The opposition's debt to Spain

Since the Irish crisis erupted, the Spanish economy has been threatened by a progressive worsening of its debt situation, which would aggravate the recession and further tighten the strangled situation of public and private finance. The announcement of the Irish bailout has not only failed to calm investors; it has also strengthened the hypothesis of a periodical repetition of crisis episodes, which may finally undermine the proposition that "Spain is not Ireland," in spite of the solvency of the Spanish banks and the fiscal adjustments now underway. On Tuesday the differential of Spain's sovereign debt reached the record figure of 236 basis points, the costs of credit default insurance rose, and the Ibex 35 sank by 3.05 percent, dragged down by wariness toward the "Spain hallmark."

The priority political task is now the recovery of confidence in the solvency of Spanish finances. But the government is not the only institution implicated in this undertaking. The main opposition Popular Party (PP) has a manifest responsibility in the management of public expenditure. It governs in several regional and many municipal governments.

The seams of the economy, sorely strained by the lack of credit and the slump in demand, have begun to burst due to regional and municipal non-payment of their suppliers; jobs and companies are being destroyed, while, unfortunately, there are no coordinated policies for containment of expenditure and debt in the institutions that control more than 60 percent of the country's public resources.

The PP has a debt of responsibility to the Spanish economy. Part of the deficit that weighs upon our public institutions is attributable to decisions made by PP governments. It may shirk its responsibility, as it has so far been doing, hammering away at the government in its strategy of attrition without accepting any agreement that would improve economic stability. Or it may honor its obligation, accepting the negotiation of a sweeping agreement that would help to reduce the debt held by regional and municipal governments, and afford support to the government's austerity plan.

This agreement, which the government is obliged to propose in realistic terms, is an imperative necessity because in the short term it is impossible to maintain the present levels of regional and local expenditure. Furthermore, it is likely that new and drastic cutbacks will be required in 2011.

The PP is mistaken if it believes that the effects of the stormy debt situation will evaporate after the 2012 general election. If decisions are not made now toward the restructuring of certain regional administrations by means of a pact between government and opposition, confidence in Spanish debt issues will not be reestablished, whoever is in power. An agreement on regional government policy would reduce risk premiums and cool the expectations of success for future speculative attacks.

If the opposition does not cooperate now, it will sketch a clear and ugly portrait of what a possible PP government would be like, and will bear a heavy share of responsibility for any eventual aggravation of the economic situation.