Congress approves Iran crisis decree: 5 billion euros — and the Canary Islands get an extra package

The Iran war, which began on 28 February with the strike on Iranian nuclear facilities, has shaken the global economy: blocked oil transports through the Strait of Hormuz, crude oil above $100, rising prices across Europe. Spain's response is a 5 billion euro package approved by Congress on 26 March with the votes of the governing coalition. Vox voted against, PP and Podemos abstained.

What the decree delivers

The decree has two pillars: short-term emergency aid against the price explosion in energy and food, and structural measures for greater energy sovereignty. The market regulator CNMC receives expanded powers to monitor the fuel market — a direct response to suspicions of coordinated price hikes at petrol stations.

What the Canary Islands get on top

President Fernando Clavijo and Minister Angel Victor Torres agreed on 27 March on an additional package for the Canary Islands. The reason: the decree's general measures are designed for mainland Spain and do not cover the specific challenges of an archipelago.

Clavijo stressed that the agreement ensures funding reaches where Spanish law fails to cover the archipelago's needs. The final agreement is expected on Monday.

Net balance: Is the war good or bad for the Canaries?

The uncomfortable truth: so far, yes — on balance, the Canary Islands are benefiting. BBVA just raised its growth forecast for the Canarian economy from 2.3 to 2.5 per cent — explicitly because of the Iran effect. Tourists who would normally fly to Egypt, Turkey or Greece are diverting to the Canaries because they are seen as safe and stable. Hotel occupancy in southern Gran Canaria is at record levels, spending per tourist is rising.

At the same time, the flipside hits residents hard: fuel prices up 34 per cent, rising food costs due to expensive freight, inflation at 3.3 per cent. The Canary Islands import virtually everything by ship — every extra cent on oil ends up on the supermarket receipt. Anyone not working in tourism mainly feels the downsides.

The net balance depends on who you ask: for the tourism industry, the Iran war is an economic stimulus. For low-income families, commuters and farmers, it is a burden that the 5 billion euro decree only partially cushions.

What this means for Gran Canaria

Fuel prices in the Canary Islands have risen over 34 per cent since the war began. The CNMC's expanded market surveillance could help identify excessive markups. The fertiliser subsidies are relevant for Gran Canaria's farmers, though the sector is smaller than on Tenerife or La Palma. Most importantly: the freight cost subsidies for maritime transport directly affect the cost of living on all islands, since virtually all goods arrive by ship.