A lack of dialogue

Despite the gravity of the economic and political crisis that Spain is suffering, Wednesday’s first part of the State of the Nation debate threw up few areas for a possible understanding between the country’s main political groups, the Popular Party (PP) and the Socialist Party (PSOE), and, as such, left little hope for rebuilding basic consensus. Prime Minister Mariano Rajoy — who, in his first State of the Nation debate as premier, showed himself to be up to the task, displaying both agility and coherence in his arguments — is convinced that his party enjoys the legitimacy to continue along the same lines for the remaining three years of its mandate.

He bases this on the assumption that his government’s performance in its first 14 months in power has allowed the country to regain the confidence of its European partners and investors and on the assertion that Spaniards “now have a future; a year ago they didn’t.”

One of the few areas that remains open to dialogue is the possible reform of the Constitution. The prime minister is no longer opposed to this, confining himself to underlining the need for any move in this direction to adhere to legal procedures. The leader of the opposition, Alfredo Pérez Rubalcaba, went much further in asking for the reopening of a constitutional debate that picks up on the debris surrounding the partly rejected Catalan Statute, and which favors the evaluation from the current system of regional government to one of a federal nature.

This is one of the few proposals put forward by the opposition that Rajoy did not slam the door on. The CiU’s congressional spokesman, Josep Antoni Duran i Lleida, warned that there is no solution for Spain without resolving the “Catalan question” and for this to be the case, parliament must reform whatever laws are needed, including the Constitution.

Putting down the opposition

The other area open to dialogue is the fight against corruption. Rajoy announced a battery of ideas that Rubalcaba accepted from the outset, including those of a “retroactive nature.” However, he took Rajoy to task about his failure to mention the serious problem of corruption in which the PP and the prime minister himself are embroiled, and his omission of any reference whatsoever to Luis Bárcenas, his party’s former treasurer, whose innocence he had sworn by in 2009.

It is evident that corruption is a matter that is of concern to Rajoy, no less so because of its international repercussions. “We cannot allow Spain to acquire a bad reputation,” he said. However, his credibility as a champion of the fight against this scourge is patently limited.

Judging by what was said on Wednesday, notice of the political blockade between the government and the main opposition party has been served. The PSOE condemned government policies that have broken with the basic consensus on respect for social rights and the model for public services, which it pledged to amend as soon as it is returned to government. In doing so, it served up the classical confrontation between government and opposition as if the current extent of national emergency lent itself to the partisanship of other times. Rajoy’s address was clearly aimed at lifting the morale of PP members and in convincing them that his government is right about everything — only that the fruits of what it is doing will not been seen immediately.

There are disturbing political aspects of current relations between the government and opposition. Rubalcaba said he was waiting for a response from Rajoy on his demand for him to stand down, while Rajoy in turn tried to put down the opposition by resorting to invective when referring to Rubalcaba as a “demagogue” and “sloganeer.” The prime minister wrested all value from the proposals put forward by the PSOE, claiming that neither Rubalcaba nor his party did anything while in power — or that whatever they did was wrong — in the areas where the Socialists now clamor for action, such as fiscal reform and evictions. “There are matters on which it will be very difficult for us to agree,” Rajoy retorted.

The deficit figure

Rajoy kicked off the debate on the economy by revealing that the public deficit for last year came in below seven percent of GDP despite the crisis. If this figure is confirmed, what we have here is one of the most surprising results in a long time. The figure exceeds the target required by the European Commission of 6.3 percent of GDP, but Brussels has already sent out enough signals to indicate that any figure below seven percent would be acceptable because of the extraordinarily difficult circumstances under which it had been achieved.

The debate also threw up a hint of change in the government’s economic policy. Apart from underscoring that the reform drive will continue “without a minute’s delay,” Rajoy also declared himself decidedly in favor of measures to stimulate economic growth when so far almost all of the government’s effort have been directed at fiscal adjustment and controlling the deficit and public borrowing costs.

The problem is that the “second generation” of reforms Rajoy announced will scarcely have any meaningful effect on growth and employment in the short term. The reform of the state pension system and the energy sector were announced without any details or timeframe. More detailed initiatives to foment youth employment are not without merit but will only be effective when the recovery kicks in. The announcement of allowing small and midsized companies to pay the VAT they charge after they themselves have been paid for the goods and services they provide (instead of in advance) had already been flagged, while the idea of extending the credit lines of the state-owned Instituto de Crédito Oficial to companies will do little to inject liquidity into the system.

The core question is if the ground is being prepared for a recovery, and the jury is still out on this. With the measures announced on Wednesday, which are probably necessary but not sufficient, a situation of economic growth capable of creating jobs does not appear to have been brought forward by much.