Don Quijones: It’s Official – Spain is Unraveling

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.

By Don Quijones, a freelance writer and translator based in Barcelona, Spain, and editor at Wolf Street, where this article was originally published

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

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  1. Ignacio

    Don Quijones did not explain that Podemos is the daugther of the 15M movement (spanish equivalent to the US occupy Wall Street movement). Those that critisized the 15M movement for its inability to transform itself in a politically relevant movement have been proven utterly wrong. It is also worth mentioning that many feel sympathy for a party that seems to agglutinate social unrest without appealing to xenophobic-nationalistic paraphernalia of parties like Le Pen’s FN. Another sign of how much the political panorama has changed is that even the banksters are now keen to interview Podemos leadership. They are always the first to lobby. Some of Podemos leaders can be identified as experienced professionals like a former anti-corruption general attorney and seasoned economists that critisized economic policy during the bubble years. My intuition is that Podemos is something more than Beppe Grillo’s party and migth surprise us all in the upside.

    1. Brooklin Bridge

      TPTB of Europe and the United States can be counted on to make any success by Podemos as difficult as humanly possible.

    2. Working Class Nero

      While Podemos is certainly better than the two mainstream parties in Spain – they will ultimately fail because at its heart the Leftist project is pretty much exactly the same as the Neoliberal Globalization project that the multinationals are using to destroy the advanced economies. The basic game plan of Neoliberalism is to destroy bourgeois national sovereignty, so hated by the Left, by both forcing first world workers to compete with those from the third world and by creating supra-national bodies that disallow nations from protecting themselves through regulations or otherwise against the deprivations of the multinationals. The recent LuxLeaks files proves beyond a shadow of a doubt that the EU is nothing more than a stalking horse behind which the multinationals can have their way with the people of Europe.

      Only by following a Keynesian-nationalist program as espoused by Marine le Pen can the people of Europe have any chance in their battle against globalization and multinationals. Podemos is way too milquetoast towards the EU. They want to renegotiate a few treaties, etc. Right, that will scare them! This candy-ass approach will never work. The only political line that will work against the EU is a full-on attack. Marine Le Pen’s recent remarks about Junker show the way. There is no doubt that with Junker in charge, the EU is nothing more than a tool of the multinationals. And France has now benefited from these attacks as fear of Marine Le Pen has translated into the European Commission accepting a French budget that is way over the deficit limits. The Germans have blinked over austerity for the first time.

      Perhaps Podemos will evolve. But in order to make any progress they will have to reject the traditional Leftist hostility towards “bourgeois nationalism”. Instead of rehashing 19th century arguments, Podemos have to reverse engineer Neoliberalism. They need to wargame things from the position of a CEO of a huge and evil multinational. They have to identify the enemy of the multinational – a sovereign nation free to create laws and regulations and well as print money – and then they have to go out and reinforce these enemies of the multinationals while attacking their allies, like the EU. In short they have to become very much like the National Front.

      1. Fiver

        ‘They have to identify the enemy of the multinational – a sovereign nation free to create laws and regulations and well as print money – and then they have to go out and reinforce these enemies of the multinationals while attacking their allies, like the EU. In short they have to become very much like the National Front.’

        The word ‘socialism’ can mean anything in Europe. Identifying the ‘Left’ with the core US post-War mission, i.e., to create a global Superstate for corporate capitalism, is a tad unfair. The old parties in Europe or the US abandoned whoever was on the ‘left’ long ago. Particulars aside, I think there’s both a slow, popular, broad, deep, global move to the left and a very reactionary, elite-via-pawns counter-wave at the sovereign-State level in our little pond these days, and it would be very interesting to see how this fellow’s message might be received elsewhere if it was ever heard through the overwhelming corporate din.

        1. Working Class Nero

          What I am trying to say is that the Left’s traditional hostility towards nationalism is aiding and abetting “the core US post-War mission, i.e., to create a global Superstate for corporate capitalism”. This mission is to basically strip sovereign nations’ abilities to resist US and multinational hegemony. The only way to fight neoliberal globalization is to reinforce national identity and sovereignty but in general the Left is fiercely against this course of action.

    3. Vj

      Hmm. Don’t they have a Spanish equivalent of the Kardasian or dancing with the stars? that is your problem right there -nothing to keep folks occupied and out of mischief. Appears to me their politico are also inept in play a good red blue tag team kabuki to keep the folks glued to non-issues.

  2. David Lentini

    “more than 100 politicians have been arrested and charged with varying acts of white collar crime, including taking kick backs from private sector companies.”

    Hard to see that happening here any time soon.

  3. Salamander

    Not just corrupt, but stupid. For a primary perspective on the oligarchy in Spain, have a look at yesterday’s Op Ed in the NYT, coauthored by Marquise and ruling party grandee Cayetana Alvarez de Toledo:

    I’ll not belabor the quality of de Toledo’s arguments. I’d be interested to hear what readers unfamiliar with Spain think.

    I do note with interest that the NYT shut down the comments section appromately 7 hours after this piece was published. Not much left to the old lady at all, really… Very sad.

    1. MikeNY

      I lived in Spain a while after school. It seemed to me that the Catalanes had as much in common with the southern French as with the Andalusians. If the Catalanes want to be independent, let them. Europe loses something by homogenization.

      Viva la diferencia!

  4. Formerly T-Bear

    Being resident in Spain, the ‘crisis’ is more profound than being reported. Seldom can one read the proffered statistics with any confidence, the significance between 25 and 30 percent unemployment is an insignificant 5% but appears as several millions not at work. Like its western Atlantic hegemon, most unemployed have found there to be no jobs whatsoever and have quit expending time, effort, energy, money and hope in that vain search. The economic inertia of the country is being paid for out of rapidly depleting residual family savings, particularly for those engaged in new families of their own who have lost their employment. There is a sense that the country’s reserves may be approaching depletion while the central government is obtusely attempting austerity programs provided by a very hated troika. There is no way this impasse will end well, those politicians enabling will pay the price for their intransigent obstinacy to obtain economic relief. Spain alone among the troubled European Monetary Union members have turned left, all the others have increased the power of the extreme right, that speaking loudly at the deteriorating state of public education in those countries.

    Spain has a new monarch and the presence of the old monarch emeritus for council and guidance. Where this may lead, given the constitutional constraints in place is a large unknown. The present government is being lead by a person whose level of competence is that of a mid-level supervised clerk; leading a country is well beyond any level of competence he may have. The main opposition lost their place of power through being supine to and inert in resisting the dictates of Brussels. The approaching election will show whether Spain will overcome its problems or succumb to them. Interesting times – indeed.

  5. NotSoSure

    Whatever. This drama has been playing so long and at the end it’s the same ending i.e. it’s always in the state of unraveling but never fully.

  6. Fiver

    Thanks for this, Yves.

    I think this is a very positive development for all of us, and certainly for Spain. If there is to be any attempt at democracy at all, the first thing required is for some principled, coherent, reality-based, public critique and grounded opposition to abusive State and corporate power to stand up and show itself. The difference between a public that has heard and understood such a critique and one that has not is huge. It would be amazing to see an American get up, knock off the dust, and (with a couple of tweaks) deliver that on a podium in the middle of Yankee Stadium. For real, I mean.

  7. Ignacio 2

    Reposting this here from the original article:

    The problem with Podemos is they don’t understand monetary economics (or if they do, is tangentially), and are misguided by the typical misunderstanding of the, not operational, reactionary left.

    In their agenda is not ‘dump the euro’, because if it was, they wouldn’t get elected, most probably their politicians are still enamoured with the political project of USE (United States of Europe), and their policies will be impossible inside the current EU, even less in the EMU.

    So the Spain electorate (much like all southern Europe), is still captured by the myth of the euro, as their politicians are. They are backing already from many of their proposals (for example BIS), as they know those are impossible, no matter how much you tax the rich, economically (and likely, socially).

    So the pretended votes they are getting, are based, mostly on a promise of regeneration, specially regarding corruption. In that sense Spain is getting ahead of other countries, like Greece, where the stinking corruption still runs rampant and there is not much regeneration. However, the misunderstanding of monetary economics, still remains with a big part of the populace, and so does the misunderstanding of budgets, the euro, etc. When we check that removing corruption is a good start, but not enough, to get things going, we are in for a rude awakening and more danger and uncertainty ahead.

    In sum: not enough, not smart enough, still misguided.

  8. Anthony

    In the early to mid 20th century Southern Italians got the hell out of their region and fled to the United States, Argentina, Australia, Switzerland, and the North when they could because the situation was so dire. In Spain there is no respite, there is no industrialized North that can offer factory jobs or teaching positions. There is nothing, and there is nothing to do. I have a big network in Spain and I don’t know a single young person that has not left for the UK, Ireland, Belgium, Mexico, etc or is not considering leaving. Reports of corruption from the central government or the “royal family” come out every month. Why in God’s name should Catalunya stay? What could be worse than being the economic motor to a failed state – a servant – Catalunya’s historical role of the last few centuries. Spain is a joke, I can’t even bear to go visit for pleasure I feel so bad for the youth who have to deal with this.

  9. Jeff N

    Several months ago, I asked a Greek guy on FB why on earth they willingly put up with so much misery from the EU.
    He explained that there is an unwritten agreement where the EU keeps Turkey from starting a war with Greece.

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