“This government has no project”

He arrives punctually, removes his coat, making a joke in the process, sits down at a glass table, and orders a coffee. His papers, filled with journalistic treasure: investigations into the banking sector, subsidies for Spanish soccer and who knows what else, are stacked in perfect order on another table. After a decade working for the European Commission, Joaquín Almunia, the former leader of Spain's Socialist Party, a minister in the government of Felipe González, former chief of the UGT union, and many other formers, will be leaving Brussels after the elections for the European Parliament in May. He seems comfortable with the parting, and is keen to talk, mainly about politics; about this crisis brought on by speculation; about Spain; about euro-skepticism; about the left; and even about the mistakes the Commission has made, the burdens it has imposed on EU member states: "We have copied old IMF practices that are not very good ideas."

Joaquín Almunia (Bilbao, 1948) knows that his political record is inextricably linked to his service under José Manuel Barroso, who has headed the European Commission for the last decade, but manages to avoid criticism during our talk. His most barbed comments are reserved for the Spanish government, highlighting the risk of "thinking that we have avoided the possibility of disaster because things have improved slightly." A supporter of the controversial single labor contract, he warns Prime Minister Mariano Rajoy against the idea that "everything has been done and that we can now lower taxes."

Almunia is a political animal, although the passage of time and the burden of responsibility has laid him open to the charge from some friends that he has drifted away from his original principles. "It isn't true that Europe is dominated by neoliberal orthodoxy, nor is it correct that financial deregulation is the reigning philosophy," he says at one point. Maybe not, but the crisis hasn't gone away, despite the optimism in Brussels. A diplomat who was in Russia during the collapse of the Soviet Union says that he kept waiting for some kind of Wagnerian apotheosis, but nothing ever really happened. The feeling is the same sometimes in Brussels: as though amid the worst crisis in decades, things are pretty much okay.

Question. Or are things much worse than they seem?

Answer. Events may not always translate into street protests, but things are going on. More and more people are suffering as a result of this crisis, and that means a loss of trust in our institutions. In the end, the truth will out: the danger is that the widespread feeling of discontent will translate into support for populist parties, nationalists, racists and the like. That is why we must respond at the political and social levels, and not just think about the economy.

Q. What could the EU have done to stop this discontent?

A. There is a growing feeling of mistrust toward politicians generally, not just in the EU. This discontent is not just about the European project; thinking that produces the wrong answers. There is a widespread mistrust of all institutions, toward all politicians.

Q. "Democratic impotence" is what Spanish sociologist Ignacio Sánchez Cuenca calls it.

A. Many of Europe's leaders have responded to the crisis believing that they should put their national interests first. But the very nature of the international crisis reveals the limitations of this approach.

Q. But there is no denying that people are disappointed by Europe. How come only the elite continue to support the European project?

Ireland is in a much better state than Greece; Portugal is on the right track"

A. Distinguishing between elites and the main body of people can sometimes help us understand what is going on, but it doesn't really explain much. Whenever you ask people what the best way to resolve the crisis is, the reply is always at the European level.

Q. That tends to be the case in countries where corruption is widespread; but in places where institutions are stronger, that's not so clear. And then there are the countries that were bailed out. Do you consider the bailouts a victory for the Commission?

A. Ireland is in a much better state than Greece; Portugal is on the right track. But this is a huge crisis; these problems require serious analysis, free of ideology.

Q. Has Brussels carried out that analysis? Has there been discussion at the political level about the euro?

A. Who is Brussels? The Commission and Van Rompuy [president of the European Council] have presented their thoughts on the second phase of the Union, which will require reforms that were not foreseen. But the reality is that the big decisions in Brussels are not taken by the Commission or Parliament: they are taken by the 28 heads of state and government. Fiscal policy decisions remain in the hands of governments, while monetary policy is the European Central Bank's remit.

Q. According to that thesis, the Commission, powerless and lacking in initiative, is unnecessary, redundant.

A. The Commission lacks power: treaties do not empower it. I am not saying that the Commission should decide everything; there are powers that could be devolved, as the British are always saying, to lower bodies. But there are aspects, such as growth strategy or reforms, where the Commission plays a key role.

Q. The Commission does have a direct responsibility over the troikas.

A. We return once again to the heart of the matter: the Commission is part of the troikas; what the IMF and the European Central Bank are doing there is another matter. But the troikas apply measures approved by governments, who provide the aid and impose the conditions. If we had been able to do what we believed we should have done...

Q. How would that have changed things?

the troika copied old IMF practices that are not a good idea"

A. With a more general overview, things would have turned out better. Would we have misjudged the pace of adjustment initially? Definitely. Everybody makes mistakes, and everybody then corrects their course.

Q. Did that correction come too late?

A. It is easy to make predictions in hindsight; that's not a game I like to play.

Q. Why do you think it was a mistake to include the IMF in the troikas?

A. Some of us warned against it from the start, but the member states decided. Otherwise, and they were the ones putting up the money. Having the IMF on board has certain advantages: we learned from their experience. Sadly, in some aspects, the troika copied old IMF practices that are not a good idea. And there was no democratic control, which is essential.

Q. The IMF has apologized to Greece. Why hasn't the Commission?

A. The important thing in politics is to learn from your mistakes and to act in consequence, not to beat your breast in public, which is simply an act of catharsis. In the case of Greece, things have improved.

Q. Do you accept that the situation in Greece is still potentially explosive?

A. I think that we have to ask ourselves how things would be if we hadn't gone in.

Q. The upcoming European elections will show how happy the Greeks are. What do you think will happen?

We are seeing a rise in populism, of xenophobic parties"

A. We are seeing a rise in populism, of xenophobic parties; there will be a lot of arguing in parliament, but the two main parties, the Social Democrats and the People's Party, along with the Greens and the Liberals, make up a huge, pro-Europe majority. But there are still risks: the main one being that the two chief parties are allowing the populists to lead the debate. In Britain, the anti-Europe UKIP has pushed the Conservatives into a euro-skeptic position, and David Cameron now seems opposed to the free movement of labor. These kinds of trends could emerge in other countries.

Q. What strategies do the social democratic parties have to channel their arguments?

A. The electorate knows that we lack any real answers. The left needs a rethink about how to organize public services, how to explain that immigration is essential, issues like these. We need to be able to talk openly about economic questions, and not use the arguments of half a century ago, which no longer mean anything. How are we going to improve productivity, to create the conditions for investment and job creation in a country like Spain, where unemployment is so high? We need to look for answers to these questions.

Q. The magic word seems to be flexi-security, but Spain is not Denmark. Would a single labor contract work in Spain?

A. The single contract is something that needs to be seriously explored. There are economists with widely differing outlooks who agree on the question of the single contract, and not just in Spain. With a 26-percent unemployment rate, we cannot rule any ideas out.

Q. With unemployment as it is, and with banks still refusing to lend to small businesses, can we really say that the Spanish bailout was a success?

A. There was a bank bailout. There are banks that are now back on track thanks to the recapitalization provided by the EU and to the restructuring that was carried out in this office. There are success stories; take Bankia, although others still need work.

Q. Your partners want more reforms. The IMF is calling for a 10-percent wage cut. Isn't the Commission effectively supporting this by recommending greater internal devaluation?

A. That is what [Economic Commissioner] Olli Rehn says. But what Spain needs is medium- to long-term vision.

Q. Does it have such a thing?

A. No. The government doesn't have a medium- to long-term project. The danger for Spain right now is thinking that we have avoided the possibility of disaster because things have improved slightly. It would be a mistake to think that everything has been done and that we can now lower taxes. That would be a huge mistake.