Prime minister Mariano Rajoy recently remarked that Spain had done as much as it could to cope with the economic crisis, and that now it was the EU’s turn to act.
This is so, no doubt, and it is also the turn of the Spanish political parties, which need to convey an unequivocal message of consensus to combat the fatalism engendered by the worst economic crisis of recent decades.
The message of consensus must be addressed to the Spanish citizens, enjoining them to set aside apprehension in favor of the determination required by critical situations; and also to the institutions and partner states of the European Union. A great part of the Spanish crisis proceeds from the distrust felt by the EU institutions and the markets over the solvency of Spain’s public debt, and its financial system as a whole. These reasons underlie the need for a political pact between the government of the Popular Party (PP) and the largest party of the opposition, the Socialist Party (PSOE), so the elected representatives of the Spanish public can defend basic economic adjustment criteria with a single voice, and share the political costs of the crisis.
The commitment to reduction of deficit, national and regional, must be the mainstay of this inter-party agreement, in which the two major parties are indispensable, though none of the others should hold themselves aloof. Deficit reduction is Spain’s only ready response to a problem of financing whose urgency can be measured in days or weeks. The pact has to commit the parties to defend fiscal discipline — that is, the stability objectives set for the regional governments, without any excuses or reticence. Each one of the signatory parties must pay the cost in electoral support that may derive from such a pact.
The agreement would not be complete if it did not extend to the need to bail out the financial system with public resources, if need be. An input of public money is the most effective procedure to restore the solvency of a bank, provided that the state has the option of retrieving the money later. The bankruptcy of a bank such as Bankia would endanger not only the Spanish financial system, already questioned by the EU, but would also cripple any chance of economic recovery in the medium term.
Such a political pact now seems remote. Weighing against it are factors such as the government’s disdainful attitude to the PSOE; its problems with the regional governments of Madrid and Valencia; and the PP’s absurd and stubborn refusal to investigate the Bankia crisis. Because, if a political pact of this importance is to bear fruit, it is imperative to determine once and for all what, exactly, is the real extent of the regional government deficit (something that the government has so far been unable to achieve) and to explain to the public how the Bankia disaster has come about. Because the ruin of Bankia is not the result of earthquakes or imponderable factors; the guilty parties behind it have names and faces.