Mario Lopez writes from Madrid: More demonstrations against the cuts announced by Mariano Rajoy, the Spanish Prime Minister are taking place. A million on the streets of Catalunya are demanding independence for the province. ‘Rajoy is a puppet in the hands of the European Commission,’ snarled one protester. A hot summer is giving way to an even hotter autumn. Can the country hold together or will the richer parts, Catalunya and the Basque country, say ‘adios’ and break the country up?
The trade unions sense that their moment has come. They are demanding a referendum on the austerity measures. Not even a minority of supporters of the Partido Popular that forms the government supports the cuts. So the likelihood is that the government would lose the referendum. After that would come massive demonstrations for new elections. The Left sense that they would win. They probably would.
Those who oppose the referendum say that it would change nothing. Economic policy is not made in Madrid but in Brussels and Frankfurt. If the socialists regained power, they would not extract any more concessions from the troika (EU, European Central Bank and the International Monetary Fund) than the present conservative government. So a referendum and an election would change nothing. In other words, democracy would not work. That said, a socialist government would levy much heavier taxes on the well off and business. The result of this would be a flight of capital and savings leaving Spain the poorer.
So what is the solution? Those in Catalunya are quite clear about this. They are the second richest region in Spain in per capita terms. They transfer more tax to Madrid than they receive in state investments. So if they kept all their own tax they would be better off. They have been hard hit by the austerity measures and have demanded, yes demanded, over 5 billion euros to keep themselves afloat.
Spain is divided into rich, poor and very poor regions. The north is rich, the south is poor and the west is even poorer. A transfer of resources from the north is needed to keep other regions viable. The present constitutional arrangement has only been in place since 1978. Hence there has not been enough time for the regions to gel together and conceive of themselves as one nation. The Catalans use their own language and require everyone from Madrid to speak it. The Basques also demand that their language be used. However whereas those who speak Castilian Spanish can acquire a rudimentary command of Catalan in six weeks, the gap between Basque and Castilian Spanish is as wide as the Atlantic Ocean. The present economic crisis has driven these two regions and Madrid farther apart.
No one in Catalunya or elsewhere in Spain has proposed the obvious solution to the mess that the country is in. Exit the euro and reintroduce the peseta. This would permit a massive devaluation and set Spain on the road to recovery. There is an obsession in Spain that in order to be part of Europe they have to be in the European Union and the euro. This is due to the fact that the country was marginalised by Europe until Generalissimo Franco died in 1976. This has left deep scars. Madrid does not want to be cast aside again. In order to be accepted as good Europeans they have to support every initiative emanating from Brussels. Not even the present conservative government will put Spanish interests first.
Spain is bankrupt. The conditions being imposed by Brussels and Berlin are driving down living standards. Unemployment among young people is about 25 per cent. The ambitious are leaving for Germany and elsewhere. How much more pain can Spain take before the people say enough is enough? Spain has a long tradition of anarchy. How long will it take for it to reassert itself? If changing the government does not change policy, why have a government?
The future of Spain is in the balance. It may split up or collapse economically. Both options don’t really look good.