Turning Ugly: Spain's deficit

The game is as good as up for PSOE. The socialist government of José Luis Zapatero faces the prospect of having its bottom soundly spanked at the national elections in November. The standing down of Prime Minister Shoemaker has not proved sufficient to revive PSOE's fortunes. His Aleksandr Solzhenitsyn-lookalike replacement, Alfredo Rubalcaba, is destined to be cast into the Gulag of a political wilderness, thanks to the Partido Popular securing an absolute majority of at least ten seats.

The latest poll suggests that PSOE supporters have all but given up. They know they're going to get whipped, just as PSOE supporters in the Balearics knew they were bound for a hiding prior to the regional elections in May. The local PSOE-ites chucked the towel in well before May, so clear was it that José Bauzá was heading for the presidency.

What has helped to make PSOE supporters even more disaffected than they already were is the agreement struck between PSOE and the PP to amend the constitution and enshrine within it the principle of budgetary stability. It was an extraordinary step. The Spanish don't, as a rule, do constitutional reforms.

What makes it even more extraordinary is the fact that it does not obviate the need for a separate change to legislation, one that will seek to ensure that Spain's budget deficit is reduced to the European cap of three per cent of GDP by 2013. This change to the law will not actually be formalised until next year. After the elections, therefore.

The bizarreness of both the constitutional amendment and the proposed change to legislation is that it is a carve-up between Spain's two main parties. PSOE may already have accepted that it will lose the elections, but it has been acting as though it were, well, as though it were part of a coalition. It is small wonder that other parties, such as the regional powerhouses in Catalonia and the Basque Country, are somewhat miffed.

The case for budgetary stability is unquestionable, but playing the constitution card, given that legislative means exist to establish limits to spending and deficits, is unnecessary and can potentially be seen as an undermining of Spanish sovereignty. It has been denied that the European Central Bank has put pressure on Spain to invoke the constitution in respect of budgetary stability, but this is how it is being seen in some quarters.

Theoretically, a constitutional change requires a referendum, even if legally the change can be made without recourse to popular approval (or disapproval). But the absence of a referendum, the suggestion that Europe is in some way interfering with Spain's sovereignty and the collusion between PSOE and the PP raise a question as to quite how democratic this all is.

PSOE, and therefore Rubalcaba, may have seen the agreement as a last throw of the dice to try and recoup some electoral support, but if they did, it was an odd way of going about this. What they have done is to make themselves hostages to the agreement. They will be hamstrung as an opposition and will lack credibility when the PP steamroller through austerity measures that will make those that PSOE has already introduced seem like profligacy.

Who will there be to offer an effective opposition to Mariano Rajoy when he becomes prime minister? With PSOE embarrassed into silence, the opposition will fall to small parties or regional parties (and the regions, such as the Balearics, are as affected by the stability agreement as is the national government). But the main opposition may not be parliamentary. Step forward, once more, the "indignados" and the 15-M movement that was behind the occupations of squares across Spain before, in some instances, the police waded in.

Sorry to have to say this, but things are going to turn ugly. And they may get uglier still. The constitutional amendment is not just bizarre and unnecessary, it is also a potentially dangerous precedent. The PP, emboldened by what, for most people, is an arcane matter of economics, might just eye up some other parts of the constitution, parts that are rather more understandable to José Public. Language, anyone?

In the Balearics, seen as the test site for what Rajoy has up his sleeve, Bauzá has been giving the previous PSOE-led administration a very public verbal beating, tossing around incredible sums of "catastrophic" debt left behind by PSOE, amounts that it denies. The Balearics are all but bust, we know this, but Bauzá's is a tactic to paint as bleak a picture as possible and so try and ensure that the real pain to come is met with acquiescence. Unfortunately, he, and Rajoy, will not get quiet acceptance.


Any comments to andrew@thealcudiaguide.com please.