Yves here. The efforts to paper over the unresolved problems of the crisis, which are straining the economic foundations of the Eurozone, are increasingly spilling over into the political realm. While it isn’t at all clear how this plays out, it is important to remember that the citizens of most European countries are far more willing to engage in collective action, particularly protests, than Americans are. And this propensity has the potential to be more effective than here since political and economic activity is concentrated in comparatively few major cities, while both the population as a whole and power centers are more dispersed in America. Don Quijones gives an update on how centrifugal forces are playing out in Spain.
While the Rajoy government fiddles in its endemic culture of corruption, the people simmer with anger
Since taking office in late 2011, Rajoy’s government has been embroiled in one sordid political scandal after another. In the latest episode, the Punica Affair, more than 100 politicians have been arrested and charged with varying acts of white collar crime, including taking kick backs from private sector companies.
Payment often came in the form of cash-stuffed envelopes although, as El Confidencial reports, it could also include completely free-of-charge construction work on a politicians’ property, luxury holidays, hunting trips and even an intimate evening or two with a high-class prostitute. Most of the politicians involved in the scandal are – or at least were – members of the governing Popular Party. The rest belong – or at least belonged – to the other partner in Spain’s (until now) two-party system, the not-really-socialist-at-all party, the PSOE.
The good news is that some of Spain’s corrupt politicians and business figures are finally seeing the sharp (or at least not entirely blunt) end of the law. Scores have been arrested and some are even going down. The bad news is that Rajoy’s scandal-tarnished government of self.serving mediocrities still stands, albeit more precariously than ever. In El Pais‘ latest poll of voters’ intentions in next year’s general election, the Popular Party (PP) was, for the first time in decades, relegated to third place. Indeed, the two incumbent parties – the PP and PSOE – were unable to muster 50% of the vote between them.
The most popular party in the poll was Podemos, a stridently left-wing political movement founded just at the beginning of this year. In May’s European elections the party picked up five seats; now, six months later, it is apparently the hottest contender for the spoils in next year’s general election, picking up 27% of the votes polled – six percentage points more than PP and one more than PSOE.
Lead by Pablo Iglesias, a firebrand (or as the right-wing media like to call him “demagogic”) 35-year-old professor of political science, Podemos has masterfully exploited the general public’s disaffection with a political establishment that serves no one’s interests but its own – and, of course, those of the country’s biggest businesses and banks.
The political establishment is quite rightly blamed for stoking and feeding the country’s biggest ever real estate bubble. Thanks to a change in the property laws enacted in 1997 by the Aznar government, local and regional administrations were encouraged to part-finance themselves through granting authorization for ever larger public and private construction projects, many of which turned out to be white elephants (empty toll roads, high-speed train stations planted slap bang in the middle of nowhere, ghost airports…).
Naturally, cash or other undeclared inducements helped grease the wheels of the bubble-making machine. As long as the local and regional governments were taking their cut of the action, property prices were allowed to reach ludicrous levels that could only be sustained (in the short term) by getting the country’s saving banks (also largely run by members or affiliates of the two main political parties) to push down-payment-free mortgages down the throat of a largely compliant public.
The bubble popped, the economy tanked, unemployment soared and all of a sudden austerity became the menu du jour for everyone – everyone except, of course, Spain’s political class and their private sector paymasters. Given the scale of the two main parties’ betrayal, it’s perhaps no surprise that many Spanish voters are determined to take their vote elsewhere, and Podemos has one huge advantage over its political rivals: almost all of its members are political virgins and as such are uncorrupted – at least for now!
The fledgling party also has the luxury of being able to espouse policies and strategies that sharply mirror the demands of a long-ignored, long-disenfranchised electorate. Those policies include a redistribution of wealth, the right to a basic income, a cap on executive salaries, an independent audit of the country’s public debt, increased transparency of political party funding, more stringent restrictions on political lobbying, stronger government support for SMEs and R&D-intensive industries, higher penalties for tax evasion, the creation of a national bank for investment and the renationalization of strategic sectors such as telecommunications, utilities and the country’s formerly public-owned savings banks [Spanish speakers can read the party’s full manifesto by clicking here].
Such promises – whether realistic or not – can be extremely seductive to a public sharply embittered by a two-party system that long threw them overboard. That’s not to say that Podemos can be expected to turn their current popularity into an electoral victory – in Spain, as in most managed democracies, the electoral system is rigged in the favor of the incumbent parties. Nonetheless, if it continues to capture the hearts and minds of the disaffected – in a country where the disaffected are now the overwhelming majority – it could well hammer the final nail into the country’s two-party system. As such, the result in the next elections would be a very weak coalition government at best or a hung parliament at worst – and just at the very moment when Spain’s richest region, Catalonia, is itching to break free.
While the Rajoy government fiddles, the country simmers with anger. Just a few days ago his second-in-command, Maria Dolores Cospedal, herself accused of myriad financial irregularities, argued that her party had done all it can (read: nothing) to fight the scourge of political corruption. As for Rajoy, all he can do is undeftly dodge (as illustrated last year by the hilarious Bloomberg interview) uncomfortable questions on his party’s endemic culture of corruption, while talking up the wonders of an economic recovery that only 12% of the population now believes in. Once that final bubble of illusion bursts – which it assuredly will, especially given Europe’s seemingly unstoppable economic descent – Spain will enter a whole new world of pain. By Don Quijones. An exclusive for Wolf Street.
The policy of the Spanish government has been to threaten Catalonia over its desire for independence and sow the seeds of discord in its fragile coalition government. Now it’s reaping the spoils. Read… Spain’s Divide and Unconquer of Catalonia