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Monday, 16 July 2012

Spain the next epicentre of the Euro crisis?

Whilst many of us have been watching Greece and the recent elections which electrified the left across Europe with the fantastic result of Syriza who came a narrow 2nd mainly down to the fact they turned to the right and watering down their programme just before the elections meant they fell short of a majority.

But now the situation of the Euro crisis seems to be moving closer and closer to the centre of Europe Spain is the next on the markets hit list it would seem.

Spain which is the 4th biggest economy in Europe would del a huge blow to the EU project if it falls.

With a likely exit from the Euro by Greece termed a Grexit the next term to be popularised is known as a Spanic which has all of the ruling class worried as Spain’s one of the biggies one of those quoted as too big too fail. Well if a change in direction is not found Spain is very likely going to head the very same direction as Greece very quickly indeed.
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As it fell, the Zapatero government was frantically scrambling to avoid a Troika bailout and combat the black cloud of ’risk premium’, which has determinedly mushroomed despite the government’s most earnest servility to the markets. Now, just a few months after Zapatero’s hammering by the electorate and the PP’s rise to power as a ’safe pair of hands’ to bring an end to uncertainty in Europe and the markets, the spectre of “intervention” has returned. This brings home the dramatic (and inevitable) failure of Spanish capitalism, under two separate governments, to put up a wall between the Spanish situation and that of other “peripheral” countries, which have already received bailouts.
The brutal austerity policies, with new measures systematically announced every Friday by the government, have had the same effect in Spain as elsewhere – they have dragged the economy further towards a depressionary spiral. Alongside the conveyor belt of negative statistics and predictions, a social nightmare is developing for millions. Mass unemployment is steadily worsening (over half of youth are without work) against a backdrop of grinding poverty, which is evidenced on almost every street corner. Those who only a few years ago enjoyed regular and seemingly stable work are seen rummaging in dustbins for food.
This flagrant contradiction – between a Spanish capitalism which struggles to remain in the “premier league” and a working class with its living conditions being driven down towards third world levels in a hopeless bid for a ’way out’ of the crisis – is set to be the determining factor in shaping the events of the coming period. To get a glimpse of the intensity of the new class battles which will continue to develop even more widely, one need look no further than the militant struggle of the miners in the north of Spain, who have erected flaming barricades on motorways and railway lines around the country and defended them with home-made rocket launchers, in some towns successfully driving out the police.
An indefinite strike of miners has been underway for days in Asturias and Leon, which has been joined by transporters. Major daily clashes are taking place, with scenes reminiscent of a civil war situation in the mining communities being widely circulated on the internet. These scenes of pitched battles between workers’ pickets and riot police armed with guns firing rounds of rubber bullets will have an electrifying effect in a country brewing with anger and a growing desire to fight back, which is why the strike was blacked out of the capitalist press for a number of days. The deepening of the crisis has generally been accompanied by rising levels of resistance.
The last two months have ushered in the most intense period of mobilisations since the beginning of the crisis. The massive general strike on 29 March and the numerous millions-strong mobilisations around it were followed by over one million marching on May Day and then by another million marching in cities across the country on 12 May to celebrate the anniversary of the Indignados movement. On 22 May, there was an 80-percent-solid strike of the entire education sector. These mobilisations, despite the limitations imposed from above by the movement’s “leaders”; show it is impossible for capitalism to implement its plan of impoverishment without raising an outcry from the working class and youth

One of the main reasons why the markets have been taking for granted that Spain needs a bailout is precisely because they believe that it is not capable of bailing out its own banks. Thus, in a desperate attempt to avoid an Irish-style scenario (where the government was in effect bankrupted by its banking guarantee and forced into a bailout), the right-wing People’s Party (PP) government began to demand a European bailout directly to the banks, without having to pass through the government.
The speed of the latest banking crisis, with the trigger of the collapse and nationalisation of Bankia (the fourth largest bank in Spain), has been breathtaking. Only a few days after Bankia’s chairman vowed that the firm was capable of solving its own financing problems, it was already in need of an emergency nationalisation. The public cost of this “nationalisation” and recapitalisation then went in another few days from 4 billion to almost 25 billion euros. The pathetic unprepared ness of Spanish capitalism for the advent of this crisis is revealed by the fact that their Fund for Orderly Bank Re-structuring (FROB) which was set up under a recent finance reform to provide a ’cushion’ to the banking sector, contained barely more than €5 billion at the time of the Bankia collapse.
In comparison with other peripheral economies, such as Ireland, the relatively low debt-GDP ratio in Spain has had a lot to do with the “unfinished” bank rescue programmes of 2008-2009. But then, instead of learning the lessons of the disastrous international experiences of nationalising bad banking debts, the PP government and European powers seem determined to repeat these situations step by step. The bailout of Bankia alone is set to send public debt up to 90 percent of GDP, above previous estimates. The €100 billion in fresh debt now being taken on by the public finances will send this figure shooting further upwards. How will this “ease the pressure” on the Spanish economy from the markets?
This is being billed as a “soft” bailout, limited to the financial sector and without a Troika austerity programme attached. However, despite the fact that the Spanish government’s policies are already largely shaped by the diktats of the Troika powers, the idea that this bailout will go without a hardening of anti-worker measures is laughable. The conditions put forward by the European Commission for a mere one-year delay of Spain’s 3 percent deficit limit target, which included an acceleration of pension reforms, a hardening of the labour reform and deteriorations to the unemployment pay system, give a small example of the “sacrifices” which will be demanded.
It is true that the size and importance of the Spanish economy gave Rajoy the room and bargaining power to prevent (so far) a Greek-style Troika bailout with all its blood-curdling conditions. Incidentally, this is a crushing blow to the right-wing fear mongers in Greece, Ireland and elsewhere, who base themselves on the idea that the Troika’s bluff cannot be called. But Spain will still be under the ’supervision’ of the “men in black”, as they have been referred to in the Spanish media, with the Troika’s austerity “recommendations” now becoming more like “impositions” with the added instrument of blackmail that is the bailout. Like the others, this bailout will be paid out in tranches (differentially structured instalments); with the threat of funds being withheld if the government “misbehaves”.
Whatever form a bailout of the Spanish banks takes, it will not consist of bailing out ordinary people, but of a disastrous policy of the public shouldering tens of billions of euros in bad private sector debt, ultimately to be paid for by bleeding workers, youth and the unemployed dry. A banks-only bailout also addresses only one of the planks of Spain’s public debt crisis, doing nothing to resolve its fundamental problems - the looming disasters in autonomous regions, for example, which the Spanish state would be equally incapable of responding to. Thus, while the initial bank rescue figure may seem “manageable” to European and Spanish capitalism, it could be a mere attempt at a ’quick fix’ which touches only the tip of the iceberg that is the deep crisis of Europe’s fourth largest economy

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Capitalism has proven itself to be pathetically incapable of preventing a Greek-style scenario from developing in Spain. The responsibility for evading such a disaster must thus fall to the working class, the youth, and their organisations, starting with a struggle against the lowering of living standards and the dismantling of the welfare state that is currently underway. Ultimately this struggle must be international in scope. The left thus has an historic responsibility to provide a consistent alternative to the road of ruin and misery offered by EU capitalist austerity. There is a climate of fear being whipped up by the media and government as they talk of Spain being cut off from borrowing money and of capital fleeing the country (almost 100 billion has been withdrawn from the Spanish economy since January). But this fear can be turned on its head if it is answered with political alternatives that go on the offensive against the bankers and capitalists.
The 20 biggest Spanish companies have reserves of over 40 billion euros, which are not being invested due to the depth of the world crisis that the profit system is passing through. In order to put this money to work, a revolutionary restructuring of the economy where the main companies and industries are run under democratic public ownership would be necessary.
It would then be possible to halt the flight of capital and invest Spain’s wealth (which the rich and corporations are currently hoarding) in an emergency anti-crisis programme to create jobs and public works. The 29 billion euros destined to be thrown into the black hole of Spanish debt payments this year alone - not to mention the billions paid to buy off property developers’ bad debts in the banks - could instead be put to social use.
The condition of Spanish economy screams the need for such policies, which could transform the situation in Spain and throughout Europe. But only a working-class government operating on the basis of socialist policies would be capable of carrying out this programme in a thorough and consistent way. The adoption of such alternative policies in Spain or another European country would in today’s globally integrated economy be only the first step, one crucial part of an international struggle for a working-class alternative to the capitalist Euro and E


with extracts taken from www.socialistworld.net

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