Why the Spanish Government Opposes Debt Relief for Greece

Why the Spanish Government Opposes Debt Relief for Greece

Why the Spanish Government Opposes Debt Relief for Greece

Any concession to Syriza could translate into an electoral boost for Spain’s own anti-austerity party, Podemos.


“Solidarity is one thing—but it’s quite a different thing to have solidarity and not ask for anything in return,” said Spanish Prime Minister Mariano Rajoy in a radio interview on June 30, when asked about the position the European Union should adopt toward Greece. The PM was widely ridiculed for his obvious misunderstanding of the notion of solidarity—inadvertently revealing one of the EU’s design flaws. But his attitude illustrates how national politics are shaping Europe’s approach to the Greek crisis.

Spain has been among the countries in the European Union most fiercely opposed to debt relief for Greece. This has less to do with Spain’s share in Greek loans than with its governing party, the conservative Partido Popular (PP), which has tied its fate to the EU’s politics of austerity. Luis de Guindos, Spain’s economy minister, tried to compete with Jeroen Dijsselbloem, the current Dutch Socialist leader of the Eurogroup, for his position in what was billed as a “political showdown” between Europe’s center-left and center-right blocs. (De Guindos lost his bid on July 13, and Dijsselbloem was reelected.) For Rajoy, de Guindos, and others in the PP, any concession to Syriza, the far-left party now governing Greece, suggests that there may be an alternative to the EU’s current approach, translating into an electoral boost for Spain’s own anti-austerity party, Podemos. With Podemos expected to mount a stiff challenge to the PP in the general elections later this year, the PP has had to balance its fierce opposition to Syriza, Podemos’s ally, with its desire that Greece stay in the eurozone.

For the PP, Greek despair serves as an electoral scare tactic. The PP and its allies in right-wing newspapers such as ABC and El Mundo have branded as a “nightmare” the urgent measures (i.e., bank closures, limited ATM withdrawals) the Syriza government has been forced to adopt, drawing direct parallels with a potential Podemos government. “Syriza’s policies are no good for Spain, and we shouldn’t risk a corralito,” said PP spokesman Pablo Casado the day after the July 5 referendum in Greece. (Literally “putting up a fence” to prevent a bank run and capital flight, corralito is a pejorative term associated with Argentina’s economic depression in 2001.) “What’s happening in Greece won’t happen in Spain,” Rajoy said a week before that, recurring to one of his favorite platitudes, “because this is a serious country.”

Many on the left, by contrast, have pointed to Greek PM Alexis Tsipras’s “commitment to democracy” as a sign that Greece, not Spain, is the serious country. “I feel a healthy envy toward the Greek government,” said Ada Colau, the leftist mayor of Barcelona, in the days following the referendum: “It has fulfilled its promises…and defended the basic rights of the Greek people.” Podemos, for its part, has since its inception maintained a strong political relationship with Syriza while openly acknowledging the divergent economic situations in each country. (With a gross domestic product of almost $1.4 trillion, Spain’s economy is more than five times Greece’s. And while Spain’s national debt is just below 100 percent of GDP, Greece’s stands at around 175 percent.)

Strangely, it’s the PP that today insists on comparing Spain and Greece—a strategy meant to scare Spain’s electorate into voting for austerity as the only guarantee to stay in the euro. Even on the right, many have criticized this fear-mongering tactic of “hacer números” (“racking up numbers”), also known as arriolismo, referring to the longtime PP strategist Pedro Arriola, the Karl Rove of Spanish politics. But the trick may work yet again for Rajoy in the upcoming national elections: Recent polls estimate that a plurality of Spaniards (43 percent) favor the Eurogroup’s position in its negotiations with the Greek government.

Still, few Spaniards have stopped to think about the actual arrangement of the negotiations, says David Sánchez Usanos, a professor of philosophy at the Autonomous University of Madrid. German Chancellor Angela Merkel, he points out, “is not a legitimate political interlocutor at the European level since she does not belong to the European Parliament; no organization is authorized to decide what concrete reforms a sovereign state ought to adopt in order to pay—or try to pay—its debt; and measures linked to austerity, in addition to being questioned internationally, have not been endorsed by a vote.”

A scenario eerily similar to Greece’s predicament today beset Spain during the summer of 2012, when Rajoy entered into negotiations with the Eurogroup to address a major debt crisis. At that same time, the tides were turning in Greece: Pasok was imploding and Syriza was quickly filling the void. On June 10, 2012, Spain became the fourth and largest EU country to receive bailout money (over €100 billion) from the Eurogroup and the IMF. Rajoy’s decision to placate the EU by cutting the budget, raising general taxes, and cutting pensions and social security hamstrung Spain’s already depleted workforce. Unemployment numbers would peak at nearly 27 percent the following year; today they’re just under 24 percent.

It’s an episode that Rajoy has chosen to misremember. Within the EU’s moral economy, a bailout is a national embarrassment, a proof of failure and irresponsibility. This is why, contrary to all evidence, Rajoy has always insisted that Spain narrowly escaped one. Back in February, Pedro Sánchez, the Socialist (PSOE) leader, attacked the PP for its selective memory. But developments in Greece have made it more difficult for the PSOE to distinguish itself from the center-right. Sánchez, like his PP counterparts, has now fallen in line with Brussels, criticizing Greece’s July 5 referendum and urging Tsipras to “follow the rules of the game.” A week before the referendum, Sánchez told La Sexta, a nationwide TV station, that he thought it “incredible” that Tsipras should call for a “no” vote because, he said, it would mean “exiting the euro.” As economic journalist José Antonio Navas points out, Greece has unprecedentedly made the PP and PSOE of one mind, determined as both are to curb Podemos’s threat to two-party dominance in Spain. (Still, unlike in Germany or the Netherlands, no grand coalition between center-right and center-left looks imminent in Spain.)

Not surprisingly, however, the cacophony of dissent among PSOE’s younger members has been growing for months. For some, Sánchez’s endorsement of the ‘yes’ vote was the last straw. Beatriz Talegón, a rising young star in the Socialist party and member of its federal committee, announced on the day of the referendum that she was leaving the PSOE over Greece and broader disagreements over the party’s political stances. She is slated to join Alberto Sotillos, who left the party last month, to found an independent leftist party that may draw more young PSOE members.

Podemos has been Syriza’s most faithful Spanish ally. The parties’ leaders, Alexis Tsipras and Pablo Iglesias, have frequently appeared together in public and expressed mutual admiration and support. Although both parties have denounced the troika’s austerity measures, neither is in favor of leaving the EU or the Eurozone. Together with United Left, a coalition of leftist parties led by the Spanish Communist Party, and members of citizen’s platforms that recently won the mayorships of Madrid and Barcelona, Podemos universally called for a ‘no’ vote and celebrated the outcome. Iglesias called it “a ‘yes’ for the Europe of social rights.” In a speech to the European Parliament on July 8, Iglesias thanked Tsipras and the Greek people before saying, “Europe isn’t destroying itself because there are governments that have the audacity to ask their people what they think. What’s destroying Europe is financial totalitarianism.”

The PP’s allies, meanwhile, are in Brussels and Berlin. Like Rajoy, Merkel and Dijsselbloem are afraid that Greece will contaminate Spain. But the contamination they fear is less economic than political: the prospect of another Syriza-like government. (Rajoy reportedly made personal phone calls to his European colleagues several times last week to underscore this point.) Merkel and Dijsselbloem are right that a Podemos or broad Left Popular Unity government in Spain would bring them major headaches. Like the former Greek finance minister Yanis Varoufakis, Podemos politicians combine intellectual firepower with a complete lack of deference to authority and protocol—formalities that they associate with the hypocrisy and theater of politics as usual. Syriza and Podemos, along with leftist parties in Italy and Portugal, have called for a Southern coalition to unite against what they see as a German-led obsession with austerity. For them, it’s a misguided policy not without a tinge of bigotry, combining ruthless, anti-democratic neoliberalism with a puritan desire to punish a supposedly lazy South for economic mistakes in which the North itself was complicit. “We can change the course of Europe,” Tsipras said when he spoke to a Podemos meeting in November. He invoked the image of a “people’s movement” in the South turning itself into the “terrifying enemy of neoliberal German hegemony.”

How this week’s last-ditch agreement between Greece and the EU will shape Spanish politics is hard to predict. Some on the left think that the impact will be negligible, because the upcoming general elections will narrowly focus on national issues. Still, a lot will depend not only on how the Greek story plays out but also on how it gets told. The narrative is anything but clear. While Tsipras has had to make important concessions, the Greek resistance to the EU, including the referendum, has helped make visible a broad, transnational coalition against austerity—including everyone from citizen activists across Europe to prominent Western economists such as Paul Krugman, Jeffrey Sachs, and Thomas Piketty. The emergence of this front has forced some of the main players in this drama—including the IMF and the European Council—to acknowledge the need for debt relief, weakening Germany’s dogmatic position in the court of European public opinion. Slowly but surely, the adjectives are switching sides. “His positions are irresponsible and can bring disaster,” said Gianni Pittella, who heads up the center-left bloc in the European Parliament, on July 11. He wasn’t referring to Tsipras but to German Finance Minister Wolfgang Schäuble.

Back in Spain, Podemos and the citizen’s platforms have so far staved off the PP’s apocalyptic rhetoric. The 17th-hour agreement between Greece and the German-led troika on early Monday morning will likely give the new leftist parties in Spain a short-term public-opinion boost. A Greek exit from the euro, on the other hand, would almost certainly have been catastrophic for the Spanish left’s chances in the end-of-the-year national elections. Still, this week’s Greek reality check is a learning moment for the anti-austerity movement in Spain—and there is no doubt that those turning the thumb screws on Tsipras meant to send a message to the Spaniards. The economist Juan Torres López, who with Vicenç Navarro drafted Podemos’s economic program earlier this year, tweeted a “Lesson from Greece”: “Shouting ‘Yes We Can’ is not enough. We have to study [the situation] intelligently in order to discover what needs to be done so that we can.” The first reactions of the Podemos leadership have been defiant. “All our support for the Greek people and their government against the mafiosi,” tweeted Pablo Iglesias on July 13, invoking the hashtag #ThisIsACoup. “This is an attempted financial coup,” echoed Pablo Echenique, leader of Podemos in Aragón. “What they are trying to do is turn Greece into a protectorate. European solidarity has ceased to exist.”

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