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Spain on the brink

By Tom Gill

First it was Greece and Ireland, but in recent weeks it has been Spain that pundits say may be forced to seek a bailout.

The Spanish government says it won’t happen. And to further reassure the financial markets, it is pushing ahead with a massive austerity programme aimed at halving the public deficit – Europe’s third largest – to 6 per cent of GDP within two years.

Workers and their families, as in Greece and Ireland, are bearing the brunt of the sacrifices. On September 29 as many as 10 million people took to the streets in the country over plans to make it easier to hire and fire, to oppose public-sector pay cuts and to object to a rise in VAT.

Faced with the massive thumbs down by his Socialist party’s natural supporters, Prime Minister Jose Luis Zapatero appeared to take stock. Some hoped that he was about to do a second U-turn from the man who swapped expansionary economic policies for austerity in May. But the hope didn’t last.

The trigger was another wave of panic in financial markets. Investors holding Spanish government bonds – sovereign debt – were worried about the ability of Europe’s fourth-largest economy to service its debts in the wake of the crisis in Ireland, which also said that it didn’t need a bailout. The price Spain paid to service its debts went up, putting up the cost of borrowing for Madrid.

If investors were worried initially they are even more worried now.

Zapatero, under pressure from the IMF and European Central Bank and on the advice of the country’s biggest corporations, announced another blitz of regressive initiatives to shore up investor confidence. This included the sell-off of state-owned companies, cuts to unemployment benefits, attacks on public-sector pensions and new tax breaks for businesses.

Then on December 5, in an extraordinary step, the premier declared a state of emergency threatening air traffic controllers involved in a paralysing wildcat strike with jail, and leading some to worry that this was the starting gun going off in a broad attack on trade union rights.

United Left, a party dominated by communists, is a lone political voice opposing the attacks on Spaniards’ living standards and democratic rights. Once a junior partner to the Socialists, its leader Cayo Lara is now denouncing Zapatero and his party for “kow-towing to the markets and big business” while ignoring the country’s root problems – high unemployment of 20 per cent and a real economy that has gone into meltdown following a disastrous debt-fuelled housing bubble that has burst.

But United Left has so far failed to capitalise on the slumping popularity of Zapatero’s government. In regional elections in Catalonia last month it was the pro-business nationalist party Convergence and Union (CiU) that trounced the Socialists.

The right-wing opposition Popular Party is now between 8-14 per cent ahead in the polls and the Socialists’ share of the vote has fallen from 27 per cent to 18 per cent. The bets are that the general elections in May 2012 will usher in a minority Popular Party government propped up by CiU.

However, while you wouldn’t guess it by reading the Spanish press or reports of events in Britain, there is really no excuse for the austerity measures.

According to Attac, a non-governmental organisation campaigning for banks and corporations to start paying a fairer share, cuts would not be necessary if the government reversed the reductions in taxes that have been carried out over the past 15 years, which it and the previous Popular Party administrations implemented in favour of the wealthy and corporations – tax cuts which the IMF estimates account for 40 per cent of the “structural” public deficit.

Together with a concerted effort to tackle tax evasion, this could raise a colossal 35 billion euros in revenues for the state, it says.

Then take the planned cuts to pensions, which Spaniards are now told the country can no longer afford. The key argument is not new. It is an aging population – every person over 65 today is supported by 2.24 workers, but by 2050 this ratio will almost half to 1.15 workers. But this ignores a likely doubling of productivity over the next half century, meaning the same number of workers should be able to support twice as pensioners as today. Problem solved.

As for the perplexing concerns of international investors, that Spain is now not in a position to grow enough to pay off its debts – growth being the best remedy for deficits – the question of just how the economy is meant to expand under the most extreme austerity plan in a generation has not been answered.

But, as in Britain, an intelligent analysis of the facts isn’t being allowed to spoil an opportunity to attack the working class. Socialist ministers and the opposition Popular Party trade insults over the management of the crisis. But there is no disagreement of substance and this game of political charades is played out uncritically in the mainstream media.

So once again it is left to the country’s two trade union confederations – Comisiones Obreras and UGT – which led the mass protests yesterday and who are set to lead another on December 18 to try to organise the resistance and start to build for an alternative.


About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope


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