In Spain, a Tide Of Development

The building boom has helped create an underground economy that has attracted billions of euros in illicit funds, experts say. Today, 26 percent of all the 500-euro notes circulating in the European Union are in Spain, according to the Spanish Finance Ministry, largely because of money laundering and corruption in the construction industry, experts believe. Spaniards have dubbed the notes "Bin Ladens" because they know they exist but no one can find them.

"Basically, drug traffickers in the south of Spain have investments in the real estate and development sector because it is an easy sector to launder money with no questions asked," said Alejandra Gomez-Cespedes, a lecturer at Malaga University's Andalusian Institute of Criminology.

In Altea, a seaside resort about 60 miles south of Valencia, an entire cliff has been embedded with concrete, and progressively newer apartment buildings have leapfrogged over older ones to the water's edge.

A new jetty is being extended through a 12-acre underwater forest of Posidonia sea grass in order to double the harbor's capacity to 1,064 boat slips. The government ordered the grasses to be transplanted elsewhere, but 85 percent of the relocated forest has died, according to the World Wildlife Fund's Garcia.

Some of the harshest criticism has targeted the Valencia region's so-called land-grab law, which turns over control of private property to developers, giving them legal means to compel the owners to relinquish the land or buy it back.

"If there is a social purpose for developing land, that predominates over the fundamental right in European law -- the rights of private property," said Charles Svoboda, a retired Canadian diplomat and president of Abusos Urbanisticos NO, a 30,000-member group formed to protect landowners.

The law was investigated by the European Parliament after 15,000 people, many of them retirees from elsewhere in Europe, signed petitions asking for relief. The European Commission has asked Spain to modify the law.

"Let's call it what it is -- land robbery," said Michael Cashman, an English member of the European Parliament who led a panel that investigated Valencia's development laws. "What we are seeing is 18- to 20,000 breaches of individual human rights."

The government of Valencia asked that The Washington Post submit its questions about the laws in writing, but then did not respond to them.

In an interview in Madrid, Spanish Vice President María Teresa Fernández de la Vega said the federal government had little control over housing and urban planning, which she said was in the hands of local authorities. But she said the government has endorsed new zoning regulations to combat land speculation and has budgeted $77 million to buy ecologically sensitive coastal areas and protect them from development.

In Benissa, a town of 12,000 residents about 50 miles south of Valencia, the case of Lieve de Cleippel and Hubert van Bel has been dormant for several months. But Mayor Juan Bautista Rosello said that it would be revisited, under a revised law that would withdraw the threat of demolition of the couple's house but press forward with plans to "urbanize" much of the property under the town's master plan.

He denied that Valencia's law allowed towns to take land. Instead, he said, towns "convert agricultural land into developable land" and then charge the owners for the cost of urbanizing it.

In the case of the Belgian couple and their 7.5 acres, Rosello said, they will be granted about 2.5 acres around their house, with the remaining five acres being declared urban. Under the new law, they will be assessed roughly $1 million in charges for infrastructure improvements, he said.

If the couple does not want those five acres to be developed, Rosello said, they must pay the charges, like everyone with property zoned urban in the new plan. Their other option would be to sell the land to the developer.

"I don't see it as a battle" between public and private interests, Rosello said, but rather a balance between the two. "They're not going to have land taken away with nothing in exchange. . . . In exchange they get land for building houses," which he said would be more valuable.

"We didn't do this for an investment, we did it to live here," said de Cleippel, 56, walking around the outside of the colonial-style house with expansive patios, lush gardens and dramatic views of the sea about a mile away. "We just want to keep our property, not have it taken away to build 17 houses on it."

Correspondent Molly Moore in Madrid contributed to this report.