Spanish premier unveils $5.7B plan to cope with ‘illegal’ Iran war

OVIEDO, Spain

Spanish Prime Minister Pedro Sanchez on Friday unveiled a €5 billion ($5.7 billion) support package to shield households and businesses from the economic fallout of the Iran war, while sharply criticizing the conflict as illegal and destabilizing.

Sanchez said the war involving Israel, the US, and Iran violates international law and threatens Europe’s interests, warning it has already killed thousands of civilians and displaced around 4 million people in just 20 days.

“It is already provoking the first shockwaves of a global economic earthquake,” he said, pointing to 50% rises in fuel and 40% fertilizer prices.

“Even though we do not support this illegal war, we will do whatever it takes,” he added.

Sanchez said the €5 billion package represents a direct cost to Spanish taxpayers.

“This is money that could have gone to scholarships, healthcare or social care, but will instead be used to protect our economy, businesses and the most vulnerable,” he said.

He also expressed frustration with global leadership, saying he was “very angry” about decisions taken by certain governments.

The first pillar of the plan focuses on immediate support for households and businesses, including tax cuts on energy and a reduction in electricity VAT from 21% to 10%.

The government will also introduce fuel subsidies of up to €0.30 per liter, along with direct aid for sectors such as transport and agriculture.

The second pillar focuses on accelerating Spain’s energy transition and strengthening resilience through decarbonization.

Measures include tax deductions for investments in solar panels, electric vehicle charging points and heat pumps, as well as efforts to improve energy efficiency and expand renewable energy storage.

Sanchez said Spain’s long-term investment in clean energy has made it less vulnerable to energy shocks than other European countries.

“In Spain, gas has determined electricity prices only about 15% of the time, compared to around 90% in Italy and 40% in Germany,” he said.

He said his government has seen Spain increase renewable energy capacity by 150% over the past seven years, putting Spain at the forefront of energy sovereignty in Europe.

However, he stressed that nothing can offset the consequences of the war.

“No plan, however ambitious, can neutralize all the damage caused by this illegal war,” he said. “That is why we must continue to demand an end to the war, respect for international law and say clearly: no to war.”