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The International Writers Magazine: From our Spanish Correspondent

Macro v Micro
• James Skinner
Not easy to send in this month’s report on Spain with all the conflicts going on around the world, especially when August is a passive month and everyone, including the government and its opponents are on holiday.

There have been some major hiccups, especially the row that has started with the United Kingdom over Gibraltar and the continuing saga of corruption that could still threaten the Conservative (PP) government, especially the Prime Minister, Sr. Mariano Rajoy.

The first issue has left the European media’s front pages although the Spanish government is firing on all cylinders lambasting both Westminster and the ‘Rock’. The conflict is old hat except that it has taken a nasty turn. Every conceivable trick that appear up the Spanish Foreign Minister’s sleeve is thrown at the colony to hamper is livelihood. The latest is a new law forbidding fuel bunkering offshore (Gibraltar’s territorial waters). Not quite sure what NATO would say to this as it is a vital British Navy refueling spot.

As regards to the corruption issue, let’s take a recap. The ex-treasurer of the party, Sr. Barcenas is still in jail charged with tax evasion, Al Capone style and continues to reveal hundreds of financial documents that imply that a series of ‘bonus’ payments were handed out over years to several members of the party, including Sr. Rajoy. The latest scandal is that Judge Rus, who is handling the case asked for the ‘hard disks’ of Barcenas’ computers, and low and behold the party have destroyed them. The opposition parties are naturally up in arms. The other much larger corruption scandal in Andalucía that has implicated most of the Socialist party leaders in the autonomous region is back in full swing after judge Ms. Alaya returned from her well-earned holiday. The President of the region, Sr. Griñan has officially handed in his resignation as it is likely that sooner or later he will be summoned to appear before the court. We are talking about billions of euros of public funds that have been syphoned illegally over the years by the Andalucía Socialist Party (PSOE).

The good news is that the past month has confirmed a possible turnaround in the macro economy of the country. In simple terms the debt is been controlled and the cost of borrowing (government bond issues) has been reduced to 2008 levels. This means, theoretically that Spain has moved away from a bail-out situation. Naturally, the European Union, Central Bank and IMF are tickled pink although the latter has warned Spain of its current problems which are still a top heavy Civil Service and a severe unemployment level that continues to harass the country’s economic recovery. The balance of payments (exports versus imports) is another positive economic piece of news. Although the price of oil may cause a change due to the problems in the Middle East, Spain has enjoyed a more than excellent tourist season, up around 5% on last year’s figures. The Mediterranean areas of Catalonia, Valencia and Andalucía plus the Balearic and Canary islands have seen an influx of Europeans lead by Britain, France and Germany. Even my own region of Galicia – known for its famous Santiago de Compostela Cathedral - has had an unusual boost.

However, the Vice-President of the Employers’ Confederation has stated that Spain’s company structure is made up of between 90 and 95% small businesses and that the labour structure still needs changing to take this into account. The Trade Unions are reluctant to move. The government has reduced the number of contractual agreements from around 40 to 5 or 6. This is a move in the right direction. The VP added that the other area that needs addressing is the usual one. ‘The banks might be having a field day with their recoveries,’ he said, ‘but the small shop, or factory is still in need of financial backing, i.e. loans.’ The micro-economics is far from resolved.

So what else has been going on?

Catalonia continues on the road to ‘independence’. They are hell bent on holding the referendum next year under similar circumstances as Scotland and so far Rajoy’s government continues to look the other way. The Basques are preparing their own show whilst in Galicia, the 3rd region that has a nationalist party seeking independence has suffered from an increase in ‘light’ terrorism thanks to a group called ‘Galician Resistance’ that so far has stuck to blowing up banks. Nobody has yet been hurt but the signs are already written on the walls.

The scandals surrounding the Royal Family thanks to the infamous son-in-law Iñaki Undargarin who continues to be investigated for fraud have taken back stage. In fact most of the above news is taken with a pinch of salt because everyone is still on holiday. The television channels keep us happy with ‘soap operas’, old movies and magnificent coverage of ‘friendly’ football matches, Rafa Nadal’s incredible tennis achievements and Fernando Alonso spectacular Formula 1 racing are but a few of the sporting events that feed the masses whilst they spend their last euros at the tapas bars, at the beach resorts or attending the numerous culinary ‘fiestas’ around the country, firework displays included.

Students will be returning to university at the beginning of September and schools open the doors a couple of weeks later. The remains of summer will still be enjoyed by many, including the foreigners. As autumn approaches so will the uncertainties of the future. If the government manages to overcome its present woes, stick to its guns on the major reforms and their predicaments of a possible economic turnaround within the next 12 months are correct, Spain might, just might begin to see the light at the end of the tunnel. The citizens though, need more than promises and rhetoric; they need a boost in morale and a return of the smiles on their faces. It’s anybody’s guess on how much of the medicine they can take. Above all they need jobs!

September 16th Update:

The holiday season is over and the politicians have gone back to work. First days in the Spanish Parliament continued with the usual slinging matches between the PM, Sr. Rajoy (PP) and his main opposition leader 'Freddy' Rubalcaba (PSOE) over the same topics that had been discussed at the close of the last sessions; the Barcenas corruption case and the Catalan move towards independence. The first item on the agenda was business as usual, the Socialists are asking for his resignation and the PM continues with 'no comment'.

The second is more serious. The Catalan regional government lead by Sr. Mas carried out a massive 'human chain' from the French border to the Valencia region with over 1.5 million persons all holding hands and Catalan flags. Once again, the PM remains silent other than sending Sr. Mas a letter reading him the usual 'riot act' that his move is illegal according to the Spanish Constitution. They keep flaunting Scotland's forthcoming referendum as an example. The other major scandal involving Andalusia is more serious. Judge Alaya has now indited both previous regional presidents, Sr. Chavez and Sr. Griñan to respond to the massive fraud of illegal public funding.

Unfortunately, Andalusia continuous to be a Socialists fiefdom and the whole party has pulled out all the guns against the judge. So much for the Spanish legal system. Will expand on these news items in next month's report as they confirm my overall assessment of Spain since over 5 years ago. The problem is more political than economic and threatens the very stability of the country and, might I add, the European Union. In other words, Spain is more divided than ever - no different to the 30's of the last century!

© James Skinner - September 16th 2013.

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