What is the political context of the Eurozone crisis period in Spain? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?
Spain’s political system: brief explanation
Spain’s political system is based on a parliamentary system, where the Government is designated by the Parliament and is accountable to it. The Head of Government is the Presidente del Gobierno (currently, Mariano Rajoy Brey) and the Head of State is the King (currently, Felipe VI). The Parliament is officially called Cortes Generales and it consists of two different houses, the Congreso de los Diputados and the Senado. Both the Congreso and the Senado represent the Spanish people (the Senado also represents the Spanish territory) and have legislative, budgetary and political control functions. However, the Congreso de los Diputados is clearly the more important of the two houses. Just to mention some examples: the most important members of the Government are members of the Congreso (e.g. the Head of the Government and his/her Ministers); the Head of the Government only appears in the Congreso to explain the agreements reached in Brussels (i.e. Eurogroup, European Council) and, in case an act is adopted by the Congreso and vetoed or amended by the Senado, the Congreso can still reject these vetoes or amendments by voting again (and attaining an absolute majority). The elections to the Congreso and the Senado are held (together) every four years. Since the electoral system is different (because the Senado includes territory representation considerations) the outcome of the elections is also different. However, for instance, the Partido Popular currently has an absolute majority in both houses. The political parties, and the grupos parlamentarios (parliamentary groups) that the former constitute, which are currently represented in the Congreso de los Diputados are the ones listed below. It is important to highlight that the grupos parlamentarios consist of a minimum of 15 members (in the case of the Congreso) or 10 members (in the case of the Senado). It is also important to take into account that there are two essential dimensions in Spanish politics: (1) left/right wing, and (2) regional nationalism.
· Partido Popular (PP)/ Grupo Popular – Right wing
· Partido Socialista Obrero Español (PSOE)/ Grupo Socialista – Centre left
· Convergència I Unió (CiU)/ Grupo Catalán – Centre right. Catalan nationalism
· Izquierda Unida/ Izquierda Plural – Left wing
· Iniciativa per Catalunya Verds (ICV)/ Izquierda Plural – Left wing. Green party
· Amaiur/ Grupo Mixto – Left wing. Vasc nationalism
· Partido Nacionalista Vasco (PNV)/ Grupo Vasco – Centre. Vasc nationalism
· Unión Progreso y Democracia (UPyD)/ Grupo UPyD – Centre
· Esquerra Repúblicana de Catalunya (ERC)/ Grupo Mixto – Left wing. Catalan nationalism
· Bloque Nacionalista Gallego/ Grupo Mixto – Left wing. Galician nationalism
· Coalición Canaria, Nueva Canaria y Partido Nacionalista Canario/ Grupo Mixto – Centre right. Canarian nationalism
· Compromís/ Grupo Mixto – Left wing. Nationalism from Valencia
· Foro de Ciudadanos/ Grupo Mixto – Centre right. Regionalism from Asturias
· Geroa Bai/ Grupo Mixto – Centre left. Vasc nationalism
Elections to the Spanish Parliament
(1) In March 2008, the PSOE (Partido Socialista Obrero Español) won the elections to the Congreso de los Diputados. The PSOE got 169 seats, the PP (Partido Popular) got 153 seats, and the rest of the parties represented in the Congreso got 27 seats in total: Convergència I Unió (11), Partido Nacionalista Vasco (6), Esquerra Repúblicana de Catalunya (3), Izquierda Unida (2), Bloque Nacionalista Gallego (2), Coalición Canaria (2), Unión Progreso y Democracia (2) and Nafarroa Bai (1). The PSOE decided to govern alone, which forced it to negotiate with other parties in order to be able to adopt important measures.
(2) In November 2011, the PP (Partido Popular) won the elections to the Congreso de los Diputados. The PP got 186 seats, the PSOE got 110 seats and the rest of the parties represented in the Congreso got 54 seats in total: Convergència I Unió (16), Izquierda Unida (11), Amaiur (7), Partido Nacionalista Vasco (5), Unión Progreso y Democracia (5), Esquerra Repúblicana de Catalunya (3), Bloque Nacionalista Gallego (2), Coalición Canaria, Nueva Canaria y Partido Nacionalista Canario (2), Compromís (1), Foro de Ciudadanos (1) and Geroa Bai (1). The PP obtained absolute majority. This is very important in the context of the crisis governance, because it allows the Government to continuously adopt urgent anti-crisis measures and then to ratify them in the Parliament without needing the support of other parties. In this sense, the opposition has repeatedly criticised the Government for its lack of will to reach agreements.
Economic and Financial Crisis Governance in Spain (January 2008- November 2012)
(1) In March 2008, the PSOE (Partido Socialista Obrero Español) won the elections to the Spanish Parliament. Although it was already evident that the inflation was accelerating, the unemployment was rising and the consumption of families was falling, the Government refused to speak about “crisis” and only admitted an economic “desaceleración”. In this context, social measures like the cheque bebé were maintained and new ones were introduced, like the refund of 400 Euros to IRPF taxpayers.
(2) In June 2008, Zapatero admitted that Spain was in a very difficult situation and adopted an austerity plan with the major aim of reducing public spending in the public administration. Some of the measures of this plan were: a major reduction of public job offers for 2009 (in relation to 2008), and the freezing of salaries of high positions in the public administration. The Government emphasised that only the salaries of high positions would be frozen, because of its commitment to keep the agreements with the syndicates of the public administration.
(3) In August 2008, the Government adopted a plan consisting of 24 economic measures mainly affecting the following sectors: transport, energy, telecommunications, environment, housing and financing of small and medium enterprises. From the point of view of social rights, it is important to highlight the introduction of measures to facilitate the financing for the acquisition of subsidised housing.
(4) In November 2008, the Government announced a new plan to activate the economy, consisting of 11000 million Euros for public investment, 8000 of which to be destined to town halls to finance public works (Fondo estatal de inversión local). With this plan, Zapatero hoped to create 300000 jobs in 2009.
(5) In January 2009, the Government presented the Plan E (Plan español para el estímulo de la economía y el empleo), which consisted of 82 economic measures basically in four different fields: aid to families, promotion of employment, modernisation of the economy and support to the financial sector. From the point of view of social rights, the most important measures are: the creation of a Fondo estatal de inversión local and the promotion of subsidised housing.
(6) In September 2009, the Government announced the increase of the IVA (VAT) and the abolition of the refund of 400 euros to IRPF taxpayers, introduced in March 2008.
(7) In May 2010, the Government announced a reduction of 15000 million Euros in social spending. The cuts mainly affected the salaries of public officials (-5% on average), the retirement pensions (freezing in 2010), the abolition of the cheque-bebé (introduced in 2007) and the Ley de la Dependencia. These cuts also had an important impact on the healthcare system and on the education system.
(8) In September 2010, the Government presented a labour market reform. This reform reduced the cost of dismissals and introduced new instruments to better control the unemployed.
(9) In June 2011, a reform of the retirement pensions system was adopted. The main innovation of the reform was the change of the retirement age from 65 to 67 years.
(10) In February 2012, the recently elected Government of the PP (Partido Popular) presented a new labour market reform. The reform reduced the costs of dismissals, allowed for collective dismissals of public officials and gave more freedom to employees to modify working days, salaries, timetables and positions.
(11) In April 2012, the Government announced a 10000 million Euros cut affecting the healthcare system and the education system. In relation to the healthcare system (7000 million Euros cut), the most important of the measures introduced was the copago (co-payment) of medicines, which would vary depending on the income of the citizens. For instance, pensioners (who did not have to pay for medicines before) will now generally pay 10% of the price of medicines. On the other hand, employed citizens whose annual income is below 18000 Euros will generally pay 40% of the price of medicines (which they were already doing), while those annually earning between 18000 and 100000 Euros will now have to pay 50% of the price of medicines. Finally citizens with incomes above 100000 per year will pay 60% of the price. Among the most important measures affecting the education system, it is important to highlight the increase of the maximum number of students per class and the increase of the amount of class hours per teacher.
(12) In May 2012, the Spanish Government rescued Bankia, the fourth largest bank of the country, injecting more than 23000 million Euros on this operation. By the end of May, Spain’s risk premium rose to 530 points, and the EU warned the Government that it should reduce public spending in order to control its public deficit.
(13) In June 2012, in particular on the 9th of June, the Spanish Government publicly announced its intention to ask for European financial assistance to recapitalise banks, and it stressed the fact that the Eurogroup had responded positively to this intention in its meeting held on the same day. Later, on the 25th of June, the Spanish Government officially requested financial assistance for the banking sector. The European Commission, together with the ECB, the European Banking Authority (EBA) and the IMF assessed and concluded that Spain fulfilled the eligibility conditions. Therefore, they negotiated and eventually agreed with the Spanish authorities the specific financial-sector policy conditions attached to the financial assistance, which resulted in a Memorandum of Understanding on Financial-Sector Policy Conditionality and a Financial Assistance Facility Agreement. As stated in the Memorandum, the main objective of the bailout is “to increase the long-term resilience of the banking sector as a whole, thus, restoring its market access”. Therefore, the key component of the bailout is to strengthen the weak segments of the Spanish financial sector. However, the text also stresses the fact that “there is a close relationship between macroeconomic imbalances, public finances and financial sector soundness”. This is the reason why Spain is compelled to ensure the attainment of deficit targets of 6.3% of GDP for 2012, 4.5 of GDP for 2013 and 2.8 of GDP for 2014. Moreover, the Memorandum “invites” Spain to introduce modifications in concrete fields such as its taxation system (so that it is “more supportive to growth”) and to implement the labour market reforms.
(14) In July 2012, in particular on the 13th of July, the Government announced a new set of measures. The most important reforms are the increase of the IVA (VAT), the increase of the Impuesto de Sociedades (Corporate Income Tax), the reduction of housing assistance, the cut of unemployment benefits, the modification of the Ley de Dependencia, and the reduction of public spending in public officials (e.g. the extra pay of December is abolished).
(15) In August 2012, the Government withdrew the tarjeta sanitaria to irregular immigrants, which means that their access to the healthcare system is now limited to very specific cases (i.e. maternity, emergency care). This measure is one of the reforms to the healthcare system adopted in April 2012.
(16) From September to November 2012, the Spanish press continuously reported about the “imminent” second bailout for Spain, in this case not for its banking sector, but for the Spanish public debt. On 26 October 2012 the Government announced the creation of a Commission to undertake a reform of the public administration to better manage public services and to avoid unnecessary bureaucracy and duplicities. Moreover, the Government adopted the regulation allowing for collective dismissals in the public administration, which is an implementation of the labour market reform of February 2012.