With protests and a secessionist threat, Spain’s problems are growing. Better a bail-out now than later
Sep 29th 2012
THE indignados who took to the streets of Spain in 2011 belied their name by being rather meek and just a little nerdy. One of their most passionate demands was for Spanish elections to involve more proportional representation. But today, after a year of austerity, Spaniards have cast off their restraint. Rowdy protests in Madrid and growing pressure for independence in Catalonia leave Spain at the mercy of dangerous forces, just when trouble is flaring up elsewhere in the euro zone (see article). Investors have taken flight. Unless the Spanish prime minister and his counterparts around Europe act, the single currency itself will once again soon be at risk.
On September 25th police used rubber bullets and truncheons on protesters who had formed a human chain around the Cortes, the parliament in Madrid. Unusually for Spain, the demonstration led to injuries and arrests. That same day Catalonia’s president said that his region would hold early elections, on November 25th. Because the vote comes after the rejection by Mariano Rajoy, Spain’s prime minister, of Catalonia’s demand for more control over taxation, it will be seen as a gauge of the region’s appetite for secession.
- In search of a dream
- »The rage in Spain
- Henrique and Hugoliath
- Hold your nose and talk
- Heading out of the storm
All this hits Spain at a bad time. Its recession has no end in sight. Judging by the fiscal balance at the end of August, the government will far exceed its deficit target of 6.3% of GDP in 2012. As The Economist went to press, the government was due to announce further austerity and structural reforms, as well as details of the latest scheme to recapitalise the country’s ailing banks. Mass protests will only make Mr Rajoy’s plans harder to implement. Catalonia accounts for a fifth of the Spanish economy; the region is the biggest contributor to the central government’s budget. Secession risks plunging what is left of Spain into bankruptcy.
Damage to Catalonia
Full-blown Catalonian independence won’t happen soon, if it happens at all. But even a tussle over autonomy would create prolonged uncertainty just when Spain needs to reassure the bond markets and fellow euro-zone governments that its problems are in hand. Catalans have genuine grievances—over a constitutional reform that was watered down by the courts as well as the fairness of its contributions—but their region is bankrupt, too, and its economy depends on trade with the rest of Spain. By choosing to take on Mr Rajoy right now, Catalans are playing with fire.
That, though, does not let the prime minister off the hook. Regionalism in Spain is an expression of discontent, much as support for populists is elsewhere in Europe. Despite having a commanding majority and unprecedented control over the regions, Mr Rajoy has been a disappointment. He has wasted precious time, lacked ambition and failed to convince his people that he holds the solutions to their problems.
Mr Rajoy’s best weapon against regional fission is to make central government work. He should accept that Spain will need the support of the European Central Bank—which means submitting the country to an official rescue programme. Mr Rajoy fears the loss of face, but the alternative is greater humiliation for less benefit later, when Spain is in deeper trouble and his own authority is further diminished. Until this week, European policymakers thought that the euro crisis was under control at last (see Charlemagne). Spain’s new indignados have shattered that illusion.