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Spain After the Greek Crisis

Fall 2015 In Situ

Spain After the Greek Crisis

Spain After the Greek CrisisWhy the country is still trapped – institutionally, politically and economically

Developments in Spain have to be read in light of what has taken place in Greece. Spain is the next big battleground in a broader political conflict unfolding at different rhythms across Europe in three dimensions: across a left-right axis; in terms of commitment to the European project; and also in terms of traditional actors versus newcomers.

As Spain approaches its general election in December, the conservative Popular Party (PP) – the ruling party in Madrid – may be seen to represent, in European terms, the inevitable: status quo economic (austerity) policies that are feasible but thus far largely dismal in their results. The upstart Podemos peddles what may or may not be an opiate for the masses – a promise to end austerity immediately. This alternative generates some optimism, but might prove impossible in practice. The big question is whether the opposition Spanish Socialist Workers’ Party (PSOE) will be able to offer a political programme that walks the fine line between satisfying the desire for change and overpromising – only to later under-deliver.

In ordinary times, the governing PP would not be expected to top the polls. Unemployment (over 20 percent) is worse than when the PP took over in 2011, and the party has spent years embroiled in a massive corruption scandal, with a former party treasurer alleging that its most senior leaders were all systematically on the take. President Mariano Rajoy’s approval rating sits at 16 percent. And yet the PP’s margin of victory over the PSOE in 2011 was so large (16 points) that it still has room to manoeuvre.

The PSOE, for its part, has been struggling to overcome its record. Jose Luis Rodriguez Zapatero was in government when the financial crisis hit, and he was the first to enact – albeit reluctantly – austerity measures. The current PP absolute majority in the Congress of Deputies is the direct consequence of voter frustration with the PSOE, from which the party has yet to fully recover: the year 2011 saw the rise of the indignados, as thousands of young people took to the squares in protest. The party has since opted for a new leader, the economist Pedro Sanchez, who is not deeply linked to the last PSOE government. The hope is that Sanchez represents sufficient renewal to meet the challenge posed by the two new parties (Podemos and Ciudadanos).

To further complicate matters, highly charged elections have just been held in Catalonia. Catalonia has been roiled by a constitutional crisis since 2010, when the Spanish Constitutional Court delivered a restrictive interpretation of the Catalan Statute of Autonomy that abruptly halted Spain’s gradual process of federalization. A cycle of mobilizations has followed, with Catalan nationalists demanding a referendum on independence – something subsequently ruled out by the Spanish authorities.

The main nationalist parties are now attempting to depict these fall elections as a veiled plebiscite on independence. The Catalan president and leader of the opposition ran on a combined ticket. Having won the elections, a hazy process of independence will now likely ensue.

Regardless of who forms the new government, the challenges for Madrid will be enormous. It will have to deal with the continued demands for fiscal consolidations and a public debt that reached 97.7 percent of GDP at the end of 2014. It will need to address the inequalities and widespread uncertainty caused by the economic crisis – now in its seventh year. Some 30 percent of Spanish children are at risk of poverty – the second highest rate in the EU after Romania. Tens of thousands of families have been evicted from their homes. A majority of young people have considered emigrating to find work on account of the lack of opportunities. And, of course, Madrid will have to reckon with the growing issue of refugees. It will certainly need to seek allies in Europe – where Spain’s influence is at a historic low – if it seeks to change the overall architecture of the Eurozone. And it will need to address the territorial issue raised by Catalan separatism.

The historical irony might be that the parties focussing on breaking Spain apart might be the trigger for the country’s renewal. Separatist pressure has prompted even the very conservative PP to recognize that some species of constitutional reform – a key PSOE demand – will be required to address the territorial and national question in Spain. Opening the constitutional file opens up a host of possibilities in terms of revisiting the existing Spanish political settlement.

On top of the separatist pressures, dissatisfaction with the state of the country’s affairs has also triggered a broader institutional crisis in Spain. Citizens – disgruntled by perceived political incompetence and corruption – have begun to consider alternatives to the traditional two-party system dominated by the PSOE and PP.

The situation in Spain is symptomatic of a broader crisis of the EU-28, and especially of the Eurozone. European institutions have been unable to provide a sustainable response to the global economic crisis. Eurozone unemployment remains chronically high (over 11 percent). Continental elites lurch from summit to summit, applying one temporary fix after another. The developments in Greece over the summer have exposed the extent to which European unity and goodwill are breaking down across the union. And few countries are immune against angry electorates turning to new actors – frequently populist and/or nationalist parties – in search of solutions.

Disruptive new political forces are everywhere in Europe today: in the UK, this space is occupied by the UKIP and the SNP; in France, by the Front National; in Scandinavia, by the parties of the far right. Italy has the Five Star movement, and Ireland an ascendant Sinn Fein. In Greece, there is Syriza and its recent splinter, Popular Unity. And in Spain, while Ciudadanos has managed to occupy a political niche as a centre-right party preaching a message of economic liberalism and political renewal, the much bigger story is the emergence of Podemos.

Podemos, led by the media-savvy academic Pablo Iglesias, has deftly managed to channel the spirit of the indignados to the benefit of Iglesias’ own electoral vehicle. The party’s initial success stemmed from its rejection of a traditional left-right understanding of politics in favour of a new dichotomy between those ‘below’ (the people) and those ‘above’ (pejoratively referred to as the casta – the caste). However, over the course of the past few months the party has suffered three serious reversals.

First, Podemos’ co-founder, Juan Carlos Monedero, was pushed out of the party in a tax scandal related to monies flowing to the movement primarily from the Venezuelan government, severely disrupting the party’s claim to purity. Second, Podemos underperformed during the regional elections held across Spain this past spring. Third, Pablo Iglesias bravely posited a domino theory for bringing an end to austerity in Europe: first Greece, then Spain. Instead, the performance of Syriza has demolished the thesis that Europe can be unilaterally changed by a highly-indebted debtor country on its periphery.

The PP, for its part, is presenting itself as a champion of orthodoxy, contrasting its record with Syriza’s failure to right the ship in Athens. In the prologue to the December election, it will argue that Spain has now turned the corner, given that the country has of late been outperforming the other large Eurozone economies in growth – a trend that justifies the years of sacrifice. According to the party’s triumphalist rhetoric, it has fulfilled its responsibilities by applying to the letter the recipes for crisis management favoured in Brussels, Frankfurt and Berlin: austerity and structural reforms.

In point of fact, however, the number of political actors contending for government has increased as the Spanish state’s perceived capacity to respond to the crisis has diminished. The PP, PSOE, Podemos and Ciudadanos all aspire to either form or condition the next government. And for the first time since the return of democracy to Spain, the possibility exists that a coalition government of some sort will be formed; an absolute majority looks highly unlikely. Responsibility for the future success or failure of Spain will therefore be distributed.

Dealing with the economic crisis and its aftermath will remain the principal task of the new government, regardless of its colour. Only once the economic situation has been stabilized will the more complicated reforms required to restore legitimacy to Spanish institutions become possible: a revision of the constitution and, beyond that, a new deal in Europe.

Normalcy for Spaniards has, to be sure, been interrupted, and the political order in place since Spain’s transition to democracy between 1975 and 1982 has been badly shaken. The Spain of today hardly resembles the Spain of the boom years that followed the introduction of the euro in 1999. The past, as it were, is a foreign country.


David Lizoain was a policy adviser to the former president of Catalonia, and is currently head of policy and research for the Socialist Party of Catalonia.


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