The Challenges Facing the ‘New’ Spain

When I spoke here a year ago, Spain had had an inconclusive general election in December 2015 which created a fragmented parliament unable to decide which party should form the new government. Two months later, in June of last year, another election was held which produced basically the same results. And a third election would have been held at the end of 2016 if the Socialists had not bowed at the last minute to pressure and supported Mariano Rajoy’s conservative Popular Party for a second term in office at the investiture vote last October. Spain was thus 10 months without a government. Had there been a third election Spain would have been close to rivalling Belgium’s record of the 541 days it took that country between 2010 and 2011 to form a functioning government.

Although some Spaniards joked that the country got along fine with a caretaker government for 315 days, last year was a lost one. There are pressing issues that only now being tackled but the Popular Party no longer has an absolute majority. As a minority administration it is having to negotiate its laws and reforms in a still deeply fragmented parliament, the result of the upending of the Popular Party and the Socialist Party by two insurgent parties, the far left Podemos and the centrist Ciudadanos. The challenges in this uncharted territory include:

• Deciding what to do about the unconstitutional push for independence in Catalonia. The region’s government says it will hold a legally-binding referendum on the issue in September regardless of whether the central government approves it or not.
• Cleaning up corruption in the political class.
• Making the judiciary more independent.
• Finding ways to reduce the still very high unemployment rate (18.6%).
• Reforming an education system whose early school-leaving rate of 20% is close to double the EU average.
• Bolstering the ailing pension system hit by a sharp fall in the number of social security contributors and a rapidly
ageing population.
• Coping with Brexit.

Political scene

The political gridlock reflected the teething problems in adapting to an end to the dominance of the Popular Party and the Socialists, the two parties that have alternated in power since 1982, following the end of the Franco dictatorship in 1975.

Felipe González, a former Socialist Prime Minister, quipped that Spain now has an Italian-style fragmented parliament ‘but without the Italians to manage it’. The Popular Party has 137 of the 350 seats in parliament, far from its absolute majority of 186 in the 2011 election; the Socialists 85 seats, their lowest number since democracy was restored (they had 202 seats in 1982), Unidos Podemos (an alliance between Podemos and the much smaller United Left party) 71 and Ciudadanos 32 seats. Even with the support of Ciudadanos for the Popular Party (the two agreed a pact last year), the Popular Party is still seven seats short of the majority of 176 seats.

The Socialists’ problems are similar to those of other European social-democratic parties including Britain’s Labour Party. In Spain’s case, with Podemos seeking to outflank the Socialists on the left, a new party, Ciudadanos, in the centre (an area the Socialists had occupied with some success) and the conservative Popular Party offering stability and continuity, the Socialists have yet to carve out a coherent position. Pedro Sánchez, the former Socialist leader, was ousted last October in a bitter dispute in the party over whether to let the Popular Party back into office. He was against it but offered no credible alternative. An alliance with Podemos was never on the cards – Podemos regards the Socialists as part of what it calls la casta (the caste) which it wants to change.

A third election would most probably have produced an even worst result for the Socialists than in June – hence the party decided not to risk it and to allow the Popular Party back into government as the best of two bad choices. Since then the party has been run by an interim committee. A new leader will be elected in May at primary elections, and Sánchez has thrown his hat into the ring.

The fall in the Socialists’ share of the vote in general elections has been a lot steeper than that of the Popular Party. In last June’s election, the Socialists obtained 23% of the vote, down from their peak of 48% in 1982, while the Popular Party dropped from its maximum of 44% in 2000 to 33%. The two parties’ combined share of votes fell from a high of 84% in 2008, before the economy went into recession, to 56% in June.

Although it took 10 months to form a government, opinion polls show that most Spaniards do not want to return to the two-party system even if it is perceived as being more stable. As a result, parliamentary life has become much more vibrant.

Whereas populism in France, Germany, Britain and the Netherlands has produced right wing, anti-immigrant parties, Spain’s populism has taken a leftist course even though the country has all the ingredients –massive unemployment, growing inequality, an influx of immigrants and the loss of trust in established political parties– to produce a right-wing populist presence in politics.

Among the reasons for Spain’s different course are: prevalent and persistent pro-European sentiment, higher than the EU average; the Spanish are the least inclined of any European people to support returning power from the EU to the member states; they hold more favourable attitudes to globalization compared with other EU countries and anti-immigration sentiment is well below the European average. A Sprexit is not on the cards.

Other factors are the relative weakness of Spanish national identity, partly explained by the strong nationalist movements in regions such as Catalonia and the Basque Country, and the association of the extreme right with the Franco regime.

Spain’s populism grew out of the so-called movement of the ‘indignant ones’ who camped out in the Puerta del Sol in the heart of Madrid in 2011. Los indignados, mainly young people, protested against high unemployment, welfare cuts, corruption, evictions of families unable to pay their mortgages and other grievances.

The age profile of the electoral census is another factor. In 1981, 35% of voters were under the age of 34 compared with 21% today. This reflects the ageing of the population. Young disenchanted adults, in particular, felt that no party represented them. The indignant movement spawned Podemos.

The generational gap is profound at the political level: the largest share of Popular Party voters at last June’s elections were pensioners, while that of Unidos Podemos were the unemployed and students. The average age of Popular Party voters is 57 and that of Unidos Podemos 43. Younger people are demanding change and an ageing population is resisting it.

The generational cleavage is more acute on the left than on the right: Unidos Podemos has a much larger share of voters under the age of 35 than the Socialists.

Podemos eschews the terms ‘left’ and ‘right’, although its radical and abrasive leader, Pablo Iglesias, is widely viewed as a Leninist. Like the Socialists, Podemos also has its internal divisions. These came to a head in February when Iglesias beat off a challenge by his deputy and rival, Iñigo Errejón, to steer a more moderate course. The differences between the two boiled down to pursuing harder left policies in parliament and also in the streets, the view of Iglesias, or being more accommodating towards the centre ground, the view of Errejón.

Podemos’s ambition is to overtake the Socialists as the main party on the left: in last June’s election it got 400,000 fewer votes. Since then Podemos has fallen victim to the very divisions that led Iglesias to voice despair at the left’s tendency to get bogged down in arguments that mean little or nothing to the average voter.

Mariano Rajoy, the Popular Party’s leader who remains as Prime Minister, revealed himself during last year’s gridlock to form a government as a master of what some call ‘strategic patience’ (or, in British imperial terms, masterly inactivity), meaning that that he left it to the other political leaders to move and possibly burn themselves (the case of Sánchez and the implosion of the Socialists) while he appeared to stand still and do nothing. Felipe González quipped that ‘Rajoy is the only creature that advances without moving’. Angela Merkel said Rajoy had the ‘skin of an elephant.’

No one is confidently predicting that the government will last the normal course of four years. If the same gridlock that prevented the forming of a government hits parliament, which has so far not happened, then a frustrated Popular Party could call an early election. According to the latest Metroscopia opinion poll, the results would be more or less in line with last June, with the Popular Party winning again with 31% of the vote.

Catalonia: no let-up in the push for independence

The Catalan government’s moves to implement its pro-independence roadmap of laws needed for an independent state, rubber stamped by the region’s parliament as pro-separatist parties have an absolute majority of seats, is being countered at every stage by the Constitutional Court in Madrid.

A train crash of some sort looks inevitable as the Catalan government says it will hold a legally-binding referendum next September whether the central government agrees or not. The move is unconstitutional: a referendum can only be held with the permission of Madrid. The Socialists and Ciudadanos back the Popular Party. Podemos is in favour of a referendum on the independence issue in all of Spain and not just in Catalonia, but with Catalonia having the final word.

Artur Mas, the former Catalan president, went on trial in February along with two members of his cabinet for organising a non-binding illegal vote in 2014 on independence. Around 2.3 million people –only between 36% and 43% of the electorate, depending on which side’s figures are used– cast a ballot in that plebiscite and 80% voted for independence.

Accused of civil disobedience, Mas was banned from holding public office for two years. He walked to court and was greeted by thousands of supporters including members of the Catalan government and of the regional parliament shouting ‘independence’ and ‘you are not alone’.

Carme Forcadell, the President of the Catalan parliament, also faces charges of disobedience for allowing MPs to debate and vote on independence. Pro-independence parties, an unholy mix of nationalists and anti-capitalists, won 48% of the vote in the 2015 Catalan election.

In her view the central government is using judicial measures to interfere in the political affairs of Catalonia, as it is unable to resolve political challenges through politics. For Madrid the issue is one of the rule of law; for the Catalan government the right to self-determination. One should be careful of making comparisons with Scotland.

The central government’s ‘Operation Dialogue’, launched in January, has got nowhere. It is a dialogue of the deaf. The central government is not prepared to cede an inch, while the Catalan government views the initiative as discredited with every new charge against Catalan officials.

The Catalan crisis requires a political solution, which means changes to the 1978 Constitution on the architecture of Spain’s system of devolution. Whether such changes would satisfy the pro-independence camp is doubtful. The dilemma is that giving Catalonia more autonomy and, in particular, improving its financial relation with the central government, one of the main grievances, runs the risk of opening up a Pandora’s Box of competing demands from Spain’s 16 other autonomous regions, while leaving the independence issue entirely to the courts does not look as if it will make the issue go away.

Lastly, while on the subject of nationalism, the Basque terrorist group Eta plans to disarm on April 8.

Formed in 1959, with the goal of achieving independence for an independent Basque homeland, which straddles northern Spain and southwestern France, Eta murdered 845 people in bombings and shootings, most of them after the end of the Franco dictatorship in 1975 when Spain engineered a successful transition to democracy.

Eta renounced violence six years ago and has not killed anyone since 2010. The government has reacted cautiously as Eta has yet to announce it will disband.

Around 350 convicted Eta members are in prisons in Spain far from the Basque Country or in France. Eta wants them moved closer to home. The government will only consider this once Eta has disarmed and dissolved.

Corruption

Spanish society as a whole is not more corrupt than other Western societies, although regular readers of the Spanish press could be forgiven for thinking that corruption had reached epidemic proportions. Graft is very rare among the police or judiciary, for example. Corruption among the political elites, however, is perceived as being fairly widespread, particularly in the interface between local politicians and construction companies, and is one of Spaniards’ main concerns in the regular surveys conducted by the government-funded CIS.

Spain’s judges processed or put on trial 659 people last year on corruption charges, an average of close to two a day. While high, the figure was below the 1,348 between 1 July 2015 and 30 September 2016, an average of three a day.

Spain’s latest score in the Corruption Perceptions Index of the Berlin-based Transparency International remained at 58 last year, down from 65 in 2012, its best score (the nearer to 100 the cleaner the country). It was ranked 41st out of 168 countries. Spain, however, still has a long way to fall before it reaches the position of Italy, which is ranked 60th with a score of 47.

The Economist Intelligence Unit ranks the quality of Spain’s democracy, based on various categories, above both Italy and you might be surprised to know also the US. Both Italy and the US are classified as “flawed democracies” while Spain is at the bottom of “full democracies.” The EIU’s latest ranking was produced before the arrival of Donald Trump.

The Spanish justice system is notoriously slow, but it does eventually get there. A spate of cases has come to the courts over the last year including the mega case known as Gürtel. Among the 37 people in the dock are three former treasurers of the ruling Popular Party including Luis Bárcenas, accused of salting away €8 million in various Swiss bank accounts. Francisco Correa, alias El Bigotes (‘Mustachio’), the mastermind behind the bribes-for-contracts network between 1999 and 2005, was sentenced to 13 years in jail in February

In a much smaller but emblematic trial (most corruption is at the local level), María Victoria Pinilla, the Mayor for 24 years of La Muela, a municipality in Aragon with a population 5,000, was jailed last September for 17 years for misappropriation of public funds, trafficking of influences, fraudulent use of state subsidies and money laundering. Her former husband, three sons and sister were also on trial. Despite being a small town, she managed to build a covered bullring, three museums, an aviary, an auditorium and a vast sports centre, and, among other personal luxuries, she acquired a mansion in the Dominican Republic where she rubbed shoulders with the legendary crooner Julio Iglesias.

In the Socialists’ fiefdom of Andalusia, Manuel Chaves and José Antonio Griñán, former presidents of the region, have been formally accused in the ERE corruption case involving the alleged misappropriation of millions of euros of public money to help companies make severance payments to laid-off workers.

Even the royal family has not escaped. Iñaki Urdangarín, King Felipe’s brother-in-law, was given a six-year-and-three-month jail term in February in a landmark trial. His wife, Cristina, was cleared but will have to pay a civil fine of €265,000 as she benefited, albeit unknowingly, from illegal gains. Urdangarín used the non-profit Noos Institute sports foundation he set up to win falsely inflated contracts from regional government bodies and then banked the money in tax havens.

The judiciary

The politicisation of the judiciary and the judicialisation of politics have deprived Spain of an effective system of checks and balances and made impunity easier.

The 20 members of the General Council of the Judiciary (CJGP), the governing authority, are appointed by parliament and the Senate by a simple majority vote. As a result, they are largely beholden to the parties that appoint them.

A survey carried out by the CGJP among the legal profession found that 75% of respondents felt that the CGJP does not sufficiently protect the principles of judicial independence. The latest EU Justice Scoreboard showed that the public’s perception of judicial independence in Spain is at the bottom of the EU ranking –in 25th position out of 28 countries–.

The justice system moves at a snail’s pace. Many of the courts are in a deplorable state due to the lack of material resources and understaffing. Photos have appeared in the Spanish press showing files piled up in toilets. In one of the most notorious cases, it took 10 years for Carlos Fabra, a prominent PP politician best known for promoting the building of the ghost airport at Castellón, to come to trial on charges that included tax fraud.

Unemployment: falling but still very high

Spain is finally out of deep recession and the economy is growing at around 3%, double the euro zone’s average, but the pre-crisis GDP level (2008) will not be regained until around the middle of this year. This is something that tends to be forgotten amongst all the trumpeting of Spain’s seemingly high growth.

Record tourism and exports fuelled growth. More than 75 million tourists came to Spain last year, close to 18 million of whom were Brits, and exports were a record €254 billion. The big depreciation of sterling after the Brexit vote last June came too late to affect the flow of British holidaymakers to Spain. This year it will be interesting to see whether it has an impact.

It has taken six years for the jobless rate to drop below 20%, down from a peak of 27% in 2013, while youth unemployment (those under the age of 25) is still more than 40%. Over 1.4 million households have no bread winners. The UK unemployment rate is below 5%.

Apart from the ill-fated real estate bubble period (2002-08), Spain’s jobless rate since 1980 has always been well above that of Germany, France, Italy, the UK and the US. Even in 2007, at the height of the economic boom, Spain’s unemployment was 8%, a disastrous level by the standards of Britain. Some companies complained during the boom they could not find suitable workers to fill posts, and so the 8% figure was regarded as full employment.

Spain also has the distinction of holding the world record in the number of labour market reforms over a 35-year period. Fifty-two were enacted between the 1980 Statute of Workers’ Rights, which laid the foundations for post-Franco labour relations, and the end of 2015, and yet the labour market remains dysfunctional.

A particularly serious problem today is very long-term unemployment (more than two years); the longer someone is jobless the more difficult it is to get work.

Spain’s crisis decimated jobs, especially in the construction sector, one of the engines of a decade-long boom. The bursting of the real-estate bubble had a huge knock-on effect. These low-skilled jobs in an economy excessively based on a labour-intensive but unsustainable construction sector were destroyed as soon as the economy ground to a halt. Part of Spain’s unemployment problem is due to the nature of its economic model. This is not a problem exclusive to Spain, but it is fair to say that it is more accentuated than in other EU countries. The number of those working in the construction sector (just over one million) is still less than half that in 2008.

One of the most worrying factors behind unemployment is the large number of workers with low levels of education and hence a lack of basic skills, many of who left school early at 16 to work on building sites during the boom years. Only 25% of those aged between 25 and 34 in 2015 in Spain had completed their upper secondary education compared with 36% in the UK. At the other end of the spectrum, university graduates often find themselves in jobs for which they are over-qualified.

Education

The labour market and education are closely linked. Spain has made considerable progress in educational attainment in the last 40 years, particularly when it is borne in mind that it was not compulsory to attend school (between the ages of six and 14) until 1970, much later than most other developed countries. The country has also done better than many other European countries as regards educational mobility: about 40% of adults have a higher level of education than their parents.

The system, however, is in crisis, particularly at the secondary-school level. During the economic boom, many teenagers came to the conclusion that education did not pay, and, sadly, they were right. They dropped out of school early at 16 (the age at which compulsory education ends) and flocked in drives to work in the construction and tourism sectors, buying their first cars when they were 18 or so. The early school-leaving rate peaked at 31.7% in 2008 (precisely at the height of the economic boom) and since then has dropped to below 20%, still almost double the EU average. This is not the result of any government measure, but simply the fact that there are far fewer jobs to go to.

Even more worrying than the early school-leaving rate are what are known as NEETs –those aged between 20 and 34 who are neither employed, in education or in training–. The rate was 24% in 2015 compared to 15% in the UK. These people form a ‘lost generation’.

The education system needs a national pact between politicians, which is finally being worked on. For far too long education had been kicked around like a political football with each change of government. Instead of focusing on key problems such as the high drop-out rate or the large number of students who repeat a course before they reach 15 (which, in turn, demotivates them and results in them leaving school at 16), the public debate is an ideological one about far less important issues such as whether to increase or decrease the amount of religious instruction or introduce or get rid of citizenship courses.

Immigration

Given the hot topic of immigration in this country, the main factor that drove the Brexit vote, some of you might be surprised about Spain’s situation in this matter.

Spain’s population rose from 39.6 million in 1996 to a peak of 46.8 million in 2012, an unprecedented increase of more than 7 million in just 16 years and largely due to the influx of immigrants. Since then the population has declined as immigrants have been returning to their country of origin, because of the economic crisis. The jobless rate among foreigners is much higher than that for Spaniards.

The foreign-born population dropped by 1.3 million to 4.4 million between January 2012 and January 2016. This population peaked at 5.7 million in 2012 (12% of the total), compared with around 800,000 in 1990 (2% of the total). Rumanians comprise the largest foreign community at almost 700,000, around 200,000 fewer than in 2012, according to official figures. In 1996, there were only 2,258 Rumanians.

Whereas between the harsh years of 1960 and 1973 more than one million Spaniards emigrated, Spain during its boom period that ended in 2008 became the favoured country in Europe for migrants in search of a better way of life. To Spain’s great credit immigrants have been largely integrated into society. The country does not have any relevant xenophobic, far-right, populist parties and violent attacks on immigrants have been rare.

Tackling the low birth rate

One challenge generally not known is how to encourage women to have more children. Spain’s fertility rate is 1.32 compared to Britain’s 1.82. The difference might not sound much, but it is an important one. Last month, the government appointed a ‘sex tsar’ to find ways to reverse the decline.

Deaths outnumbered births in 2015 for the first time since 1941, setting off alarm bells. The number of childless couples almost tripled between 1977 and 2015 to 4.4 million.

The population increase that I mentioned a minute ago when I was speaking about migrants was due almost entirely to the influx of immigrants and not to the rise in Spaniards.

Spain’s fertility rate began to decline as of 1980 when it stood at 2.20. Contraception by then was widely available (during the 1939-75 Franco regime contraceptive methods and abortion were banned).

The fall has gathered pace since 2008 when the economy was headed toward a prolonged recession and couples put off starting families. Spanish women today are the oldest first time mothers in the EU, as they have their first child at 32.
The economic crisis, however, is not the only factor. Spain is not noted for its family-friendly policies in terms of free nurseries, child care and the work-life balance.

With dinner at 9pm and a couple of hours TV, Spaniards tend not to go to bed before midnight because of the long working day. This is not very conducive to procreation.

The government is considering moving clocks back an hour to GMT, which would help workers make an earlier start in the morning and end earlier.

Spain’s declining and rapidly ageing population has potentially serious long-term consequences including a rise in the dependency ratio (the inactive elderly as a percentage of the working age population). This is already exerting pressure on the sustainability of the pay-as-you-go pension system. The number of social security contributors for each pensioner dropped from 2.53 in 2007 to 2.07 in 2016. Again these figures might not mean much, but they are telling and point to serious problems in the future unless reversed.

The lack of children is also accentuating the already deep divide between urban and rural Spain. The latter has become known as la España vacia (“Empty Spain”). Those of you who know the interior of Spain, not the horribly overcrowded costas, particularly provinces like Soria, Teruel and the regions of Extremadura and Castilla León, will be aware of large areas of Spain that are practically deserted with a few scattered villages.

The legacy of Franco
More than 40 years after the death of General Franco and with it the demise of his dictatorship, Spain has yet to decide what to do with his tomb in a basilica at the Valley of the Fallen in the mountains outside Madrid, which is crowned by the world’s tallest cross – 150 metres high – and which contains the bodies of 33,000 men killed during the 1936-39 Civil War.

In the first years after Franco, streets bearing his name and that of close associates were re-named, but usually with people from before the Civil War and not with the names of Republicans, the side that lost the war, in order not to provoke the remnants of the old regime, in particular the army, at a time when the transition to democracy was taking place.

The consensus that made a peaceful transition possible was epitomised by the so-called Pact of Forgetting, an unspoken agreement between the reformist right and the non-violent left to look ahead and not rake over the past politically.

In 2007, the Law of Historic Memory, passed by the Socialist government and opposed by the Popular Party, began to address the authoritarian past. This law declared illegitimate the military tribunals that condemned people to prison or death; banned public symbols commemorating Franco and his allies; urged the Roman Catholic Church, which called Franco’s uprising against the democratically elected government of the Republic a “crusade”, to remove plaques that remembered those who had “fallen for God and Spain” (only those on Franco’s side) and ushered in the re-naming of streets, this time commemorating Republicans and exiles.

The Socialist government appointed a commission of experts in 2011 to draw up proposals for the Valley of the Fallen including removing Franco’s grave and burying him elsewhere. When the PP won the election that year it shelved the document, on the grounds that any change needed a consensus, something that remains as elusive as ever. The basilica would be a good place to finally have a civil war museum that objectively recounted that conflict.

The ruling Popular Party has long resisted any attempts to uncover the Franco past and since returning to power in 2011 has done little to implement the Historic Memory Law.

Opposition parties teamed up and outvoted the government last month and approved a motion calling for the tomb to be removed and a ‘truth commission’ to be created to examine the crimes of his regime.

Madrid, whose town hall has been in the hands of the left since 2015, is currently re-naming 47 streets in the city under the Memory Law.

On a personal note, last month I got a square in Madrid named after the émigré Spanish writer Arturo Barea, who went into exile in 1938 and lived for 10 years in Faringdon near Oxford. Barea, who died in 1957, is best known for his marvellous trilogy, The Forging of a Rebel, and for giving more than 800 talks for the BBC’s Latin American service. This civic gesture was not done under the Memory Law in order to have the support of all parties.

The square followed my organising in 2010 the restoration of his commemorative stone in Faringdon and in 2013 the placing of a plaque on the outside wall of Barea’s favourite pub in that town. Some of you might have seen a piece I wrote about this in the Oxford Times.

The challenge of Brexit
I will end on the sombre note of the impact of Brexit on Spain. The Spain-UK relation has become increasingly significant in terms of trade, direct investment, tourism, fisheries and the number of Britons living in Spain, by far the largest group of British expats in any European country, which is around 300,000 and 800,000 if one includes those with properties who spend part of the year in the country.

I will mention just one issue: the legacy rights of the expats, like myself, who have made their home in Spain, in my case since 1986. We can no longer take for granted that we will be able to continue to live and work unhindered in the country, although both the UK and Spanish governments say they would like an early reciprocal EU-wide agreement on this issue now that the Brexit process has started.

Had all expats everywhere in the world been able to vote in last June’s referendum, perhaps Brexit would not have happened but only those who have lived for less than 15 years outside the UK could do so. Yet perhaps nothing would have changed, as there were expats who voted in favour of Brexit, which strikes me as really dumb given that these people were enjoying the benefits of being a EU citizen, such as healthcare under the EU’s aegis.

Some Brits in Spain are already returning home. In the case of my wife and I, we are staying put and will have to see what happens.

Date
April 1, 2017