The International Writers Magazine: Comment
Will Spain Survive?
The financial meltdown threatens Spanish social structures
In last month’s issue I wrote about this fascinating country I live in, full of contrasts and different cultures that happens to be caught up in the same financial turmoil as the rest of the cockeyed world, especially the European Union and how it was or at least gave the impression of trying to resolve some of its own problems related to the crisis. No need to back track as a reminder, suffice to say that the penny has actually dropped and the Spanish Socialist Government led by Jose Rodriguez Zapatero has woken up from its internal sleep and decided to do something about it; at least on paper.
But before I continue, I would like to mention a comment made by a member of a panel of economic experts on one of the many Spanish television talk shows dealing with the subject when he said, ‘trouble is that for decades the outside world has no idea what is or has been going on in Spain.’ Quite a statement! In fact he was spot on, not only about Spain but the rest of the world in general, as the whole shebang of a financial mess emerged some two to three years ago and how each section of the international media came to handle the matter. Just think about it. Most TV stations and newspapers, doesn’t matter from which country they come from can be seen or read on the Internet, yet if one checks out Spain in any of the more important ones, such as the Wall Street Journal, Financial Times, NBC or the BBC, to give some examples one will most probably get the weekend score of the Real Madrid football team or Rafa Nadal’s latest tennis win. Therefore when it comes to the socio-political or the economic woes no correspondent gives a fig; that is, until it is too late. This is exactly what happened with Greece and is now happening to Spain. Europe had no idea of the mess they were in until the lid was taken off the pot.
Even though the USA was the first one off the post in chasing the disappearing wealth of the Western World, bit by bit Europe soon followed suit and one by one each country’s balance sheet was made public and what a bloody great hole began to appear.
However, coming back to Spain and at face value there is light at the end of the tunnel. The Prime Minister ZP, or Mr. Bean thanks to the insistence from Mr. Obama and Ms. Merkel who more or less told him to ‘pull his finger out’ has finally recognised that his country had a problem. It’s taken him a couple of years but at least he’s come out of his ‘Wonderland’, has admitted and stated, similar to the Apollo 13 team that: ‘Brussels: We have a problem.’
Despite having consistently hidden the truth he has now proposed a set of economic measures, albeit dramatic ones to try to solve the huge debt that is pulverising the economy and the gigantic country’s welfare state. In a nutshell, he intends to reduce salaries in the public sector, freeze pensions and raise taxes. Apart from an increase in VAT that had already been agreed, nobody knows where the rest of the tax increases are going to be as each government spokesperson when mentioning the dreaded word has a different story to tell. As far as the cuts are concerned, as I explained in previous essays, Spain is really 17 little Spain’s (autonomous regions) and 8000 minute Spains (town councils), each living within their own economic fiefdoms. They all have to be convinced to reduce costs; when the fun starts it will be the best circus act in the history of Europe. Nevertheless, there have been ‘Hail Mary’s’ from the outside world and especially within the Euro Zone members that include the European Central Bank. The International Monetary Fund has also applauded the move. But as I stated earlier, nobody outside the borders of Spain really has a clue as to what is going on or even worse what is going to happen on my doorstep.
I’ll tell you, when the Spanish Trade Unions come out of their eternal slumber and realise what their super-hero ZP is going to do to the workers, the Greek rioting, because of similar reasons will look like a bachelor’s farewell party compared to the Spanish version. There’s going to be hell to pay.
Let’s move on to another of Spain’s huge problems; unemployment. More that four and a half million persons, 20% of the population is still out of work. At this very moment the number has ceased rising but then Spain is entering the tourist season and hopefully some of those poor sods sitting on city pavements begging for money or food may be lucky and offered a temporary job in the catering or other tourist related trade. Creating jobs has to date never been tackled in earnest by the Government, the Trade Unions or anybody else for that matter including the media. It just keeps rising similar to the world’s temperature thanks to global warming and what’s worse the dole money continues to eat into the governments coffers (the remaining amount available thanks to the odd taxpayers!). The underlying tragedy is twofold. 40% are within the 18 to 30 year olds and still waiting to obtain their first employment whilst the over 45’s haven’t a hope in hell of ever seeing another pay check.
How about the banking system? Here’s another thorn in the side of ZP that doesn’t go away. A few months after the bust up occurred in the US he proudly stated that Spain had the best system in the world. Sure. For the banks. As of today they still won’t lend the needed funds to the private sector to kick-start the economy once and for all in spite of the fact that their balance sheets look superb on paper. However, they are full of ‘hidden’ toxic assets in the form of defaulted mortgages and bankrupt town councils. Ah but the European Central Bank has suddenly become suspicious and found out about it. They’ve told ZP that he has to sort the financial sector out or else the whole lot will go bust. No kidding. This leads on to the peculiarity of the so call Savings Banks created over a century ago as social lending societies. They literally belong to the people, for the people but, and here comes the catch, controlled by the local politicians, i.e. town councils. These organisations have not only grown like Topsy, they have indulged in all sorts of activities, nothing to do with banking such as building and running museums, opera houses, business schools and other social institutions. Because of the crisis it now appears that they have overlapped not only in social service offerings but in the number of offices around the country. In other words, they’ve become too big for their boots and have to cut back. As I write this, the latest is that by orders of the European Central Bank they’ve got up until the end of June to sort the whole mess out. They must reduce in number of banks from around 50 to about 15. The aftermath will be redundancy not only of premises and personnel but a plethora of the above mentioned social ‘goodies’. As far as the true balance sheets are concerned, watch this space!
What about the internal political scene amidst all this financial chaos? Well, Spain is also faced with an education problem, the emergence of various independence movements including the language problem, and what is sitting on the crest of the heap, a possible collapse of the Spanish judicial system. Ironically they are all linked. Briefly, here they go, one by one.
The Minister of Education, one of the few sensible but weak members of the government has asked for a State Pact to solve the education problem. But what exactly is the dilemma? Simple. Amongst the industrialised nations of the world Spain has the highest number of dropouts from high school, the highest percentage of delinquency both inside and outside the classrooms and above all a huge number of unemployed workers who, thanks to the construction boom that went bust have no skills whatsoever. These include a high percentage of legal immigrants without work. In a nutshell, a real tragedy. Unfortunately the opposition party is reluctant to sit down and agree to discuss a possible solution. Status Quo for the time being.
Whilst all the hoopla on the economy was going on the Catalans, despite all their autonomous power granted under the Spanish Constitution have always wanted more freedom. So, a few years ago they redesigned their own Statutes of a Catalan type constitution which included amongst other clauses the right to be called a ‘Nation’ and that the Catalan language would be the overriding official language of Catalonia. The whole set of documents were presented to the Supreme Court of Spain for review to see whether it complied with the actual Spanish Constitution. They’ve been sitting on if for over 3 years. In the meantime, the Catalan Government has gone ahead as if it was already approved including local laws practically banning the Spanish language in Catalonia. Result? The president of Catalonia is now questioning the very legality of the Spanish Supreme Court.
But this very Supreme Court is also under fire from a different source; Judge Baltasar Garzon. Remember him? The guy who went after Chilean President General Pinochet for human rights violations a few years ago and drove Margaret Thatcher mad? Well, this super hero of the judicial system overstepped his mark (as I mentioned in one of my early essays) and decided to open up all the Spanish Civil War graves and prosecute members of the Franco regime including Franco for crimes against humanity under the new Law of Historic Memory, another one of ZP pet themes. Unfortunately, another judge discovered that Spain, during the transition period of the 70’s had passed an amnesty law and therefore Judge Garzon did not have authority to prosecute all the nasty fascist creatures of sixty years ago even if they were now all dead. That was not the other mistake committed by our masterminded attorney. He is also in the dock because he spent a few months in the USA giving lectures in some university paid for out of dubious funds from a Spanish bank that was under judicial supervision. But the best of all is a third case opened against him whereby he is alleged to have asked for transcripts of phone calls made between lawyers and jailed defendants in one of the major corruption scandals known as the Gürtel case that he is investigating. Apparently the Spanish law allows such transcripts only in cases of terrorism and not bribery and corruption. The point is that he is so popular inside and outside Spain that public opinion has mixed feelings and hence street demonstrations and news reports, mainly in his favour are sprouting up all over the country. The tragedy is that he is ‘legally’ at fault and therefore has broken Spanish law and all the hoopla is indirectly challenging the actual Spanish Judicial System. If they win, it could mean the end of democracy in Spain.
Finally we have the unsavoury theme of corruption. Again, because of the crisis all sorts of junior Al Capone’s have been sprouting up all over the country that have been involved in minor and mayor fraudulent activities for years. From small town councils to autonomous regions reaching as high as the Spanish Parliament hundreds of political characters are falling off the tree and spreading their illegal fruit before the judges en route to a jail sentence. Gürtel, the fraud case mentioned earlier is so huge that it would take another two essays to dissect the plot and the players. Suffice to say that the President of Valencia, one of the regions that is a haven for British expats is being investigated for taking bribes in the form of expensive tailor-made suits whilst the President of the Supreme Court is being ‘asked’ how he was able to clock up 6M Euros of wealth over the last few years including the purchase of an apartment worth 1M Euros as a birthday present for one of his sons, especially as this personage is a member of the Socialists People’s Party. Austerity my foot.
Despite all the unemployed, the enormous debt, passive trade unions, corrupt politicians life seem to go on. The restaurants still operate, the sidewalk cafes are crowded, the tapas areas with juicy goodies as ever and the wine still flows. Why? This is still the land of ‘Mañana’ that means literally, ‘live today; tomorrow will take care of itself!’ Welcome to the crisis ridden XXI century Spain!
© James G. Skinner. May 19th 2010.