist organization. Spanish authorities have arrested approximately 90 people so far in 2015 for connections to Islamist terrorism; Spanish courts are investigating approximately 300 individuals for alleged ties to jihadist organizations, and the national prosecutor's office is handling approximately 160 cases related to jihadist terrorism.¹²

In March million Muslims living in Spain have their origins in Morocco.) Spain and Morocco cooperate closely with regard to counterterrorism, including regular intelligence exchanges and joint operations against terrorist organizations and recruiting networks. Moroccan authorities coordinated with their Spanish counterparts in support of the investigations following the Barcelona terrorist attack.

Compared to many other Western European countries, a relatively low number of people have traveled from Spain as "foreign fighters" seeking to join the Islamic State or other jihadist groups fighting in Syria and Iraq. Spanish authorities estimate that approximately 150 Spanish nationals or permanent residents (mostly Moroccan nationals) have traveled to the conflict zones in those two countries. In recent years, Spanish police have conducted raids to dismantle jihadist recruiting networks active in Ceuta and Melilla, Spanish enclaves located on the north coast of Africa, as well as in Madrid. From 2015 to 2017, Spanish security forces reportedly conducted 128 police operations against domestic terrorist networks, resulting in the arrest of 242 individuals.

In 2015, the Spanish Parliament adopted legislation backed by the PP and PSOE to strengthen counterterrorism laws and police powers in response to the foreign fighter threat.¹³ The new legislation makesmade it a criminal offense to receive terrorist training (past reforms criminalized providing training only) or to participate in an armed conflict abroad; allows the government to revoke the citizenship of those participating in terrorist activity; allows for passport seizures, accelerated expulsion orders, and reentry bans of identified extremists; and introduces streamlined search and capture warrants for police to arrest fighters attempting to travel to conflict zones. The government also indicated plannedinitiated reforms to the regulation of evidence collection and standards for witness protection, in order to improve the success rate of terrorism-related prosecutions.

In the aftermath of the November 2015 terrorist attacks in Paris, the Spanish government is reportedly considering a plan to increase the contribution of Spanish troops to ongoing missions in a number of African countries, in order to free up French forces for the campaign against the Islamic State in Syria.¹⁴

Relations with the United States

The United States and Spain have close links in many areas, including extensive cultural ties. The U.S.-Spain political relationship rests on a foundation of cooperation on a number of important diplomatic and security issues. Spain has been a member of NATO since 1982.

The Rajoy government has takenhad a relatively low profile in international affairs, while continuing the main tenets of past Spanish foreign policy: support for European integration, friendly and cooperative relations with the United States, and strong ties with Central and South America. The PP has traditionally promoted a strongly "Atlanticist" foreign policy that emphasizes close security ties with the United States. The PP-led government of Prime Minister José María Aznar (1996-2004) supported the U.S.-led invasion of Iraq in 2003 and contributed forces to the coalition. During the Socialist-led government of Prime Minister ZapateroJosé Luis Rodríguez Zapatero (2004-2011), U.S.-Spain tensions arose over differences in approach to several international issues,issues including Iraq, the Middle East peace process, and Spain's engagement with Cuba and Venezuela.

In 2013, allegations about surveillance and data collection activities by the U.S. National Security Agency (NSA) generated some tensions in the relationship—Spanish media reported that the NSA recorded information on approximately 60 million Spanish phone calls over the course of a month during 2012-2013, and that the communications of Spanish officials and politicians may have been monitored.¹⁵ Analysts observed, however, that the initial instinct of the Rajoy government was to play down the revelations in order to preserve relations with the United States. According to subsequent press reports, leaked documents also indicate that Spain's intelligence service was aware of and cooperated with many of the NSA's surveillance activities.¹⁶

Defense Relations

Defense Relations

Spain plays an importanta significant role in U.S. defense strategy with regard to Europe and Africa. Under the terms of a bilateral Agreement on Defense Cooperation, the United States has access to several Spanish military bases, including a naval base at Rota and an airbase at Morón that has been a key transportation link to U.S. forces in the Middle East. An increased U.S. presence at these bases during the last five years reversed a decade-long downsizing of U.S. forces in Spain.

In 2011, the United States, Spain, and NATO announced that four U.S. Aegis BMD-capable ships (Arleigh Burke-class destroyers equipped with the Aegis Ballistic Missile Defense system) would be based at Rota as part of the European Phased Adaptive Approach (EPAA) for missile defense in Europe. The ships began forward deployingdeployed to Rota in 2014, and the fourth arrived on station in September 2015.

In 2013, the United States deployed 500 U.S. Marines to Morón and 2015. The ships' primary mission is to operate in the Mediterranean to help defend Europe against theater-range ballistic missiles that could be launched from counties such as Iran. The ships also have undertaken other missions, including patrolling the Black Sea and launching Tomahawk land attack missiles in April 2017 in retaliation for the Syrian government's use of chemical weapons. Following the 2012 terrorist attack against the U.S. diplomatic facility in Benghazi, Libya, the United States deployed 500 U.S. Marines to Morón in 2013 to serve as a rapid reaction force protecting U.S. interests and personnel in North Africa. The unit wasdeployment increased to 850 Marines in 2014. In May 2015, the Spanish government grantedapproved a U.S. request to upgrade the basing agreement, making Morón the permanent task force headquarters for 2,200 Marines, 500 civilian staff, and 26 aircraft, with capacity for a temporary deployment of an additional 800 Marines and 14 aircraft. The Spanish Senate finalized approval of the agreement on September 1, 2015. These actions reversed a decade-long downsizing of the U.S. presence in Spain.

Spain is an active participant in international security and peacekeeping operations. Spain maintained a significant decade-long deployment as part of the NATO-led International Security Assistance Force (ISAF) in Afghanistan, and has 326 personnel deployed to NATO's follow-on Resolute Support training and assistance mission as of October 2015.¹⁷ Spain took part in NATO Operation Unified Protector against the forces of Muammar al Qadhafi in Libya in 2011, and Spanish forces also participate in international security operations, such as the United Nations peacekeeping mission in Lebanon, the EU maritime anti-piracy mission off the Somali coast, the EU stabilization mission in Bosnia-Herzegovina, and EU training missions for the security forces of Mali and Somalia.¹⁸

In the context of U.S. concerns about a long-standing downward trend in European defense spending, analysts note that Spain's defense budget has been affected by the country's economic difficulties. Although Spain enacted modest increases to the defense budget in 2014 and 2015, and has announced a 0.4% increase for 2016, overall defense spending was cut considerably between 2009 and 2013. The Spanish navy withdrew its only aircraft carrier from service in 2013, and the air force withdrew Mirage F-1 fighter aircraft from service and put some of its newly-delivered Typhoon combat aircraft in storage.¹⁹ According to NATO, Spain's defense expenditures for 2015 are expected to be €9.666 billion (approximately $10.3 billion).²⁰ At 0.9% of the country's GDP, this figure is well below the 2% of GDP set by NATO as the minimum defense spending target for its member states.

Economic Ties

The U.S.-Spain economic relationship is large and mutually beneficial. Recession and austerity in Spain had a negative impact on foreign direct investment (FDI) flows in both directions in 2012, but the investment relationship has subsequently rebounded. In 2013 (most recent complete data available), U.S. FDI in Spain totaled $31.4 billion and U.S. corporate assets in Spain totaled over $144 billion. Spanish FDI in the United States totaled $48.5 billion in 2013, and total Spanish corporate assets in the United States exceeded $315 billion.²¹ Spain's FDI in the United States has increased every year since 2002, and the value of Spanish assets invested in the United States has increased 10-fold over the past decade.

Over 1,190 U.S. firms operate subsidiaries and branches in Spain (including, for example, Apple, General Electric, General Motors, Ford, and AT&T). More than 80the Special-Purpose Marine Air-Ground Task Force Crisis Response-Africa (SPMAGTF-CR-AF).

The arrangement allows a permanent U.S. military presence of up to 2,200 personnel, including 850 SPMAGTF Marines and 500 civilian staff, and up to 26 aircraft. It also allows a surge deployment of an additional 800 task force Marines and 14 aircraft during contingency operations. The SPMAGTF is a rotational expeditionary force incorporating command, ground, aviation, and logistics units, with a primary mission of responding to emergency calls for security assistance at U.S. embassies and other U.S. operations in Africa. The task force may also undertake a variety of other missions, including evacuation of noncombatants, humanitarian assistance and disaster relief, or training and security cooperation activities with partner forces.

Spain is an active participant in international security and peacekeeping operations, with more than 3,000 soldiers and guardias civiles (Spain's national police force) deployed in 17 missions as of March 2018.¹⁸ Deployments include more than 600 soldiers to the United Nations peacekeeping mission in Lebanon, 473 to the international coalition (Inherent Resolve) countering the Islamic State in Iraq and Syria, and 336 (including a mechanized infantry company) with the multinational battlegroup stationed in Latvia as part of NATO's Enhanced Forward Presence mission. Spain contributes naval forces to the EU anti-piracy mission off the Somali coast (Atalanta), the EU (Sophia) and NATO (Sea Guardian) maritime security missions in the Mediterranean Sea, and the Standing NATO Maritime Group (SNMG/SNMCMG). Spain also participates in NATO's Resolute Support training mission in Afghanistan and EU military training missions in Mali and Somalia, and provides air transport in support of French and EU operations in Mali, Central African Republic, and the Sahel region. Spain has deployed a battery of Patriot missiles to Turkey to guard against possible ballistic missile threats from Syria. From 2002 to 2015, Spain maintained a sizeable deployment as part of the NATO-led International Security Assistance Force (ISAF) in Afghanistan.

In the context of U.S. concerns about a long-standing downward trend in European defense spending, analysts note that Spain's defense budget was negatively affected by the country's economic difficulties. Overall defense spending was cut considerably between 2009 and 2014, although Spain has enacted modest annual increases to the defense budget since 2015. According to NATO, Spain's defense expenditures for 2017 were $11.655 billion.¹⁹ At 0.92% of the country's GDP, this figure remains well below the 2% of GDP set by NATO as the minimum defense spending target for its member states.

Recent funding increases have been directed largely to the Spanish navy, including plans for the construction of new class of diesel attack submarines and the acquisition of five frigates, patrol vessels, and marine helicopters.²⁰ A force structure review in 2016 resulted in a reorganization of Spanish army brigades to make the forces more deployable for operations, with an emphasis on mechanized formations and more special operations forces. In 2018 or 2019, the Spanish air force expects to receive the final six of 73 contracted Eurofighter Typhoon combat aircraft.²¹

Spain is reportedly considering the acquisition of 45 to 50 F-35As, which would replace its fleet of 85 F-18 aircraft as they are gradually phased out between 2020 and 2025. As the Spanish navy's Harriers near the end of their service life, Spain is also reportedly considering the purchase of 12 to 15 F-35Bs in order to maintain a naval aviation capability.²²

Economic Ties

The U.S.-Spain economic relationship is large and mutually beneficial. In 2016 (most recent complete data available), U.S. foreign direct investment (FDI) in Spain was $37.4 billion and Spanish FDI in the United States was $68.2 billion. Spain's FDI in the United States has increased every year since 2002, and the value of Spanish assets invested in the United States has increased nearly five-fold over the past decade.

Approximately 1,100 U.S. firms operate subsidiaries and branches in Spain (including, for example, Apple, General Electric, General Motors, Ford, and AT&T). More than 90 Spanish firms operate affiliates in the United States (including, for example, BBVA, OHL, and Banco Santander). In 2016, U.S. affiliates employed more than 181,500 Spanish firms operate affiliates in the United States (including, for example, BBVA, OHL, and Banco Santander).²² In 2013, U.S. affiliates employed over 172,000 people in Spain and Spanish affiliates accounted for nearly 73more than 83,000 jobs in the United States.

The U.S.-Spain trade relationship is relatively modest in size. In 2014In 2017, U.S. goods exports to Spain totaled about $10.2more than $11 billion, and U.S. goods imports from Spain totaled about $14.4 billion.²³ Spanish officials have strongly supported the proposed Transatlantic Trade and Investment Partnership (TTIP) under negotiation between the United States and the EU.

In January 2013, the U.S. Treasury Department 15.66 billion. U.S. services exports to Spain were $6.8 billion in 2016, and U.S. services imports from Spain were $6.3 billion.²³ In 2013, the U.S. Department of the Treasury announced the signing of a new protocol amending the U.S.-Spain bilateral tax treaty of 1990.²⁴ Analysts assert that the protocol will modernize the agreement and make it more similar to U.S. treaties with other European countries in terms of avoiding double taxation and preventing tax evasion. Ratification of the protocol is awaiting the advice and consent of the Senate.

²⁵

Author Contact Information

Footnotes

The prime minister (head of government) is determined by the composition ofThe prime minister (head of government) is the leader of the largest party in the Congress of Deputies (lower house). The Senate (upper house) has 266 members and is structured in large part to voice the interests of Spain's regional governments.

9. The White House, Office of the Press Secretary, Remarks by President Trump and President Rajoy of the Government of Spain in Joint Press Conference, September 26, 2017, https://www.whitehouse.gov/the-press-office/2017/09/26/remarks-president-trump-and-president-rajoy-government-spain-joint-press. International Institute for Strategic Studies, The Military Balance 20152017 and The Military Balance 2018.

23.

1.	For the 114115th Congress, the co-chairs of the Congressional Friends of Spain Caucus are Representative Mario Diaz-Balart and Representative Pedro PierluisiJenniffer González-Colón and Representative Joseph Kennedy III.
2.	The current Honorary Chairman of the Council is Senator Tim Kaine. See http://usspaincouncil.org/.
3.	After an inconclusive result in the December 2015 election, coalition negotiations between the political parties reached the legal time limit without successfully forming a government, thereby triggering a "re-run" election.	4.
4.	The Spain Report, https://www.thespainreport.com/newsitems/325-151112104119-update-celeste-tell-poll-shows-ciudadanos-rising-podemos-on-10.
5.	Germany is the largest economy in the Eurozone, followed by France and Italy. The European Union (EU) has a total of 28 member countries; 19 EU countries have adopted the euro as their currency.
6.	Economic statistics from the Economist Intelligence Unit, Spain Country Report, November 2015March 2018.
7.	For additional information on the migration crisis, see CRS In Focus IF10259, Europe's Migration and Refugee Crisis, by [author name scrubbed] and [author name scrubbed].
8See https://www.elespanol.com/espana/politica/20171104/259474433_0.html.
8.	Miquel Alberola, "King Felipe VI makes rare address to the nation as Catalan crisis deepens," El Pais, October 4, 2017, https://elpais.com/elpais/2017/10/04/inenglish/1507101494_919786.html.
There are 17 autonomous regions and two autonomous cities (Ceuta and Melilla).
910.	For additional information see CRS Report RS22030, U.S.-EU Cooperation Against Terrorism, by [author name scrubbed]Jon Henley, "How Important Is Catalonia To Spain?," The Guardian, October 2, 2017, https://www.theguardian.com/world/2017/oct/02/catalonia-important-spain-economy-greater-role-size.
1011.	Peter R. Neumann, Foreign Fighter Total in Syria/Iraq Now Exceeds 20,000, International Centre for the Study of Radicalisation, January 26, 2015Valentina Romei, "Catalonia's Economic Strength Fuels Independence Push," The Financial Times, September 28, 2017.
1112.	Jorge A. Rodriguez, "Dozens of Jihadists with Spanish Links Thought to Be Fighting in Syria," El País, August 25, 2014See http://www.congreso.es/constitucion/ficheros/c78/cons_ingl.pdf, p. 9.
1213.	Fernando J. Perez and Jorge A. Rodriguez, "Spain Investigating 301 People over Links to Jihadist Terrorism," El Pais, November 18, 2015See http://www.congreso.es/constitucion/ficheros/c78/cons_ingl.pdf, pp. 47-48.
1314.	Elisabeth O'Leary, "Jailed Catalan leaders lodge case with U.N. to put pressure on Spain," New York Times, February 1, 2018.
15.	The parties are Together for Catalonia, Catalan Republican Left, and Popular Unity Candidates.
16.	Heather Nauert, Department Spokesperson, On U.S. Support For Spanish Unity, U.S. Department of State, October 27, 2017.
17.	For additional information see CRS Report R44003, European Fighters in Syria and Iraq: Assessments, Responses, and Issues for the United States, coordinated by [author name scrubbed], and CRS Insight IN10209, European Security, Islamist Terrorism, and Returning Fighters, by [author name scrubbed] and [author name scrubbed]. Also see Graciela Rodriguez-Ferrand, Spain: Criminal Sanctions for Foreign Fighters and Anti-Terrorism Measures Under Consideration, Law Library of Congress, October 16, 2014.
14.	Miguel Gonzalez and Javier Casqueiro, "Spain Ready to Support France by Taking over Africa Operations," El Pais, November 20, 2015.
15.	Raphael Minder, "Spain Summons American Ambassador on New Reports of N.S.A Spying," New York Times, October 28, 2013.
16.	Paul Hamilos, "Spain Colluded in NSA Spying on Its Citizens, Spanish Newspaper Reports," Guardian, October 30, 2013.
17.	NATO, Resolute Support Mission (RSM): Key Facts and Figures, http://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2015_10/20151007_2015-10-rsm-placemat.pdf.
18.	Government of Spain - Ministry of Defense, http://www.defensa.gob.es/misiones/en_exterior/. Galerias/defensadocs/misiones-internacionales.pdf
19.	NATO Public Diplomacy Division, Defence Expenditures of NATO Countries (2010-2017), June 29, 2017.	20.
2021.	NATO Public Diplomacy Division, Financial and Economic Data Relating to NATO Defense, June 22, 2015.
21Airbus, Airbus Delivers Latest Standard Eurofighter to Spanish Air Force, January 23, 2018, http://www.airbus.com/newsroom/press-releases/en/2018/01/Airbus_Delivers_Latest_Standard_Eurofighter_to_Spanish_Air_Force.html.
22.	Miguel Gonzalez, "Spain's Air Force and Navy have sights set on new American fighter aircraft," El Pais, June 5, 2017, https://elpais.com/elpais/2017/06/05/inenglish/1496652196_078384.html.
Daniel S. Hamilton and Joseph P. Quinlan, The Transatlantic Economy 20158, Center for Transatlantic Relations, Johns Hopkins University School of Advanced International Studies, p. 91142, Uniworld database, and U.S. Department of Commerce, U.S. Census Bureau, Balance by Partner Country – Trade in Goods with Spain.
2224.	Information obtained from Uniworld database. See https://www.gpo.gov/fdsys/pkg/CDOC-113tdoc4/pdf/CDOC-113tdoc4.pdf.
2325.	U.S. Department of Commerce, United States Census Bureau, Balance by Partner Country – Trade in Goods with SpainThe protocol was reported favorably by the Committee on Foreign Relations during both the 113th and 114th Congress.