Spain facing gigantic challenges of historic proportions

BREAK AWAY LEADER: Carles Puigdemont, the new head of Catalonia government is set to embark on a new push for the region's independence

BREAK AWAY LEADER: Carles Puigdemont, the new head of Catalonia government is set to embark on a new push for the region’s independence

For more than 40 years in the political arena of Spain two parties had been dominating, the People’s Party and the Spanish Socialist Workers’ Party (PSOE) which alternated in power. The last catalytic elections of December 20, 2015 resulted in a significant weakening of these traditional political forces and the emergence of new anti-regime parties. Thus, the People’s Party of Mariano Rajoy got the lowest percentages since 1993 (28.72% of votes and 123 seats out of the 350 in Parliament, compared to 44.6% of the votes and 186 seats in 2011), while the PSOE Party of Pedro Sanchez recorded the worst result in its history (22% of the votes and 90 seats, compared to 28.73% of the votes and 110 seats in the previous elections of 2011).

The emergence of the left wing party Podemos of Pablo Iglesias – product of the so-called movement of the “Indignant” – and of the center-right party Ciudadanos of Albert Rivera (which was supported by some mass media), in the third and fourth place respectively with high percentages (20.6% of the votes and 69 seats and 14% of the votes and 40 seats), shows the end of the forty-year-old two-party system and marks a new period for Spain.

This change in the Spanish political landscape, of course, is largely due to the economic crisis in Europe. The anti-popular austerity policy which was faithfully implemented by the government of Mariano Rajoy in the past four years, combined with a corruption scandal regarding his party, led to the emergence of a new four-party political scene.

The new parliamentary reality, where no party has an absolute majority, leads inevitably either to a coalition government that the majority of Spaniards seems to prefer or to new elections. After four years of governance with strong majority, Spain is now facing the prospect of some kind of political instability that torments the other European countries as well, since the fragile government coalitions and the traditional parties that dominated the political scene for decades, feel strongly the pressing effects of the years of economic hardship and the growing wave of immigration.

The new Spanish government, whenever it may occur, with or without new elections, shall immediately be confronted with very serious problems and challenges. Although this European economy came out of the recession and is on the road to recovery, it will take several years, without regressions, to recover the lost ground. Otherwise, if the Spanish economy gets into reverse mode again, this precarious recovery will resemble the suspended step of the stork.

The country is beset by the second highest unemployment rate (21.18%) in the Euro-zone following Greece, and the unemployed Spaniards are more than five million. Poverty increases on a daily basis and threatens to disintegrate the social fabric of the country. “Poverty is the worst form of violence” once Mahatma Gandhi declared. With the applied vast neo-liberal policies the gap between the rich and the poor is constantly growing. In 2013, 22.2% of the households, based on the most recent data of the National Statistics Institute (INE) of Spain, lived below the poverty line, i.e. their income was less than 60% of the mean national disposable income. Many people today are living without heat and electricity, countless families face eviction and have no other residence; 34.680 first houses, that is 95 a day, were foreclosed by the banks in 2014, according to the INE), many pensioners cannot pay for their medicines. Also, more than one in three children – or 2.6 million – are now faced with the risk of poverty and social exclusion, according to the most recent data of the European Commission. The high percentages of the long-term unemployed combined with the drastic cuts in expenditures on health and education have driven more families and children into poverty in spite of the financial recovery.
The public debt is continuously showing an upward trend and based on the latest official figures, is at 98.8% of GDP, approaching the high level of 100% of the GDP. Spain last saw its public debt reach or exceed GDP 1900 and 1909. The “informal economy” is estimated at 25% of GDP, i.e. 235 billion Euros that have not been declared, thereby depriving the Spanish State from some very substantial financial resources.

Meanwhile, the new Spanish government shall have to tackle the urgent issue of Catalonia. The election of the separatist Carles Puigdemont, to the presidency of the semi-autonomous Catalonia was a resounding wake up call. He is poised to lead to clamor for the region’s independence from Spain. “We need to commence the process to create an independent State in Catalonia, so that the decisions of the Catalan Parliament are sovereign”, he declared earlier last month amidst cheers of the legislators before the Catalan parliament elected him head of the local government replacing Artur Mas.

The direct consequences of the unilateral declaration of independence of Catalonia, which is the richest region of Spain with a GDP of about 200 billion Euros, shall undoubtedly be extremely painful: without Catalonia, Spain shall lose 16% of its population, 25% of its exports, and 19% of its GDP according to the OECD.

More than 586,000 companies are based in Catalonia – out of those 2,150 large companies employing more than 200 workers each, such as Gas Natura and garments giant Mango. Catalonia is also home Volkswagen and Seat auto plants.
Besides, Barcelona is by far the first tourist destination across the country and one of the leading worldwide, with net proceeds from the arrival and stay of tourists reaching tremendous heights. Meanwhile, both in the commercial and the industrial sector, Barcelona is perhaps the most fundamental pillar of the Spanish economy.

Catalonia’s independence should be emphasized at this point, it has acquired gigantic dimensions due to the austerity policies imposed by Brussels and mainly Berlin on Spain and of course throughout the Euro-zone. This is the main reason why the Catalans want to become at least autonomous. They want to have their own laws and their taxes not to go to Madrid to pay the austerity programmes. The reasons for the apparent break-up are therefore primarily financial.

In conclusion, the extreme austerity policies have heavily Spain, like other countries in the Euro-zone. Therefore it is imperative that the new Spanish government, which will be faced with a historic crossroad, to formulate a very clear progressive policy agenda built upon the re-examination of the Constitution, the direction of specific popular social reforms, the inhibition of uncontrolled privatization, suffering among other things, from issues of transparency, and the protection of the first housing to low income groups. The effective combat against tax evasion and financial crime is also needed, as well as the appropriate restructuring of the production model and the significant easing of major structural imbalances, such as unemployment, budget deficits, and the public debt.

The author is a Greek novelist, poet and economist with postgraduate studies in tourism economy. He can be reached via email at