“My mistake was to stay on during Zapatero’s second term”

Life-long public servant Pedro Solbes rose to become European commissioner and deputy PM He tells EL PAÍS about the situation he endured as a key member of Zapatero's government

Carlos Yárnoz
James Rajotte

He shouldn't have continued as economy minister during Socialist Prime Minister José Luis Rodríguez Zapatero's second term in office. This is the only thing that Pedro Solbes regrets after a lifetime of public service. The man who sat at the heart of power for several decades is speaking out now to reveal his thorny relationship with the former Socialist leader, which ultimately led to a well-publicized resignation.

"This is my story," he says to explain that his newly published memoirs are not about settling scores with the man who made him deputy prime minister only to ignore his advice at key moments of the economic crisis.

A native of Pinoso, Alicante province, Solbes has spent 41 years working in the public sphere - as a civil servant, a deputy, a minister (agriculture and economy), deputy prime minister and EU commissioner. Now 71, he says he is finally starting to feel like "a regular citizen."

It has taken Pedro Solbes four years to break his silence following his turbulent exit from the government in May 2009. His memoirs, simply titled Recuerdos (or, Memories), cover those last few years in power and reveal that he left because Zapatero refused to cut back on spending or balance the public accounts. "Pedro, this document [with your proposals] is unacceptable; what you are proposing involves two general strikes," the Spanish leader allegedly told him. This exchange, in January 2009, triggered Solbes' decision to step down. Since then, he and Zapatero have not been in touch with each other.

Pedro, what you are proposing involves two general strikes," Zapatero told me

Question. Your book seeks to explain your own role in the crisis, I presume.

Answer. Yes. I tried to recount the way I experienced those moments.

Q. Is this a settling of scores with Zapatero?

A. No. It's my story.

Q. You have been agriculture minister, economy minister, deputy prime minister and EU commissioner. What position gave you the greatest sense of power?

A. I never had that feeling of power that people think. It's true you could make decisions, publish decrees... but I always tried to negotiate. Power to take the initiative or suggest things, yes. Power to impose your will, no. That wasn't my style. I have always been a man who likes to reach agreements. There are red lines, but there must be negotiation, always.

Q. At this point, after those 41 years in public service, do you mostly regret things that you did or things that you didn't do?

A. I am at peace with what I did. My mistake was to remain with the Zapatero government during the second term. I think my time was over. My perception of the crisis was not the same as the prime minister's, yet at the time it was essential to have a common stance in order to act. Yes, I do regret that.

My perception of the crisis was not the same as the prime minister's"

Q. "I was there," you say when you talk about the crisis. Do you feel responsible or partly responsible for what happened?

A. The crisis is a very complex one. It began taking shape when we joined the euro, with measures that were taken by previous governments that led to an expansion of credit and housing, and to the expansion of corporate financing at the international level... It's true that we inherited all of that and were unable to make sufficient corrections. And the global crisis, as well as the financial crisis in the United States, ended up affecting us too. I therefore bear the share of responsibility that falls to me, no doubt about it.

Q. How responsible do you feel for the six million unemployed people in Spain?

A. Well, that's a process that began much earlier. There were a lot of latent problems when we came to power. We tried a few things during the first term, but it wasn't enough for a new growth model. We didn't do everything we could have. It wasn't easy, mind.

Ex-PM José Luis Rodríguez Zapatero (l), with Pedro Solbes in Congress.
Ex-PM José Luis Rodríguez Zapatero (l), with Pedro Solbes in Congress.GORKA LEJARCEGI

Q. What would you say to a jobless person?

A. I would tell him that all crises are eventually overcome and that we will pull out of this one. But above all I would tell authorities that they have to provide maximum support so that this difficult situation is less hard, and to aid the system so that the jobless can find alternatives.

Q. Surveys show that a high percentage of Spaniards still lay most of the blame for the negative current situation on the government of Rodríguez Zapatero.

A. Zapatero's administration was the one that had to face the bull when it got aggressive, but the problem had been building up for a long time.

Decisions ended up being made later, with more difficulty, and greater trauma"

Q. The fact is, the crisis hit Spain in late 2007. Yet in December Zapatero was publicly celebrating the fact that Spain's GDP was greater than Italy's and that the next target to reach was France. Just a few days later, it emerged that unemployment had risen five percent, the worst figure in five years. Such contradictions...

A. I think it is unfair to assess the crisis based on the events of 2007. The crisis really began in 2008, got much worse throughout that year, and got more complicated in 2009. That is why people do not understand the decisions that were taken in 2008; in hindsight, we might criticize that leaders said A, B or C when later things were actually much worse. But in 2007 nobody foresaw what would happen in the spring of 2008, especially what came later with the collapse of Lehman Brothers. The greatest complication came in 2010 when the economic problems affected sovereign debt.

Q. But in the spring of 2008 there were already facts such as the bailout of Bear Stearns in the US and the nationalization of Northern Rock in Britain. Meanwhile, back here, authorities were working on tax breaks and more public spending...

A. During those months, electoral promises weighed heavily. In the first quarter of 2008 we still had relatively high growth and a budget surplus... I did not support those measures, but they were on the table, and some of them were implemented when everything was already getting more complicated. But we must not forget that during this period there was a debate on how to proceed. The alternatives were: either making decisions to reduce spending, or, given that the forecast was a V-shaped recession due to end in 2009, using our margin built up over previous years - we had margins in debt (low), social security (surplus)... - to forge ahead without trouble. But it turned out that everything took a turn for the worse in 2009, 2010...

Q. The tsunami really hit with the collapse of Lehman Brothers in September 2008.

A. That's the big issue, the thing that changed everything else.

Q. How did the Zapatero administration handle that disaster?

A. That was when I put my entire team to work to see what could be done. The budget was already in parliament. Pulling it would have created more problems, so it was better to approve it and take measures the following January, in 2009.

It was hard for me to come back from Brussels but I felt indebted to the party"

Q. What measures did you want to put in place?

A. First, defining a fiscal policy with a medium-term stability target; that is to say, accepting a deviation from the target [three percent of GDP], with a commitment to return to three percent in the following years. We were starting to have a major competitiveness problem, and so we had to slow down wages and adjust pensions. A significant effort had to be made, and so a three-year salary freeze was discussed. It was essential to carry on with reforms. And the financial system had to be restructured. There were still no solvency problems, but the Bank of Spain was already in favor of mergers between savings banks, the weakest link in the system. That would have been impossible to suggest during the election campaign, though.

Q. Zapatero replied to you in January 2009 that this plan would cost him two general strikes and that he would not agree to it.

A. It is the political assessment that many make: it is difficult to adopt these measures, let's wait, let's not adopt them... But waiting is not better - it just makes things worse. Decisions end up being made later, with more difficulty, in a more traumatic way.

Q. What would have happened if these measures had been adopted back in January 2009?

A. I don't want to do science fiction here. All I'm saying is that at least we would have started to react a year earlier, and everyone can reach their own conclusions from there.

Q. I suppose you couldn't avoid an "I told you so" feeling when in May 2010 Zapatero announced drastic cutback measures of that nature.

A. I never gave an opinion on what happened that month. Before or after, measures had to be taken.

My public service side flared up, and I felt leaving would be taken the wrong way"

Q. And do you feel that the measures taken by the current Popular Party (PP) administration have been adequate?

A. Until now I have maintained a stance of not voicing an opinion on what happened after I left the government. But I think the PP has continued, expanded and deepened the necessary adjustment policy, which the Zapatero administration initiated in May 2010, and I would also say that the PP is benefiting from a much more loyal opposition than the Socialist Party enjoyed during the toughest times of the crisis.

Q. Was it Zapatero who invited you to leave or did you take the initiative?

A. I offered him the option of leaving before Christmas of 2008 and I told him I would bring him a paper with the things I believed needed to be done. His reply was that this paper implied two general strikes, and that's when I assumed that there was nothing more for me to do there. So at that point my feeling was that the problems were no longer mine to deal with, and that all I had left to do was wait to see when I would get replaced. My impression was that if it hadn't happened earlier, I would have left during the debate over the spending ceiling, which would have proved the excess spending and the need to curtail it.

Q. So you felt very relieved when you left the government.

A. Yes, but not over the fact of leaving; rather, over the fact of resolving the contradiction that had been there since the elections: I had run for office, albeit with great hesitation, with the intention of implementing certain measures and corrections, and months later I saw that my views did not fit in with those of Zapatero, and since he was the prime minister, my leaving made things easier and everything was more coherent after that.

Germany is taking a long time to accept its role as leader of Europe"

Q. But even the first term got off to a bad start for you. At first you didn't want to leave Brussels and your post as a commissioner.

A. It was very hard for me to come back. I did so because I felt indebted to the Socialist Party, which had put my name forward to be commissioner.

Q. And because Zapatero accepted your conditions.

A. Yes, the main issue I put to him was implementing budget discipline. In the first few months I had some tension with the other ministers, who all wanted to spend more, although it is true there was a favorable economic context then. And I wanted to reduce debt as much as possible to prepare for a potential period of difficulty. There was tension and I was tempted to leave, but after weighing the pros and cons, you reach the conclusion that you can only leave once and that the effect you will produce if you do so is not the best for the country... and so you end up staying.

Q. Olof Palme, as your book reminds readers, used to say that the prime minister should almost always support the economy minister. It didn't happen in your case...

A. That model was respected when I was economy minister under Felipe González. Under the Zapatero model, the prime minister appropriated the ability to make decisions on the major economic issues. That turns the economy minister's opinion into just one more voice. This voice may be louder, but there are others. A Prime-Ministerial Economic Office was set up, and its views did not always concur with those of the economy minister. That led to tension in some cases, even though my relations with that office were not as bad as some people think, nor as good as I would have liked.

Q. The impression was that there were permanent counterweights working against the economy minister within the government and even the prime minister's closest circle.

A. That was one of the reasons why at some point I considered leaving. That is also the reason why I decided not to stay on during the second term.

Q. When were you first tempted to leave?

A. Zapatero's decisions regarding the minimum salary, in December 2004.

Q. But you'd only been deputy prime minister for six months...

A. Yes.

Q. The problems began very early, yet you were in government for five years. It must have been very hard.

A. At the personal level, yes, it was tough.

Q. But if everything went badly from the beginning, how is it possible that you decided to stay on for Zapatero's second term?

A. Everything was in readiness for my departure. Until the summer of 2007, I was certain that there was no way I would be staying. But at the October IMF meeting I noticed a mood of concern. And that is when my public service side flared up, and I told myself: "Leaving now will be taken the wrong way, just when things are getting difficult." And that is the reason why I accepted staying on for a while, maybe a year or two. And then I ran a second time because Zapatero insisted.

Q. How would you define the effects of the crisis?

A. The consequences have been devastating for a country like ours, with growth based largely on construction. The impact is not balanced across society. Part of it has not been affected. And the other part has been hit terribly, especially in terms of unemployment.

Q. Is another real estate bubble brewing?

A. I would rather not talk about what happened after I left government.

Q. And what did your administration do to deal with its own bubble?

A. First, given that there was a lot of empty, very expensive housing, we encouraged rentals. The results were limited. The other alternative was increasing the amount of subsidized housing. But this did not stop the demand for free market housing. Plus, there was another measure up for debate: eliminating the tax breaks for home purchases, which is what international organizations were asking us to do. We threw the idea around, and found ourselves with a Senate resolution in which all the groups voted against it. All of them, even the Socialists.

Q. There was just no stopping the trend...

A. No. People kept buying properties for resale, and the bubble kept growing.

Q. Some people are asking themselves whether another model is possible for Spain.

A. I don't know. I do know that the previous one no longer works, so there will have to be another model. That is the battle that we began: more education, more technology... Housing and infrastructure at one point represented nearly 20 percent of annual GDP. Elsewhere in Europe it was six percent. We turned a means into an end: construction is a means to achieve a set of benefits, but we turned it into a means for economic growth.

Q. And the savings banks went under because of it. Was there also no way of stopping that debacle?

A. The savings banks respected the rules, to a greater or lesser degree, and they were carefully monitored by the Bank of Spain. We were aware that in an expanding economy, the financial system had expanded as well. Going back to normal necessarily meant a smaller financial sector, and that would affect savings banks more than commercial banks. But there was a law that had been approved a few years earlier, giving certain powers to regional governments over their savings banks. Changing this law before a general election seemed difficult. Doing it afterwards was also complicated unless solvency issues turned up. In any case, there's been all sorts of situations with the savings banks: those that were mismanaged [...] went under; but there are a lot of lenders that are absolutely solid.

Q. Was it complete nonsense to let politicians run the savings banks?

A. Of course, of course. The inconsistency lay in accepting a model dominated by non-professional elements. It was a delicate matter. In any case, the savings banks issue was not well resolved.

Q. How would you rate the actions of European leaders during this crisis? More specifically, the role of Angela Merkel?

A. I defend the principle of austerity, but balanced out by spending. Of course spending requires financing, and if you don't have that... Germany, on the other hand, is taking a long time to accept its role as leader of Europe.

Q. It positively resists it.

A. Enormously. Because of its history and its commitments. But reality is what it is, and I have hopes in the new coalition government with the Social Democratic Party, which should compensate for some excesses and result in greater German involvement in Europe.

Q. Because of one thing or another, citizen disaffection for the EU is growing enormously in many countries, especially in Spain.

A. Yes, but Europeanism cannot be based on them giving us money and us spending it, not always in good ways.

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