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Ideology is first casualty of Spain’s economic crisis

Both the government and opposition have failed to rise to the policy challenges of the current crisis. This bodes badly for the next general election.


The day José Luis Rodríguez Zapatero’s dream ended was not even marked by a speech from the unlikely new champion of glum realism. As Congress in Madrid debated in late May cutbacks effectively imposed by Frankfurt and Brussels, the Spanish prime minister, who had tended his very personal flame of optimism with so many smiling words, saw his political future turn to ashes without even taking the stand. The Socialist who had vowed to bring the benefits of economically successful Spain to the disadvantaged now looked on as Catalan nationalist Antoni Duran i Lleida announced that his bloc would save the government in the vote to cut public workers’ wages and freeze pensions, but declared that Zapatero’s term as prime minister was “over”.

Zapatero’s version of events is that rapacious globalised markets forced the government’s hand, and that the pain of austerity has been minimised by spending up to and finally beyond the deficit limit accepted by Spain’s international partners. The damning truth is that Zapatero never had an economic policy, but rather remained faithful to an idea that took root during his time as leader of the opposition to Aznar’s government:  the Popular Party had improved the country’s economic performance but neglected to pass the benefits down the line. The Socialists would manage these benefits differently, he believed.

And yet, they in turn neglected to seek new avenues for an economy that was munching through a building boom and attracting a new immigrant workforce at an alarming pace. Where would all this activity and manpower go when the boom ended? The talk before the Socialists’ 2008 re-election was of a “soft landing” and how Spain would fall victim to the slow-burning financial crisis. Just months later such arguments were exposed as mere flimflam in the teeth of a savage economic downturn that would undo in little over a year what the Spanish miracle had taken decades to build. So many of the new jobs proved to be disposable and the theatrical talk of replacing the brick with the laptop proved to be so many empty words. Leaving several significant social advances, such as gay marriage, to one side, by spring 2009 there was not a lot left to show for Zapatero’s first term and an awful long way to go before the next general election.

In the government’s defence, it did follow international orthodoxy in its reactions to events as they unfolded. During what was generally being described as a slowdown, the G20-backed Keynesian medicine of hole-digging was generously applied. After the Greek catastrophe, the need to grovel to the market was manifest and officials were duly dispatched from Madrid to London and elsewhere to assure investors that austerity was being swiftly applied in Madrid, unlike in Athens. But again, the problem with Zapatero’s handling of the situation was that he was equivocal in his message. In 2008 he insisted there was no crisis. Two years later he denied that he was performing a policy volte face, although his silence on the day of Congress’ vote on his austerity package was far more eloquent.

The opposition Popular Party, outraged by the government’s refusal to countenance the use of the “c” word (“crisis”, that is,) before the extent of the slump became apparent, is understandably eager to point out Zapatero’s slender contribution to economic renewal. PP leader Mariano Rajoy feels absolutely no need to play ball, as shown by his arrant hypocrisy in not supporting a pensions freeze despite having been a prominent member of a Cabinet which allowed them to lag and boasting that his party would have tightened the spending screws long ago.

A startling feature of the international crisis has been the left’s inability to distance itself from the slavish marketplace adoration which has become a mainstay of Western politics. With conservative governments becoming sudden converts to a Keynesian approach to buoy the networks of private capital, social democrats had neither the stomach nor the vision to haul decision-making power back to central institutions. The banks, meanwhile, persuaded governments there was no other way out. The debate over regulation would have to wait. In Spain, even opposition parties from the left seemed reluctant to discuss what form the post-crisis economy would take.

Zapatero’s forced switch from champion of the disadvantaged, dishing out baby bonds to Spain’s new parents, to market-based orthodox with a constant eye on the sovereign debt differential with the German bund, is not only the story of personal disenchantment but also its very own chapter in the failure of third-way politics. The vision of redistributing the funds raised by deregulated private enterprise turned into a neo-liberal dead end.

All of which begs the question: what role do our political leaders play in economic policy? The laughable attempts by Spain’s two dominant parties to strike different poses in the teeth of an economic storm (Zapatero insisting social policies are still his priority while Rajoy frets over pensioners picking up part of the austerity tab) cannot disguise the fact that opposing economic models no longer feature in the political mainstream. Indeed, it has become more common to read impassioned diatribes in defence of one policy path or another penned by the e-conomists of the blogosphere (Paul Krugman et al) than hear a feisty argument from a politico. Zapatero’s silence on austerity is lame, but no more so than the PP’s refusal to detail how it would wield the knife, preferring to carp on about the cost of Socialist projects it considers frivolous.

This lack of sincerity on the part of the opposition threatens to make the next election campaign in Spain as insincere as that of 2008, when tight-lipped Socialists scraped home before the growing wave of negative economic data finally broke. It would almost be preferable to stage an electoral battle between Nobel-winning economists, propounding their growth models and proudly sticking by them. Even amid the political mishmash of a post-ideological world, a little credibility wouldn’t go amiss.

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Published: Aug 30 2010
Category: Business
Republication: Creative Commons, non-commercial
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1 Comment for “Ideology is first casualty of Spain’s economic crisis”

  1. One sound that rings out loud and clear is that reformist politicians can only ever deliver temporary gains which at any moment of crisis get clawed back. They might all sound off about being progressive and committed to progress and reform, fairness and balance, opportunity and growth, but what they really mean is that they are completely committed to maintaining the economic system as it is.

    They accept that there will be devastating crises, that income will continue to flow from the poor towards the rich as it has done throughout the crisis, that corporations will continue to make the financial rules, and that they themselves will do all they can to dampen and dilute trade union organisation and opposition. They all long ago traded their political principles for a carefully fashioned platform of popular soundbites, based on centre-right beliefs in capitalism. That's what reformist politicians always do.

    They know that financialisation of debt was the result of profit-chasing, that blind competitive motor of capitalism, and they know that the anarchy of the system guarantees repeated crises which working people always pay for. They know the state borrowing crisis was brought about by the cost of massive bail outs but don't want to think about alternatives.

    Effective change has to be fundamental, permanently taking control away from the financial speculators. But if they said that, the owners would be upset and also they might have to argue their case before the electorate and no politician is willing to do that. So instead they turn away from honesty and political principles to the "art of the possible". It's easier being on message when you're not saying anything.

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