It’s official. After the debacle of Greece, Portugal and Ireland, the time has now come for Spain. The big Spanish banks are going to be ‘rescued’ -and only for a start-, by the not negligible amount of 37 billion euros from the European Financial Stability Facility (EFSF), i.e. the European bailout funds. While the rest of the Spanish population languishes exhausted and discouraged because of the high rates of unemployment, or the increasing layoffs in health and education, the Spanish financial system has all the support of the EU to sponsor its survival.
Alberto Garzón is a Spanish deputy for Izquierda Unida and also the youngest member of the Spanish Parliament. He specialises in economy, which he best serves cold and dressed with truth. He has a goal to reach: bringing light to the hidden economic interests that are being cooked behind the Spanish ‘rescue’.
Actually it is more appropriate to call it ‘kidnapping’. The reason is that technically the only rescued ones are the creditors of the banks. The creditors are banks -mostly German, French and American- that during the golden years of the Spanish economy “bubble”, borrowed credits in a large majority of cases to the Spanish banks -now being in the red- but also to the private sector, especially to real estate companies.
Earmarking money to the financial systems of the crisis countries, means to prevent the financial system bankruptcy and thereby keep from themselves from paying back the international banks – the creditors -who also impose the economic conditions to be applied on the ‘rescued’ country.
Additionally, from the social point of view, the economic conditions that the “rescue” involves ultimately affect the quality of life of the rescued country citizens. That already happened in the 80s with the so-called structural adjustments in Latin America, and now is happening in the European periphery countries or mostly known as P.I.G.S (Portugal, Ireland, Greece and Spain). The rescue is going to bring aggressive reforms of the labor market which will be gradually translated in a privatisation of public services, pay cuts, deterioration of health and education, etc. In brief: this rescue will only expand inequality and it will spread poverty and misery, even if this is already happening.
On the one hand, one of the main consequences of the ‘rescue’ of Spain is that the economic recession will eventually increase and therefore the state will have less income with which to cope with a growing expenditure of financial charges due to its public and private debt. A bailout (or rescue) entails opening a door to new bailouts and it’s going to be the third time for the Greeks.
On the other hand, the European institutions -which certainly are not democratic- are not seeking the welfare of society. Not even seeking employment. They seek to ensure financial stability, which in this context means that they want to make sure that the banks and investment funds, managed by them, will still receive the money they lent during the years of the ‘economic bubble’. Europe only seeks to guarantee that the resources of these large financial institutions won’t be affected by assuming losses.
In that sense, as I said before, the rescue is truly lucrative for the creditors who don’t suffer losses at any time, and for the whole financial system, that despite being in bankruptcy, is saved; additionally the very large fortunes can dodge the crisis by investing in international financial markets.
Angela Merkel is certainly succeeding in imposing her conditions and modifying, not only the growth model of South Europe, but also the model of society. Germany is doing what she wants with these countries because governments of these periphery countries are allowing and applauding it. If the P.I.G.S countries accept the current institutional framework of the neoliberal European Union and the ‘Troika’*, they have no choice but to comply with the European standards. Nevertheless, the alternative is always desirable: to change or break the old neoliberal frame and build a new one that allows reconfiguring the economy and society. Even though that would obviously put into question the benefits of the richest countries.
Apart from that, Spain as well as the other P.I.G.S countries could claim the so-called international law of the ‘Odious (or illegitimate) debt’, with which establish a social and economic criteria for which part of the debt should be considered illegitimate. For example, Spain could claim that its debt is the result of the “need” to bail out banks, or, alternatively, that it is the consequence of a game of arbitrage played by international banks that borrowed public money at one-percent interest and loaned then to the States at five-percent interest. Based on this criterion the burden of debt could be modified.
What’s more, abandoning the euro is always an option, but not without economic and social consequences. In any case it would be an assessment as to whether the gains and losses of such a measure are affordable or desirable for most of the people of the country. Greece is probably already in a stage where it is much better to run off than to stay in Europe, and Spain could be very soon in the same situation.
Today we are immersed in a global problem that reflects a political, economic and institutional crisis. Therefore it cannot only be solved by economic measures that are technically feasible, but by a political reconfiguration that would allow people to support and sustain these measures. Of course, these necessary policies conflict with the wishes of the most powerful ones.
We need a broad social base of millions of voices to help push policy the right direction to enable progress. The opposite of this is the domain of some “technocrats” who are selling the idea that they are making decisions for everyone’s benefit, but they’re clearly being ideological, i.e. pursuing a particular and hazardous model of society.
Troika*: A EU decision group formed by the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB).