A hard line on economic adjustments

On Saturday, top executives of Spain's 37 most important companies (representing 40 percent of Spain's GDP, as has been repeatedly emphasized) attended a four-hour meeting with the prime minister, José Luis Rodríguez Zapatero. The mass nature of the encounter raises doubts as to its real usefulness - that is, its beneficial effects on the depressed Spanish economy.

However, there are no doubts about the political profitability of this public encounter between the government and the country's principal businessmen and executives, or about the message this conveys to the markets.

The substance of the meeting can be rapidly summed up: the prime minister wanted to say - in the context of an elite forum where the qualified nature of the audience would lend more credibility to his words - what investors are demanding that he confirm and accredit every day: that he will rapidly and effectively implement the economic reforms now underway. These are the reforms in Spain's financial sector, the labor market and the public pensions system.

This is a matter of the greatest importance, because all the clarity that Zapatero showed earlier in defending a reform of the pension system has since shaded into doubts and delays, in the words of his labor minister. And the times are not favorable to double-talk: the prevailing, accepted line must be either that of the prime minister, or that of the labor minister.

We get the impression that Zapatero chose such a distinguished gathering as a forum in which to make a clear statement that it is his political line (the pension reform must begin now) that must be taken into account by the markets - that is, by the potential purchasers of Spanish debt.

The prime minister's call on major Spanish firms to invest and create employment in Spain is not as childish as it appears. In view of the financial pressure on Spanish debt, such moves by the major firms might impose a more general trend toward assuming debt in Spain, and of investing in countries not suspect for the markets. It is a question of the relative quality of assets and liabilities.

Lack of conviction

It is unlikely that the prime minister's speech altogether convinced those attending. Such conviction will perhaps emerge in the second meeting, which Zapatero is to call "in two or three months," provided that the economic reforms have been effectively concluded.

The call reveals a further institutional shortcoming in the Spanish economy, and this is the paltry role of the employers' association CEOE. While the unions have lost credibility since the general strike, owing above all to their inability to understand the gravity of the Spanish crisis, the employers' association has become a hollow set of initials, with no opinion to offer, and no business leadership.

The upcoming elections in the CEOE may be an opportunity for Spanish companies to elect a president with real prestige, whose voice will be heard in the political sphere, and who can reach practical understanding with the union organizations.