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. First, three workshops were organised, competitiveness, mainly by reducing labour costs. This discussing 3 key questions (European financial system, policy promoted by the EU –and Germany especially - the Green New Deal as answer to the crisis and what is caused strong suffering within the Spanish society, as the Green vision for Europe) with Green activists from described above, and at the same time produced no across Spain. This was followed by a public discussion visible improvement. dealing with the impact of the economic crisis on the European project, which gathered an audience of about Unemployment is increasing (with over 800,000 new 70 persons. unemployed persons in 2012), the decrease in wages has spread to all sectors, there is an increase of the During the public conference, the specific Spanish socio- population in poverty, consumption decreased and the economic situation was discussed in a wider context of economy continues to decline in terms of GDP. The only the role of the EU in addressing the crisis and of what are economic sector to have slightly recovered is the exports, the expectations from the EU in this sense. but being a very small part of GDP, it has no real impact on the economy. The contribution of MP Laia Ortiz showed that the austerity measures currently pursued by the Troika are These austerity policies are transforming the Spanish unsuitable as a solution to the economic crisis in Spain, social model to the worse, by reducing protection, as they appear to actually deepen the current recession. deregulating labour relations and labour laws, and She clearly advocated for a different Europe - more privatising essential public services such as health care democratic and more social – which could better face the and education. The aim is to implement a neoliberal negative trends of globalization and recover citizens’ agenda exploiting the crisis and, supported and sustained sovereignty from the markets. Pierre Jonckheer’s by right-wing governments in the core countries of the intervention went in the same direction, pointing to the eurozone and the European Commission. necessity of a different political model for EU. This model should be more federal, with a central European budget and more powers for the EU Parliament. Mariano Baratech talked about of the disillusion of citizens with the old “European dream” and argued in favour of a new The Future of Europe - Perspectives from Spain 4

narrative based on a Greener Europe, centred on the unemployment and destroy much of the country's concept of more solidarity. Finally, Reyes Montiel productive economy. concluded by pointing to the responsibilities of public and private debt in causing the crisis, and the resulting necessity for a different fiscal framework. She pleaded for a more progressive tax policy; “It is not that we have The problem of the Spanish economy, in addition to the spent over our possibilities, is that we have taxed below heavy indebtedness of its companies, banks and families, our responsibilities”. is the brutal fall in public revenues: state tax revenues are currently at about 33% of GDP. This is a result of an The European Financial System unfair and inadequate tax structure, a sharp drop in revenue from the decreased economic activity, This first workshop, focusing on the regulation of the consumption and employment, and a strong tax fraud. financial system in Europe, was moderated by Fernando Rodrigo, coordinator of economic policy at the EQUO The banking bailout is first of all not democratic: it has Foundation, together with Delfina Rossi, assistant to Raul not been discussed in Parliament, while the Romeva, MEP. Memorandum of understanding containing the conditions has not been made public. Furthermore, the bailout is The debate focused on the causes of the financial crisis unfair and ineffective to restore the credit activity and the and its consequences. Among the fundamental causes system's solvency. It has ensured that the banking debt is identified were the predominance of financial economy transformed into sovereign debt and thus turned the over the real economy, the existence of large amounts of Spanish citizens into debtors. At the same time, the capital looking to maximize their returns on speculative managers who left more than a half of the Spanish markets, the financial deregulation undertaken in the financial system in ruins, were not held accountable. ‘70s and ‘80s in the USA and UK, extended and then exported to other countries and the existence of tax Under these circumstances, there is a clear need for a heavens. European solution because further adjustment policies and cost reductions, will lead to economic and social With regard to Spain, the financial crisis has been the disaster. result of the house building and real estate speculation (the “bubble”), financed with bank debt (mainly from Among others, the following proposals that were German and French banks) to companies and families. discussed during the workshop:

Private debt at the beginning of the crisis (2007) exceeded > There is a direct relationship between the tax 300% of GDP, compared to less than 40% of GDP in system and the financial system. The tax on public debt. Currently, public debt exceeds 80% of GDP. international financial transactions (Tobin tax) is Currently private debt is being converted into sovereign essential, both for the limitation of international debt through the bank bail outs. It was not the public speculation, and for generating European and deficit and the public debt that have caused the crisis, but national resources to promote sustainable the crisis that has caused the increase in public debt. The policies. It is also necessary to eradicate tax cost of financing the public debt in 2013 sums up to 37 havens. billion euro - the second highest heading in the national budget after pensions. These costs cannot be sustained > The EU banking union should be finalized rapidly in an economy in depression, unless social benefits and and it should include: the creation of a European basic public services (such as health, education, bank bailout fund and a deposit guarantee fund, unemployment benefits and pensions) are cut, which is with contributions from the banks themselves the current logic of austerity. and the entire financial system, preventing that citizens pay for the banking crisis. Unique Furthermore, this accumulation of debt makes Supervision and the separation of commercial impossible investments in a green and sustainable and financial banking, to limit the size of banks economy. The growing debt will perpetuate and increase and to prevent systemic risks, should also be social inequalities - Spain is already the most unequal foreseen. country in Europe - , it will further increase > The reform the European Central Bank is essential. It is essential that the ECB could act The Future of Europe - Perspectives from Spain 5

as a lender of last resort and to issue The Green New Deal Eurobonds as soon as possible for debt pooling and reducing the current inequalities in the Is the Green New Deal the answer to the crisis? How financing costs of states. could the GND contribute to solving the crisis? How can this be explained to the public? These were the main > The debt of banks should not have been questions addressed by this workshop, moderated by converted into sovereign debt. Socialising Alejandro Sanchez, Director of the Fundación EQUO. losses, while benefits remain privatize is not acceptable. Companies should be allowed to go Here are the main conclusions of the debate: bankrupt when a social consensus exists over the costs of saving the respective institution > The GND cannot be combined with neoliberal exceeding any potential future benefits. austerity policies as we see being implemented today. To exit the deep depression, there is a > The dividends of shareholders and owners need for job creation and investment in the real should be limited during the bailout economy (a greener economy, more programme. participatory and more focused on human needs). > The banks recapitalised and bailed out with public money should become public banks - > The terminology Green New Deal was also efficient, ethical and serving the sustainable discussed. In order to give meaning to this term, economy it needs to go clearly beyond the neoliberal economic concept, and address the organisation > A control, monitoring and evaluation Committee of employment, the decline in consumption, as should be created to oversee the use and well as ideas of de-growth or Tim Jackson’s application of the bailout fund for banks and the prosperity without growth. Changing the name compliance with all established conditions on “Green New Deal” to a more explicit concept the possible privatization, sales or orderly such as “New Deal for Common Goods and bankruptcy proceedings. That Committee shall Sustainability” would highlight the be composed of representatives of social and environmental, economic and social civil organisations, parliamentary sustainability dimensions of the concept. In the representatives and experts of the Bank of Spanish context, the phrase Green New Deal Spain. has to be translated.

> All persons accountable for the bankruptcy of > The scale of the global economy should become the financial and banking system (bank more human, not exclusively focusing on big managers and executives, banking authorities projects or investments, but rather on smaller and regulators, political authorities, projects that are manageable, controllable, corporations that used their influence for local, based on food sovereignty and self- preferential loans, board of directors etc) should sufficiency. More needs to be done in Europe take responsibility for the bankruptcy. and beyond for label traceability, environmental and social cooperativism and fair trade. > A public “housing bank” should be created that oversees the property assets of the nationalised > The GND must come from Europe and it must banks and saving banks. A powerful public bring social on top of economic change. It must authority for rental housing should be also represent a transition to a way out of the crisis, created. alongside a political change in Europe. What must be avoided is that the GND is perceived to > Solutions to the crisis cannot be found in be a green washing of the capitalist system. individual Member States. The crisis can only be overcome by advancing with the political, > The Canary Islands were presented as a economic, fiscal, banking and social integration potential laboratory for implementing GND of the EU. policies. The insular character is a good premise to try to get self- sufficiency, for example in energy through the implementation The Future of Europe - Perspectives from Spain 6

of renewables instead of fossil fuel plants, as it citizens does not advance, hence the increasing is currently intended on the El Hierro Island. euro-scepticism.

What does “more Europe” mean? > Imbalanced institutions: In recent years there has been a de facto loss of political weight The discussion was structured around three questions: within the EU of the traditional engines of What is the Green vision for the future of Europe?; What European integration (the European are the fundamental pillars of a Green Europe?; and Commission and the European Parliament) to What should be the road map to reaching a greater the benefit of the Council, even though the political union and what is the role for the European Lisbon Treaty allocated more powers to the institutions in this process?. The workshop was European Parliament. This effectively left moderated by Marc Gimenez, advisor to the Greens/EFA decision-making in the EU in the hands of parliamentary group and member of ICV. national governments (the fiscal pact is the latest such example). During the discussion other relevant questions arose: > Political vision and ideology: The European Is the lack of a good response to the crisis a project has been broken, because as such there matter of poor architecture of the European was no project to begin with. No strong Monetary Union or is it an ideological obstinacy? European leaders have come forward over the past decades, because of member states’ Is the current democratic deficit in decision- governments prioritising national interests over making at European level also ideological, or is European ones. The EC, the EU and the Euro it intrinsic to the increasing global competition have not had a vocation to strengthen social for the control of resources by the established rights, equity and cohesion, which was proved and emerging global powers? once the economic crisis unrolled.

Given the current doubts about the economic > Weakness, disunity and nationalism: The EU and political viability of the European project, budget is very low, and made up only of should there be a return to a strictly national contributions from Member States. The EU has logic, or should we on the contrary accelerate little room to boost the public sector. There has the process of integration into a truly federal not been a real culture of a shared project. The entity? There was a consensus on this last point engine has been exclusively the safety and in the workshop, with participants clearly money provided by the single market. advocating for greater European integration. > Absence of a European public opinion: To begin Over two hours of discussion, mixed answers were given with, the European elections do not directly to the above questions: from spontaneous criticism of the decide on the European government (the current state of affairs, to listing the positive elements Commission), which is appointed by member still present in the Union, to trying to focus on proposals states instead citizens. There is little visibility of to reverse the growing euro-scepticism in Spain and decisions made at European level, their Europe, as developed below. implications or their reasoning, due to a lack of media coverage of the European decision- Criticism voiced towards the current state of the EU: making processes. A public debate on EU issues is not possible because information is only > Opacity and governmentalism leading to a lack conveyed in the media about decisions already of legitimacy: Europe is seen as a closed shop taken. Communication on European policy is by its citizens. More transparency is needed, as done at national level, which is then used by well as an effort to render understandable the national governments to assume popular effects of European legislation. There is a clear decisions, and to blame unpopular ones on lack of permeability of the European political Europe. system towards the citizens. This is a project of national governments. There is a problem of > Changing trend in Southern Europe: After two legitimacy, the result of a lack of democracy in decades of democratic consolidation and the decision- making process. The Europe of economic development as a result of EU The Future of Europe - Perspectives from Spain 7

integration, regression occurred in both areas > Education policy, particularly in the field of recently. Europe is perceived as the domain that citizenship rights, must become more imposes measures that undermine social ambitious. The Erasmus programme must be cohesion and democracy. continued. Linguistic diversity and language learning have been continuously promoted by > The influence of markets: The logic of wealth the EU and should remain so. creation for a few has had monopoly over European policies, the EU being a structure > Historically for the Spanish, the EU has meant created for market interests. The European freedom and economic prosperity. The EU project has been hijacked by the economic remains a guarantor that there will not be a powers that are dictating economic recovery severe democratic regression in Spain, nor in policies. The balance between the market and any of the other 26 Member States. the state (or the EU in this case) has been clearly broken, with the markets having > The European framework is the only option to engulfed democracy. The EU crisis is the best achieve the Green aim of global sustainability. evidence of the crisis of the capitalist system. Green proposals for a stronger European Union > EU's role in managing the crisis and the discussed in the workshop: shortcomings of the European Monetary Union (EMU): Both the EU and the EMU are paying the We need a new model for Europe, based among others consequences of an incomplete project. When on: things were going well, with widespread economic boom, the EMU model worked well. 1. Greater European federalism and political But in the current times of recession it has union: become clear that other steps crucial to robust economic integration were not completed. The > For a stronger EU we need to move responses to the crisis showed no clear vision, towards greater political union, leading allowing the logic of austerity and national to greater solidarity. We must go adjustments to prevail over that of the needed beyond the logic of the nation-state, to further integration. a truly federal structure.

Positive values and hopes for the future: > There should be a direct administrative relationship between the EU and the > In a globalised world, the EU can be a powerful citizens, for instance by having a direct player only united; the positive hallmarks of the communication with the European European project should be strengthened. Commission for the allocation and implementation of certain projects > The European Parliament, the most progressive financed by European funds, without European institution, should play a more the mediation of Member States. decisive role in European decision-making. > European leadership has to be > The EU should contribute to the advancement promoted, by giving citizens the chance and harmonisation of both civil and social rights to elect the EU President. The (including labour law, where harmonisation European Green Party's role is vital to should be done towards the highest not the ensure a European debate, and thus lowest standards). The EU represents a frame the EGP should also put forward a that aspires to the logic of equality of candidate for the presidency of the opportunities for all. European Commission. The introduction of transnational lists in the > The European single market has allowed for European elections would be a big step businesses to flourish and for the EU to forward to the de-facto establish itself as a global economic power. Europeanisation of the elections. The Future of Europe - Perspectives from Spain 8

> A new constituent process should be > It is essential to combat fraud and tax started, calling for a European evasion in Europe. We have to shame Convention 2.0. the UK and Luxembourg (and others) for their unsupportive practices. 2. Citizenship at the centre: 5. Europe in the world: > To move forward we need driver of change. So far, the driving force has > At European level, there should be been the member states, but now the more instruments to permit action and driving seat should be passed on to the effective coordination in foreign policy European citizens. The European project should be rebuilt from the > Spain can play a leading role in bottom- up and centred on citizens, strengthening the relations with Latin while breaking the logic of EU being America and the Mediterranean the mere sum of state governments. countries.

> The barriers that still exist 6. Subsidiarity: (administrative, legal, civil laws) to facilitate mobility inside the EU should > Rebuilding the EU can only start at be removed. national level. Going beyond the “market-only” logic of the EU starts > Europe needs to be taught and also by electing more progressive, less explained it must become part of nationalistic governments. common school curricula, much in the same logic that Germany and France > It is necessary to return to used education to end past hostilities. Tocqueville's thesis about the importance for democratic control of 3. Strengthening the social domain and setting the local authorities and their role in the basis for a European welfare state: creation of today’s Europe.

> To increase social cohesion, the European Social Model should be Conclusion rescued from ostracism. The European Union in its current state is far from the > The EU has to ensure a quality welfare Green vision of a strong and united continent. Nowadays’ system for all its citizens ensuring Europe is not driven by the same principles that were basic high-quality and affordable public once its driving force: the expansion of peace, services (especially health) throughout democracy, social justice and the welfare state. On the the Union. This has to be the EU contrary, the EU has a lot of responsibility for the current guarantee. situation especially in Spain, not only for the roots of the crisis, but also for its management. > The EU must also be the guarantor of pensions, so that the free movement of So far, the European institutions have fallen short of persons (used to work in other EU expectations and in trying to resolve the crisis they have countries) is not penalised. deepened the democratic legitimacy struggle that has always been questionable in the eyes of the Union’s 4. Taxation: citizens. Despite these negative trends, the seminar showed there is still confidence in the European project. > Taxes should be harmonised, while If steered in the right direction, putting social welfare extending the European budget to ahead of market interests, the EU might still achieve the allow more investment at European European dream of freedom, peace, democracy and level. prosperity. The Future of Europe - Perspectives from Spain 9

The article was written by Alejandro Sanchez, director of the EQUO Foundations, with contributions from Fernando Rodrigo and Marc Gimenez Villahoz.

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The views expressed in this article are those of the authors’ alone. They do not necessarily reflect the views of the Green European Foundation. With support of the European Parliament.

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