“Energy is the Key Factor in Economic Growth”
José Folgado takes stage at Global Leadership Series
“What is really important in life is to be well-equipped with principles and values,” said José Folgado, president of Red Eléctrica Española (REE), during a recent presentation that formed part of the Global Leadership Series held on IESE’s campus in Madrid.
Folgado encouraged Executive MBA participants to “tackle risks with enthusiasm and responsibility. It is critical to set objectives and not despair if not all of them are achieved.
Happiness or unhappiness is cultivated inside each of us. If your values and principles are clear, things will likely go well. But you must always act with humility, the foundation of decision making and leadership.”
Born in Zamora, Spain in 1944, Folgado holds a degree in economic science from the Universidad Autónoma de Madrid (UAM) and has served in various high-level public positions, such as secretary of state of Spain three times between 1996 and 2004. In 2007, he was elected mayor of Tres Cantos, Madrid, and since last year has been head of REE.
Folgado said he chose to study economics following a questions that he has intrigued him all of his life: What leads to development in cities?
“I wanted to know how to maximize well-being in a society, what affects people,” he said. His economics degree was a highlight of his professional career.
The role of government
After completing his degree at the beginning of the 1970s, he began working as a teacher – a career he carried out for 25 years. University teaching was an exciting experience for him, he said, and he taught courses on Public Finance and Tax Systems at the UAM.
“I was very interested in explaining how government and markets share tasks, and what roles the two entities played. The market, if it acts alone, disrupts society. That’s why politics is an art. A good politician is someone who succeeds in helping government and the market strengthen each other mutually,” he said.
Later, Folgado headed the Department of Economics at CEOE. This was during the 80s in Spain, when he helped forge agreements between the government and unions.
“An organized civil society is basic so that it can mature,” he said. His doctoral thesis focused on social partnerships and budget policy. “That is, on how to take action to maximize well-being,” he said.
Path toward the euro
With the Popular Party’s victory and the election of José María Aznar as prime minister in 1996, Folgado jumped into politics. He was 52 years old and accepted the post of secretary of state for budgeting. In this role, he helped steer Spain’s economy toward the euro. “Thanks to a spirit of sacrifice and dedication, we achieved this goal,” he said. It wasn´t easy, however, since Spain had at the time an unemployment rate of 23 percent, a deficit higher than 7 percent and the country did not fulfill any of the criteria required to be included in the eurozone.
Folgado’s first decision as minister was to reduce public spending by 200 billion pesetas. “In one year, we gained the confidence of the markets. But keep one things in mind: a county that does not apply the right social policies will fall apart.”
Some years later, after being elected as representative of Zamora, the PP proposed a new challenge: win the mayoral election of Tres Cantos. He served as mayor for five years, “the happiest five years of my life,” he said. “The politics are local but they are very gratifying because you have enough autonomy to carry out your plans,” he said. He managed to be reelected as mayor until in March 2012, he was elected president of REE.
Folgado believes that “energy is the key factor in economic growth” and dependence on foreign energy sources is so strong in Spain because there has not been a structural reform implemented in the sector, as there has been in other sectors such as transportation. Renewables, nuclear energy and pumping are also vital for development in the country.