The administration of Pedro Sánchez has officially disclosed to the Spanish Congress that it holds contracts with Grupo PALCO, a Cuban state-owned enterprise linked to the military conglomerate GAESA. These agreements pertain to providing support staff for the Spanish Consulate General in Havana.
These contracts, which relate to the operations of Spanish diplomatic missions amid a surge in nationality requests due to the Grandchildren Law, total over 1.6 million euros, according to public procurement records.
In a parliamentary response dated September 23, 2026, the Spanish government confirmed its contractual relationship with PALCO, asserting the legality of these dealings in accordance with Spain’s Public Sector Contracts Law 9/2017.
This response was issued following a written query from Popular Party deputies on July 10, after Spanish media exposed the substantial contracts awarded to the Cuban company and the financial terms under which it supplied workers to the diplomatic missions.
Legal Obligations and Cuban Employment Regulations
The Sánchez government justified the contracts by highlighting that Cuban law mandates foreign embassies and consulates to hire local staff through state-owned companies, precluding direct employment relationships.
The executive explained, "The requirement to hire through a Cuban state enterprise to access local personnel, whether Cuban citizens or foreign residents, is enshrined in Cuban regulations."
According to the parliamentary response, any local staff hiring by the Spanish Consulate General in Havana must be channeled through a state entity, in this instance, PALCO. The government noted this method has been in place since 2017, with no alternative hiring options permitted by Cuban authorities.
Details of the Contracts with Grupo PALCO
Public Sector Procurement Platform documents reveal three contracts awarded to Grupo PALCO, with a combined value exceeding 1.6 million euros.
The primary contract, identified as 2024SWs00114, was awarded by the Subsecretariat of Foreign Affairs on March 5, 2025, for a sum of 1,131,295.68 euros, to supply office and domestic staff to the Spanish Consulate General in Havana. This contract, with PALCO as the sole bidder, remains valid until December 2028.
Additional agreements include one for 242,743 euros to supply personnel to the Spanish Embassy and another for 228,000 euros concerning property rental for staff.
These contracts enabled the hiring of approximately 87 office assistants at the Spanish consulate to manage the high volume of nationality applications generated by the Democratic Memory Law, popularly known as the Grandchildren Law.
Disparities in Wages Reveal Financial Controversy
One contentious aspect of these contracts is the discrepancy between the payments made by Spain to PALCO and the salaries ultimately received by Cuban employees.
The Spanish government paid the state firm between 205 and 210 euros monthly per worker, whereas employees received between 133 and 135 euros. This gap of around 70 to 77 euros per person per month went to PALCO, acting as the obligatory intermediary between Spanish authorities and Cuban workers.
This employment mechanism enables the Cuban state to control job access within foreign diplomatic offices, generating revenue through labor mediation.
Political Implications of the Grandchildren Law
The involvement of PALCO in these contracts has fueled broader controversy over the application of the Democratic Memory Law and its potential electoral consequences.
The Popular Party and Vox have criticized the process of incorporating new Spanish citizens into the overseas census, accusing the Sánchez government of exploiting the Grandchildren Law to expand its electoral base.
Opposition sectors have speculated that new registrations could impact up to 20 parliamentary seats, although this is a political forecast rather than a verified electoral outcome.
On September 8, the Supreme Court provisionally suspended the electoral effects of certain registrations tied to the law, in the context of the general elections scheduled for November 29, 2026.
On October 12, Spain's Supreme Court rejected an appeal by the State Attorney's Office, maintaining the provisional suspension of voting rights for certain individuals nationalized through the Grandchildren Law in the general elections of November 29. This decision could affect 163,020 voters, though it does not entail the loss of Spanish nationality nor clarify how many affected are Cuban nationals.
In addition to these political debates, there are concerns about the verification of documents issued in Cuba, a country not part of the Hague Apostille Convention.
By July 2026, the Spanish Ministry of Foreign Affairs had processed nearly 1.3 million nationality requests and granted citizenship to over 357,000 individuals through this procedure.
Insights into Spain's Contracts with Cuban Enterprises
Why does Spain contract with a Cuban state enterprise like Grupo PALCO?
Cuban law requires foreign embassies and consulates to hire local staff through state-owned companies, preventing direct employment relationships. This regulation mandates Spain to engage with entities like Grupo PALCO to comply with local laws.
What is the Grandchildren Law?
The Grandchildren Law, formally known as the Democratic Memory Law, allows descendants of Spaniards to apply for Spanish citizenship. It has caused a significant increase in nationality applications at Spanish consulates, particularly in countries like Cuba.
How does the wage disparity in the contracts with PALCO affect Cuban workers?
The Spanish government pays PALCO more per worker than what the employees actually receive, with the surplus remaining with the state company. This results in Cuban workers earning significantly less than what Spain pays for their employment.
What impact could these contracts have on Spain's political landscape?
The contracts have sparked political debate, particularly regarding the potential electoral impact of the Grandchildren Law. Some opposition parties suggest that new citizen registrations could sway up to 20 parliamentary seats, though this remains speculative.