Text in which the author defends ideas and reaches conclusions based on his / her interpretation of facts and data

The canary in the mine

Spain, unlike Italy or Greece, has a problem with private, not public debt; before the crisis its public finances were in order

In recent weeks the Spanish government - once a model of austerity, reforms and cutbacks - has come to be at odds with the European Commission and with Germany, all on account of the government's recent announcement that it will not meet the deficit objective assigned for 2012.

The situation allows for two readings. For the Commission and for Germany, the announcement weakens the credibility of the recent Fiscal Pact, and endangers the efforts made to stabilize the euro zone. For Spain, however, the new objective has been set from a contrary viewpoint. It perceives that, at least in its case, the markets are more concerned about weak prospects for growth and employment than about the short-term sustainability of public finances. In other words, while Germany, the Commission and others think that Spain's announcement pours more firedamp gas into a mine that's already saturated and is about to explode, others think that Spain, on the contrary, is the canary bird in the mine that is announcing the danger deriving from the inflexibility of too-rigid rules that attempt to impose a single solution on different problems.

Remember that Spain, unlike Italy or Greece, has a problem with private, not public debt, since before the crisis its public finances were in order, even more so than those of Germany itself. While in the case of Italy or Greece, investors were frightened at the high levels of debt, and the absence of reforms, in the Spanish case their concerns were different, centered not on the government's capacity to adopt reforms (which they take for granted), but on the capacity to generate growth and employment, and to restore the normal functioning of the financial system.

As diplomats say, being in the right has two parts: one, being in the right, and two, more infrequent, others admitting that you are in the right. It is revealing that in support of Spain, a country whose international image is in the dumps, two of the world's most influential economic commentators have spoken out: Paul Krugman of The New York Times, and Martin Wolf of the Financial Times. Spanish diplomacy, accustomed to long attrition in diehard battles incomprehensible to others, at last has an opportunity that doesn't happen every day.

True, when one is up to one's neck in the water, it isn't the best time to start thinking about what one will do when the crisis is over. But in the present circumstances this vision of what we want the EU to be, and within it, of what Spain we want to build and what role it is to play, is not an arbitrary whim, but a necessary condition without which we cannot climb out of the crisis. It is a matter, not of establishing alliances against Germany or the Commission, which would be meaningless, but of paying close attention to the way in which Italy's Mario Monti is showing that reforms and cutbacks, properly handled, generate legitimacy, and thus a capacity for negotiation that had been lost, and which can anew be exploited to shift the terms of the present debate over austerity and stimulus measures onto a plane more favorable to Spain's interests.

From this point of view, Rajoy's references to "sovereignty" in defense of his decision follow a line contrary to the more desirable one. Whatever sovereignty may be, if it is a matter of the capacity to set public deficit objectives for the fiscal year, it is obvious that Spain is not a sovereign country. To say otherwise is to deceive oneself and public opinion, which rightly perceives that, at the present time, in a monetary union subject to huge pressures from the financial markets, this sovereignty is a fiction. So we should take courage and not stand on the defensive about our sovereignty. On the contrary: we should force a really Europe-wide debate, and play a leading part in it. If we are canaries, we ought to be singing.

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