REGIONALISM AND REVENUE – THE MODERATE BASQUE NATIONALIST PARTY, THE PNV, AND POLITICO-ECONOMIC POWER IN THE BASQUE COUNTRY OF SPAIN 1980–1998 Ilkka Nordberg Phil.Lic. Doctoral dissertation Department of History University of Helsinki 2005 ISBN 952-91-8800-5 (paperback) ISBN 952-10-2499-2 (PDF) Helsinki University Printing House Helsinki 2005 Ilkka Nordberg REGIONALISM AND REVENUE – THE MODERATE BASQUE NATIONALIST PARTY, THE PNV, AND POLITICO-ECONOMIC POWER IN THE BASQUE COUNTRY OF SPAIN 1980–1998 Academic dissertation to be publicly discussed by due permission of the Faculty of Arts at the University of Helsinki in the auditorium of Helsinki University Museum, on the 20th of August, 2005 at 10 oʼclock. “But what makes the domination of a group, a caste, or a class, together with the resistance and revolts that domination comes up against, a central phenomenon in the history of societies is that they manifest in a massive and global form, at the level of the whole social body, the locking-together of power relations with relations of strategy and the results proceeding from their interaction.” – Michel Foucault, The Subject and Power (Foucault 2000b, 348) “Historical knowledge gives solidity to the understanding of the present and may suggest guiding lines for the future.” – G. R. Elton, Practice of History 1967, 67. TABLE OF CONTENTS LIST OF FIGURES 5 LIST OF TABLES 5 LIST OF ABBREVIATIONS 6 ACKNOWLEDGEMENTS 7 1. INTRODUCTION 8 1.1. The subject of my thesis 10 1.2. The concept of politico-economic power and prerogatives in the context of the Basque Country 22 1.2.1. The concept of economic policy 22 1.2.2. The concept of politico-economic power in the context of the Basque Country 23 1.2.3. The Basque System of Finance 26 1.3. Eltonʼs theory of political history and Foucaultʼs analysis of power examined 27 1.3.1. The relation between power and administration 27 1.3.2. Analysis of the use of politico-economic power 30 1.4. Sources 37 1.5. Merits and problems of previous studies on the PNV 49 2. THE PNV AND THE HISTORICAL CHANGES IN THE BASQUE ECONOMY 59 2.1. The economic context of contemporary Basque history 61 2.1.1. The Basque Country from the economic point of view 61 2.1.2. The Basque economy in relation to Spain and the EC/EU 65 2.2. The politico-economic roots of the PNV 69 2.2.1. Traditionalism and bourgeoisism 69 2.2.2. The attitude of the PNV towards the economic policy issues in the Statute of Autonomy 82 3. THE ECONOMIC POLICY OF THE REGIONAL GOVERNMENT 1980–1998 91 3.1. The beginnings of the economic policy 92 3.1.1. Deliberations of the Basque Economic Agreement 92 3.1.2. The creation of the regional structures of politico- economic decision-making 101 3.2. Troubled waters 106 3.2.1. The PNV and the nationwide LOAPA law 106 3.2.2. The politico-economic dimensions of the Law of Historical Territories 111 3.3. The economic policy of the coalition governments 118 3.4. The agreement on cupo 127 3.5. The quest for new economic policy solutions 134 3.6. Pragmatism and the creation of matrices for economic growth 144 4. THE PNV AS A RULING POLITICO-ECONOMIC PARTY 156 4.1. Regionalism, populism and capitalism 156 3 4.2. The main concepts of the Basque Countryʼs economic history instrumental in the PNVʼs policy 160 4.2.1. The signifi cance of fueros to the PNV 161 4.2.2. Economic agreement 167 4.3. The strategic role of the party council, EBB 172 4.4. The PNVʼs use of politico-economic power and the Basque provinces 181 4.4.1. Relations under tension 181 4.4.2. Congruent interests – Vizcaya and Bilbao as an example 185 4.4.3. The Guggenheim effect 192 5. THE INCREASE IN POLITICO-ECONOMIC POWER AND ITS LIMITS 196 5.1. The road to fi scal federalism in the Basque Country 196 5.2. The PNV and European integration 202 5.2.1. From an ideological to an institutional relationship 202 5.2.2. The PNV and the economic policy challenge of the integrated Europe 207 6. CONCLUSIONS 213 SOURCES 218 4 LIST OF FIGURES 1. The Basque Country. 2. The organization of the Basque Nationalist Party 1980−1998. 3. The regional and provincial political institutions in the Autonomous Basque Country since 1980. 4. The transfers of authority to the Basque Country 1980−1998. 5. The Powers of the autonomous regions of Spain in 1998 6. The fi nancial relations between the political institutions in the Autonomous Basque Community in 1998 7. Economic growth in the Basque Country 1980−1998 8. The problem of unemployment in the Basque Country and Spain 1980–1998 9. The Basque Country in the Spanish economy 1980−1998 10. The GDP of the Basque Country and Spain in 1981−1998 LIST OF TABLES 1. Results of the Referendum for the Basque Statute of Autonomy (October 25, 1979) 2. The results of the regional elections in the Autonomous Basque Country 1980–1994. 5 LIST OF ABBREVIATIONS ABB Araba Buru Batzar AP Alianza Popular BBB Bizkai Buru Batzar CC Coalición Canaria CCOO Comisiones Obreras CEOE Confederación Española de Organizaciones Empresariales CEV Círculo de Empresarios Vascos CiU Convergència i Unió CONFEBASK Confederación de Empresarios Vascos EA Eusko Alkartasuna EB-IU Ezker Batua - Izquierda Unida EBB Euskadi Buru Batzar EC European Community EE Euskadiko Ezkerra ELA-STV Eusko Langile Alkartasuna - Solidaridad de Trabajadores Vascos ETA Euskadi Ta Azkatasuna EU European Union GBB Gipuzko Buru Batzar GDP Gross Domestic Product HB Herri Batasuna IU Izquierda Unida LAB Langile Abertzale Batzordea - Comité Patriótico Obrero LOAPA Ley Orgánica de Armonización del Proceso Autonómico LOFCA Ley Orgánica de Financiación Autonómica de las Comunidades Autónomas LTH Ley de los Territorios Históricos NBB Napar Buru Batzar PCE Partido Comunista de España PCE-EKA Partido Carlista de Euskadi - Euskadiko Karlista Alderdia PCE-EPK Partido Comunista de Euskadi - Euskadiko Partidu Komunista PNV-EAJ Partido Nacionalista Vasco - Eusko Alderdi Jeltzalea PP Partido Popular PSE-EE Partido Socialista de Euskadi - Euskadiko Ezkerra PSOE Partido Socialista Obrero Español UA Unidad Alavesa UCD Unión del Centro Democrático UGT Unión General de Trabajadores VAT Value-added Tax 6 ACKNOWLEDGEMENTS It took me many years to complete my doctoral thesis, and work which itself took place in several countries, whether I studied or worked during that period. It is no wonder, therefore, that the list of people who I want to thank for contributing to the completion of my work is long and actually goes beyond these lines. First of all, I should like to thank Professor Erkki Kouri for always providing advice and guidance, regardless of the corner of the world from which I contacted him. His excellent post-graduate tutorials in general history formed the basis for this academic undertaking. To my other tutor, Pauliina Raento, Docent, go my warmest thanks for her support and criticism, which helped me forward and saved me from many errors. I am also grateful to the pre-examiners of my thesis, Professors María Jesús Cava Mesa and Gurutz Jáuregui Bereciartu. I also wish to thank Professor Cava Mesa for having agreed to be my opponent in the public examination of my thesis. To Professor Rafael Mieza y Mieg I owe thanks for extremely interesting discussions on the early history of the PNV, and for helping me to strengthen my arguments. Professor Alberto Atxabal I thank for stimulating discussions on the Basque economic agreement and its characteristics. Everybody who has done post-graduate research part-time knows how important it is to have support from their superiors and colleagues in their daily work. Therefore, I want to warmly thank Pekka J. Korvenheimo, Ambassador and historian himself, for his continuous support, encouragement and topical criticism. Jan Wahlberg, Vesa Lehtola, Maarit Ritvanen, Maika Ortiz de Urbina, Beatriz Plaza Inchausti, Andoni Iturbe, Gerardo Polledo, Kustaa Multamäki and Roderick McConchie are among those to whom I am extremely grateful for their various kinds of help during the project. I wish also to thank Felicidad Santidrian and Javier Viguri and their whole family, who offered me a cosy home during my years of research in Bilbao. They introduced me, in the fi rst place, to the fantastic world of the Basque cuisine. During these years, they and good friends of mine such as like Christian Komonen and Mika Launikari were always able to help me to put life into perspective. Finally, I thank my parents Eero and Eva-Leena, and, of course, my dear wife Pia. They have shown incredible patience with my project and shared and understood all the good and bad moments of this solitary work. Without them this doctoral thesis would have never been completed. This thesis does not in any sense bind the Ministry for Foreign Affairs of Finland. I am, as a historian, responsible for the all the arguments and opinions it contains. Naturally, the errors that remain are the fault of the author alone. Ilkka Nordberg Paris, May 2005 7 1. INTRODUCTION When I studied at the University of Deusto in Bilbao (in Euskara or Basque Bilbo) in 1996 and followed the politics of the Autonomous Basque Country of Spain at close quarters for the fi rst time, the moderate Basque Nationalist Party, Partido Nacionalista Vasco / Eusko Alderdi Jeltzalea (PNV/EAJ)1 was already 101 years old. As a student of history I was interested in the fact that the PNV, which was founded in 1895, was the oldest political party still active in Spain, along with the socialist party of Spain, Partido Socialista Obrero Español (PSOE).