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The Future of Europe - Perspectives Debate Was Moderated by Political Journalist Fernando from Spain Berlin

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The Future of Europe - Perspectives Debate Was Moderated by Political Journalist Fernando from Spain Berlin sociologist and expert from the EQUO Foundation. The The Future of Europe - Perspectives debate was moderated by political journalist Fernando from Spain Berlin. The conclusions of the seminar are presented below, after an introduction to the Spanish political system and the particularities of the economic crisis in Spain. The European Union is in The Spanish Party Political System a vulnerable situation. The project that started half a Spain is currently governed by the conservative party century ago is now (Partido Popular - PP) that holds an absolute majority staggering. (186 of 350 parliamentary seats since the 2011 elections). The landslide electoral win of the conservatives was the While its primary objective of ensuring peace on the result of a massive protest vote against the Socialist continent has been a success, subsequent Party (PSOE) for its inability to address the economic expectations of greater political integration beyond a crisis after 8 years in power. mere common market are not accomplished. The EU project itself is now in question, not only from the The Spanish party system was created with the intention outside, where the markets doubt and test the to provide on the one hand political stability to the young viability of the Euro - its economic flagship, but also democracy trough a nation-wide two-party system (the from within Europe whose citizens are beginning to electoral system making it virtually impossible for any doubt the direction of the project and the legitimacy other party except the PP and PSOE to govern) and on the of EU policies. Even in countries traditionally pro- other hand to allow the representation of regional European like Spain or Greece, where in past times political forces in the chamber of deputies, as the of dictatorship the EU was seen as the ultimate electoral system favours parties that concentrate big democratic achievement, this once unconditional amounts of votes in a specific region. For this reason 7 support is cracking, mainly as a result of austerity parliamentarian groups are represented in the Spanish policies imposed by European authorities. Parliament. The biggest groups are of course the conservatives and the socialist, the third force is the Identifying the need to reflect about the causes of Catalan party Convergència i Unió (currently governing this turnaround, GEF organised with support of Catalonia), while the fourth party is “Izquierda plural”, a Fundacion EQUO and Fundacio Nous Horitzons a coalition of national and regional leftist parties. seminar on October 4th in Madrid, meant to collect ideas on how to change Europe so that it is better fit ICV and Equo are the two Green parties in the Spanish to address the critical economic situation inside the political spectrum. ICV, the Catalan Green Party, has two euro-zone, starting from a Spanish perspective. members in the Spanish Parliament as part of the Izquierda Plural coalition. Equo is a recently founded This article is based on the conclusions of the party with the aim to develop and consolidate a national seminar, detailing on the Spanish views on European Green party in Spain. Equo ran for the first time in the integration in light of the crisis. The article has been 2011 elections and was the party with the highest number written by Alejandro Sanchez, Director of the of votes (215.776) left outside of Parliament. Fundacion EQUO, with contributions from Fernando Nevertheless, EQUO got a Member of Parliament elected Rodrigo and Marc Gimenez Villahoz. in Valencia through their coalition with Compromis (a regional-based coalition), with over 125.000 votes. The seminar in Madrid was organised along two lines. The context: the economic crisis in Spain Firstly, activists around the Spanish Green party EQUO discussed in three working groups about crucial The economic crisis in Spain has its own characteristics questions of current relevance. Secondly, there was a that overlap with those of the general international crisis. public debate that benefited from the contributions of The Spanish model of economic growth had been based Pierre Jonckheer, GEF co- president, Laia Ortiz, member on the construction industry, particularly private of the Spanish Parliament from ICV (Inicitiava per residential buildings, but also public infrastructure Catalunya Verds – Catalan Green Party), Reyes Montiel, works. According to the Spanish National Statistics Co-spokesperson of EQUO and Mariano Baratech, The Future of Europe - Perspectives from Spain 2 Institute (INE) the weight of construction (both residential This drastic change occurred due to a collapse in tax and non-residential activity) in the Spanish GDP revenues caused by the collapse of the real estate sector, increased from 11.7 % in 1996 to 17.9 % in 2007. At the the decrease in consumption, and especially by the same time, the sector grew from 9.3 % of total increase in fraud and tax evasion of the high incomes and employment to 13 % during that period. corporations. In addition, because of the risk premium increase, Spain allocates annually 38 billion € in interest However, the actual weight of the real estate sector in payments (3.8% of GDP), a figure that exceeds the sum of the Spanish economy was much higher. The overall all civil servants’ salaries (32 billion €). figure of that activity in the productive structure of the country was around 39.4 % of GDP in 2007, excluding the Labour income and indirect tax revenues support public involvement of the sector on energy or on net taxes. The expenditure, having increased the rates of the Income number of homes built in 2007 was 700,000. Direct Tax and VAT up to the levels of countries with higher employment in the sector reached 3 million workers. taxation. However, big companies and big fortunes still This strong growth in construction brought about a do not virtually pay. There is a growing “defiscalisation” strong demand for workers that was provided from a of capital incomes. Estimates managed in Spain by growing immigration – between 2000 and 2010, 6 million experts and even by tax inspectors themselves show that persons immigrated to Spain, now accounting for 12% of there is a tax fraud of around 8% of the GDP, which the total population. This real-estate based model of means about 80 billion € in 2012. This implies much growth that induced the crisis in Spain is not comparable lower tax revenues in Spain compared to other EU to economic developments elsewhere in Europe, except countries (see graph on page 3), at about 7 percent of in Ireland. GDP, which leads to a serious imbalance in the state accounts and justifies budget cuts and attacks on social Apart from the enormous environmental impact, the policies and the welfare state which is already commitment to unbridled construction of residential and underdeveloped compared to neighbouring countries. civil works implied strong internal (from households and firms) and external debts (from banks) to ensure the The inefficient tax policy renders redistributive policies investments needed to feed it. These investments were incapable to fighting poverty and inequality in Spain, made at the cost of marginalising knowledge and which is already the highest in the European Union. It is technology, green jobs and sustainable industries, producing a growing and sustained decrease in real abandoning productive investments and channelling wages in the national income since 1998, which was also savings into credit and property speculation. Spain had accelerated by the last labour reform of the Popular an unbalanced growth, deformed and unsustainable, Party government in 2012. For instance, even though socially, economically and environmentally. capital income grew from 30% to 35% of national income in the period 2000- 2011, Spain now exceeds 6 million The private debt in the housing sector (debt of unemployed persons and there are over 1.7 million households) currently totals 800.000 million € and there households with all members unemployed. are now more than 1 million unsold homes, which is weighing down a significant economic recovery. The The mass unemployment in Spain, especially the youth Spanish banks also borrowed heavily on the European unemployment - currently 52% of young people under 30 interbank market from mainly German banks which were are unemployed - has been a growing burden on the able to channel the German savings to Spain. social sectors. The inability to pay back the debts incurred to purchase a house has led to more than As opposed to other crisis hit countries, the biggest 350,000 families being evicted from their homes (2008- problem in Spain is not the deficit or the public debt. In 2011). During the last year, there have been 400 2007 Spain's public debt was 36% of GDP and a budgetary foreclosures a day. The latest figures on the evolution of surplus existed. By contrast, private debt in Spain (firms poverty show that 21% of Spanish families live below the and households) amounted to 240% of GDP, well above poverty line and that 45% are unable to face any the European average and similar only to that of Ireland. extraordinary expenses. Nearly 2 million people receive In 2011 the national (public) debt had risen to 75%. The food aid from NGOs on a daily basis. total of the private and public debt now exceeds 300% of the Spanish GDP. The budget deficit had risen to 9% in 2011. Nevertheless, Spain's public debt is still currently 10 points lower than the euro-zone average. The Future of Europe - Perspectives from Spain 3 Tax revenues as % of the GDP The economic and social policies implemented by the previous two governments (PSOE – Social Democrats and Key issues discussed especially the Partido Popular – Conservatives) were intended to promote a so-called "internal devaluation" – As mentioned before, the event was divided in two a measure meant to restore the economic sections.
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