FRFI 215 June/ July 2010

On 12 May Spanish President Jose Luis Rodriguez Zapatero announced a package of economic measures aimed at reducing the country’s deficit. This will involve severe cuts in social spending, pay and benefits – something Zapatero had for months declared himself unwilling to do. He also announced the imminent reform of the labour market. This

U-turn follows pressure from the EU and Washington, desperate to prevent the ‘Greek situation’ from spreading and dragging the euro down.

The mass media praised this ‘brave’ move that will save the state €5 billion  in 2010 and €10 billion in 2011. The civil servants whose wages will be slashed by an average 5%, retired pensioners whose income will be frozen, or those with disabled relatives no longer entitled to benefits, have a very different perspective. The social democratic PSOE government has once again revealed its true colours: protecting the bosses and making the poor pay for a crisis that others caused.

The international economic crisis has specific characteristics in different areas. Spain, with low industrial productivity, specialised in the last ten years in commodities which provide short-term profits: tourism and real estate. Massive development of real estate eased the flow of speculative capital while providing corrupt deals between local councils and agents, and great profits for banks and construction companies. Spanish ‘growth’, apparently above the EU average, turned out to be a bluff sustained by speculative movements and rampant corruption. As the crisis started last year, banks closed down credit, investment quickly shifted away and capitalists moved funds into Investment Societies of Variable Capital, with privileged fiscal treatment. In just the last quarter of 2009 the assets of such societies rose by 4.3%, totalling €25.6 billion.

The economic crisis doesn’t affect everybody equally. Unemployment has dramatically risen to 4,612,700 people (over 20%) at the beginning of the year – a rise of more than a million in the last year, and is the highest in Europe. But at the same time, the 584 top executives and advisers from the companies of Ibex-35 (Spain’s stock market index) received an average of €989,000, the highest ever for this group.

But it is not this inequality that concerns those who raised the alarm about the economy; they care only about the state’s accounts. It is true that state revenues fell because of the decline in economic activity, but also derived from neo-liberal policies that eliminated death, inheritance and corporation taxes. Moreover, fiscal fraud (estimated at between 20% and 25%) is also to blame for Spain’s deficit, which currently stands at 11.2%.

Spanish workers must wonder why they have to pay higher direct taxes, whereas capital gains taxes have been reduced. In the ‘good times’ (1999-2004) the cost of labour increased 3.7%, while company profits saw a 73% rise, but in the ‘bad times’ the working class is paying for the abuses of immoral speculators. Many mayors around the country have been put on trial, accused of illegal concessions of land, bribery and enriching themselves through political favours to private companies. Most of these corrupt politicians belong to the conservative opposition, and the Bank of Valencia has paid €3 million bail for one of them. Needless to say, the banks have no money to spare for loans and mortgages to ordinary citizens.

The trade unions have failed to mount a strong challenge to this obscenity. The opportunist union leaders decided not to call a strike against the government’s ‘plan of adjustment’, until it became a decree and was effectively brought in. They have finally called a strike to defend public services and civil servants on 8 June, but they are not organising the unemployed and other sections of the society on the edge of survival. Zapatero knows Spain is not Greece and at the moment he need make only the most minor of concessions to cool workers’ anger. In a populist and token move, the cabinet will see their salaries reduced and Zapatero himself will receive next year €78,185 instead of €84,000 (excluding bonuses and extras, of course). He made vague promises on a special tax on those with assets of over €1 million, but this will not apply until 2011.

For months, the Spanish government had been vacillating. But after being taken to task by US President Barack Obama and German Chancellor Angela Merkel for their failure to act, the Spanish social democrats are now showing their real face. They are determined to confront the crisis by placing the heavy cost of recovery on workers’ shoulders. It is still to be seen whether these attacks provoke organised resistance from the Spanish working class, as voices calling for a general strike grow louder.

JJ Rivas