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The Spanish 'adios'
by Pablo Ouziel
April 6, 2008

When trying to understand the geopolitical reality of Spain, one must never forget the two military bases the United States actively maintains in the country. One of which currently serves as the main transit point between the United States, Iraq and Afghanistan. In 2004, following a large-scale terrorist attack in the country’s capital, attributed to Islamic terrorists, Spanish voters swept the ballot boxes and demanded a new foreign policy. For a brief moment during the after shock of destruction at home, the Spanish population rose to a leading role in the resistance against illegal wars and occupations. Soon after, José Luis Rodríguez Zapatero became Prime Minister and Spain’s troops were removed from Iraq, silencing angry Spaniards.

Four years later, this transitioned and fully-fledged western democracy, which is yet to declare Franco’s regime as illegal, presented itself in front of the ballot box. Mr. Zapatero fell seven seats short in the 350-member lower house of parliament from winning the absolute majority. He now has to build a governing coalition either with the Catalan nationalist coalition Convergence and Union, which won 11 seats, the Basque Nationalist Party, which won six seats, or to rally for support from several smaller left-leaning regional parties and the United Left. His job during this second term will be to keep the country united, save it from economic disaster, and aligning Spain’s Foreign Policy with the wishes of the people who voted him into power. All of these will indeed be hard to fulfil.

Over the past decade Spain's economy has been one of the strongest in Europe, with 14 years of straight growth, and a booming property market. Now the housing market is on the brink of collapse, inflation is running at a 12 year high of 4.4%, and unemployment is soaring. Spain, like the United States, is going through the end of a housing boom and the start of a credit crunch, however, the weight of the housing sector in Spain is three times that of the housing sector in the United States and Spain does not have a competitive enough industry to substitute construction.

According to Eurostat, in January Spain experienced an 8% reduction in construction, the most drastic in the Euro zone. Much of Spain’s “economic miracle” has been driven by consumption and construction. Construction has come to represent 20% of the Gross Domestic Product and 20% of the labour market. In the last quarter of 2007, Spain's construction giants were badly hit with combined losses totalling more than 200 million euros. While the German Commerzbank believes a recession is reaching the country, the Association of Spanish Savings Banks, FUNCAS, has said that the slowdown in the economy will be greater in Spain than in the rest of Europe.

In the last few years Spain has seen the construction of 800,000 new homes per year and there is no doubt that housing has become unaffordable for most Spaniards entering the market, just as there is no doubt that there are over three million unoccupied dwellings held by speculators. According to the Bank of Spain, properties are 40% over priced. To add to this, a USB bank study says Barcelona is not far behind New York when it comes to being one of the most expensive cities in the world. Sadly Barcelona’s salaries do not align with the city’s cost of living.

In the last eight months, Spain's six largest banks, Santander, BBVA, Popular, Sabadell, Bankinter and Banesto have watched a fifth of their stock market value (EUR 36.7 billion) being wiped off. Some 60% of bank loans are property-related and a spokesman for the banking industry association AEB says; "The number of people not repaying loans is increasing in line with the direction of the economy." Delinquency on credit given by Savings Banks to individuals and companies rose in January to 1.08%, the highest since October 2000. Delinquency on mortgages grew 46.5% in 2007, and in January it grew unexpectedly to the highest since 1994. The volume of delinquencies in Euros increased 60% since the beginning of 2007. The Bank of Spain has advised the Savings Banks to try and reduce their exposure to the housing market.

Unemployment, which never fell below 8 per cent, even in the good times, has risen for the past five months in a row. It is rising fast specially amongst immigrants working in the construction sector where it has increased by 92% in a year. The increase in agriculture is even higher, at 139%. In the past eight years, the Spanish population has risen from 39m to more than 45m. Mr Zapatero legalised 700,000 illegal immigrants in his first term in office. Many have already lost their jobs and the cooling economy has Spaniards turning against them, especially now that 750,000 jobs are expected to be lost in the construction sector alone, over the next couple of years.

Although Spain's First Deputy Prime Minister Maria Teresa Fernandez de la Vega, yesterday said that Spain’s economy is no cause for alarm. Faced with a global economy, which western investors are comparing to the “commodity shock” experienced during the 1970s oil crisis, Spain is going to have to face reality and acknowledge that the country is living well over its means. People in the country will soon understand that in the Government Bonds market, global investors are already dumping Spanish securities, because Spain mirrors most closely what is happening in the United States.

As for Spain’s foreign policy, indifferent of what is promoted through the mainstream media, Spain is behaving like a good “client state.” Militarizing and investing in the war against terror during Mr. Zapatero’s first term in office, Spain’s military has been busy on international missions just as it was during the times of José María Aznar. Today as Mr. Aznar celebrates the five years of war in Iraq, proclaiming on the BBC that he would do it all over again, the Fundación Alternativas, - of which Mr. Zapatero is member of the board of governors - is advising the government to reconsider the Spanish Military’s 3000 troop limits on foreign participation.

Spain already has 258 effectives in Bosnia-Herzegovina, 778 troops in Afghanistan and 1100 soldiers in Lebanon stationed at the ironically named military base "Miguel de Cervantes". More important however, is Spain’s military presence in Kosovo where Spain currently has 585 soldiers and 14 Civil Guards. These servicemen and women were stationed under a peace mission led by NATO. After the unilateral declaration of independence by Kosovo, which broke all the accepted rules of International Law and which the Spanish government did not recognize, the Secretary of State for Foreign Affairs Bernardino León, justified Spain’s continued military presence by saying; “If the troops had been removed, Spain could not help as it is helping now.” However, with the Spanish Security Services, confirming that ETA is “planning a violent summer campaign in Spain’s popular tourist destinations,” for Spain, with regional conflicts yet to be resolved, actively collaborating with the international community to protect by military means the territorial segregation of another sovereign State, could be potential suicide.

The fact remains that George Bush has just authorized weapons to be sent to Kosovo because its independence “favours the security of the United States and global peace.” It is also a fact that under Mr Zapatero, Spain’s fight against terrorism has followed a similar trajectory to that which is currently being denounced in the United States. On January 19th, Indian, Roshan Jamal Khan, along with 14 other people, was detained in Spain and charged with plotting a terrorist attack; The Indian Ministry of External Affairs says it still has no word from Spain on the charges that have been pressed against Khan. Also, in a chapter dedicated to Spain, the UN’s Manfred Nowak, confirms that various NGO sources within the country, have informed him of the fact that the Spanish security forces systematically ex-communicate suspected ETA terrorists, and that just in the first ten months of 2007, restricted the rights of 65 arrested in the Basque Country. Of these 65 ex-communicated detainees, at least 24 have denounced torture during their stay at Police Stations.

During the times of Aznar, we often heard the famous phrase España va bien (Spain is going well), it has been a while since we last heard it, and it is not surprising, for Spain is not going well at all. Spain is in a lot of trouble because of the dream of a richer and better society modelled on that of the United States. All Spanish people can do now, apart from staging a run on the banks, is to brace themselves and hope that Spain’s guarantor, the United States, will stay afloat and remember to save us, even though we democratically requested to pull our troops out of Iraq. Otherwise, Spain might as well say 'adios'.

Pablo Ouziel is a sociologist and a freelance writer based in Spain.

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