The International Writers Magazine: Our Man in Vigo - Spain
Have We Got A Deal?
I’ve said all along that a major solution for Spain’s political problems is a pact between the conservatives (PP) and the main opposition party, the socialists (PSOE). Well, some sort of agreement has been reached - albeit a feeble one.
The Prime Minister, Mariano Rajoy and the leader of the main opposition party, ‘Fredy’ Rubalcaba of the PSOE (Socialist) carried out secret meetings and agreed to a common front on Spain’s demands at the forthcoming European Union Council of Ministers’ forum to discuss the future of Europe. Sounds great but could be a sort of smoke screen. What the PM achieved later in Brussels was an extension of another two years for Spain to reduce its deficit, presently at 6.5% of GDP to 2.8% in 2016. In exchange the country must continue to cut back on public expenditure, reduce inflated expenses in non-viable infrastructure, e.g. airports – and there are plenty lying idle - motorways, high speed trains as well as another round of tax increases, especially VAT. All this is a tall order especially as the country continues with political problems and high unemployment. Some autonomous regions and town councils have agreed to cooperate but there are many others that have not. The latter are still to be convinced of the cutbacks and many continue to do their own thing.
Back to reality!
Ana Santamaría turned up at the town council of Talavera de la Reina in the Toledo province and handed over her two small children aged 11 and 22 months. She said she could no longer take care of them as she had run out of money. This is one of many tragic cases as more and more citizens cross over to the danger zone of absolute poverty. They have lost their jobs, have run out of the dole money and ended their period of extreme subsidy of 400 Euros a month. What is even more frightening is the increase of malnutrition in the children whose parents are suffering from the horror. The evidence is everywhere. There are beggars on every street corner and the charity kitchens are overflowing.
The very same day the Association of Spanish bankers announced an annual overall profit for the sector of nearly 6Billion Euros – probably thanks to the big guys, Santander and BBVA. ‘These results are rather modest,’ said Pedro Pablo Villasante, the General Secretary. ‘An expected increase will be seen as the recovery of the banking sector takes effect,’ he added. Big deal! More on banks later on.
These are examples of the two extremes of the today’s scenario in Spain.
But first let’s start with the massive corruption scandals bombarding the media for past month that are not only threatening the main political parties but could also hurt the government as well as the monarchy. As mentioned in earlier reports the case of the King’s son-in-law, Iñaki Urdangarin continues to hit hard at the very credibility of the Royal Family as his wife, Princess Cristina appears to be up to her neck in the same scandalous laundering of money through dubious not profit organizations set up by the couple; the main cause before the courts. To add fuel to the fire, the tax authorities mistakenly attributed the sale of several properties worth over 1Million Euros in her name and asked her to produce the equivalent tax returns. In turned out that a series of ID entries into the fiscal system were wrong, every sector involved, from the property registrar to the notaries denied any failure. The end result is that no one can now trust the tax man when it comes to income tax declarations. As far as the monarchy is concerned, the only surviving member in the public’s eyes is the Queen and she is Greek. The King has had a serious back operation and looks like a walking corpse. He is also out of favor for his past philandering. The Prince is trying his best to keep as far apart as possible from all the royal shenanigans.
Next, but not last, is the ongoing saga of the accumulated wealth of the ex-treasurer of the conservative party, PP, Luis Barcenas that is spread all over the world from Switzerland to Uruguay. Over a period of 20 years, this gentleman accrued over 40 Million Euros in all kinds of deals from stock market profits to expensive art collections. The investigating judge has finally sent him to prison without bail. The trouble is that most members of the party hierarchy could be involved through illegal payments or handouts of donations thanks to his manipulation of the party’s coffers. The filth is liable to splash onto the present PM, Mariano Rajoy! Every other political party is out for blood. Could it bring down the government?
Another case is that of the ex-president of the Madrid Savings’ bank, Miguel Blasa who is meant to have made an illegal purchase of the City National Bank of Florida for several million Euros. This savings bank is now part of Bankia that is having its own troubles of capitalization. Sr. Blasa ended up in jail although was released a few days later. This caused a rumpus in the judicial system but that is another story. The main point is that he is not the only banker that is or should be in the hot seat. Read later section on fraudulent preference shares.
Finally we have the whole scandal of misuse of public funds in the autonomous region of Andalucía. I had reported this in earlier essays and how the judge was slowly but surely homing in on most of the politicians involved. Well, the Andalucía President, Jose Antonio Griñan has suddenly sent in his resignation despite the fact that he has another few years in office. Suffice to say that this region has been governed by the socialists, PSOE since Spain’s democracy. This has sent ripples through the party and ‘Freddy’ Rubalcaba has taken to his worry beads.
On to the banks.
Sure, the European Central Bank has handed over several billion euros to clean up the Spanish bank balance sheets, but the money is still not being handed over to the public in the form of loans hence the economy is still at a standstill. Whatever home buyers are left as well as small businesses, all are still unable to obtain credit. Ah! But the downside of the system continues to be the long standing battle of the over half million savers who were fraudulently sold a sort of pension savings product that turned out to be a toxic investment and are clamoring for their money. Jose Ignacio Goirigoizarrai, the President of Bankia was holding the annual shareholders meeting when one of these savers stood up in public and took off his clothes. ‘This is how you have left me1’ He shouted. He was a partially blind invalid who had saved around sixty thousand Euros over 30 years and was now faced with about 10% of his original investment. It hit the national media like a bombshell.
If we add the other grievance sector, the thousands of mortgage defaulters that are not only being evicted from their properties but continue to owe thousands of euros of unpaid mortgages, the social effect of both problems could very well spill into violence. Demonstrations are nationwide and daily. They are also extremely well organized and continue to disrupt every political event or rally that takes place in the country. The government is trying to sort the mess out but has its hands tied thanks the specific ruling on the EU loans.
Spain continues to have an unemployment problem including the huge number of young persons between the ages of 18 and 35 that are unable to find a job . The EU has at last taken some steps towards remedying the latter sector as it also affects most of the 27 members. Spain is to receive 1Billion Euros to be used as incentive to create new jobs. Talk to any young intelligent university student who’ll say he or she can’t wait to finish and leave for better pastures. Trouble is that one or more generations have already been lost and the possible recuperation may take another decade. Coupled to this situation is the education system itself. Spain’s statistics are well below that of a developed country with dropouts and low standards. The Minister, Jose Ignacio Wert has introduced a new law to remedy the chaos, but has met with heavy residence from both opposition parties and the education authorities including teachers union and the like. Cleaning up the mess is still far away.
And now the icing on the cake – separatist movements!
Catalonia is well on its way to seek full independence regardless of what the state says. The Basque country and to a lesser extent Galicia, where I live are also on the same path. There is however a twist in the Catalan situation especially as far as the politics is concerned. The President, Artur Mas who belongs to the CiU right wing nationalist party has dropped in the ratings. The Socialists, PSC are in disarray because of internal problems, the right wing PP is in a minority and low and behold the extreme left wing Republican Party, ERC is way ahead should regional elections take place today. Most of the citizens favor independence and consider Spain as an enemy. One must remember that the ERC is anti-monarchy and has support from fellow republicans throughout Spain. With the turmoil that is going on with the Royal Family it merely adds fuel to the fire. It’s anybody’s guess what will happen next as the referendum has been set for June next year regardless of what Madrid says. They are literally defying the Spanish Constitution. The trouble with Catalonia is that it is also bankrupt!
As a roundup for the month two news items that have hit the headlines recently. Leo Messi, the famous Barcelona Football team ace has been accused of tax evasion. Apparently the profits from his advertising campaigns, not his football contract, have been paid offshore into a tax haven account. He owes the taxman 4Million Euros but could be fined double or treble the amount. Another and more serious case is the possible demand by the EU for Spain’s shipyards to pay back a sort of grant known as the ‘tax lease’ for irregular use of the same. What this means is that the yards in Galicia, Asturias and the Basque Country, many which have been idle for two years, could go belly up and cause the end of shipbuilding in Spain. 80000 jobs would be lost. Ironically the whole country including political parties, trade unions and business entities have joined together to fight for the annulment of the payback.
Is there light at the end of the tunnel? I’ve said all along that Spain’s major problem is geo-political. Unless the 1978 Constitution is revised from top to bottom, before it is too late and a sense of statehood is reintroduced, the country will not recover economically or socially. It is totally divided from top to bottom into fiefdoms and a myriad of political parties all trying to pull in their own direction. Strong statement but one only has to look at its recent history and realize that it is going through the same phase as the 30’s of the last century.
As for the present moment, it's summer and most Spaniards are now on holiday. I’ve also repeated this statement every year. The tapas bars and beaches are thriving; the foreign, mainly German and British tourists are everywhere. However autumn will no doubt be full of surprises.
July 4th Update:
Just thought I'd let you know that the superstar judge Mercedes Alaya has summoned Ms. Magdalena Alvarez who is now vice president of the European Development Bank and was Transport Minister (the one with the largest budget) during Zapatero's reign but in her earlier role was The Finance Counsellor (equivalent to minister) in the Andalusia Regional Government. This judge is slowly working up the ladder to unravel the huge fraud of public funds that went on for years under the rule of Manuel Chavez. Although the present government has got its own scandal with the Barcenas character what is going on down South is far more serious as it involves massive laundering of tax payers money. Trouble is that nobody in the EU knows nor give a damn but the Spanish citizens are getting pretty tired of all the scandals especially as more and more poverty creeps into their homes. Ms. Alaya has been hassled by the Socialist Party, especially the Nº 2, Ms Valenciano, yet she has on the other hand a very large following of supporters from the general public. Let's hope she doesn't give up as she's been investigating the filth for the past 5 years!
July 14th Update:
There could be a showdown soon as the country spins out of control. What with the corruption charges reaching a peak (Monarchy, Government, Andalusia and the Pujol family who ruled for decades in Catalonia), the independence cry (Basques, Catalonia and Galicia), the disarray of the socialists, the increase of National, Republican and (lo and behold) Social-Democrats (UP&D) parties, we're in for a rough ride. Summer will soon be over, the tourists gone and an added problem with the shipbuilding yards going belly up because of a dubious 'hand-out' back in 2005 that the EU Commission is asking for a payback, I'm off to Portugal to ask for asylum. No money in the kitty and all major works (trains, airports, museums, auditoriums, hospitals at a standstill).
© James G. Skinner. July 2013
Education is Paramount in Spain
Details from the 2012 UNESCO study on world education have revealed that 1 in 4 youngsters in Spain between the ages of 18 and 24 had no studies at all.