How to use this Page

By William Chislett

Spain has a new king, following the abdication of King Juan Carlos earlier this month in favour of his son, Felipe VI. The move comes at a time when Spain is emerging from a long period of recession with an unemployment rate of 26%, a tarnished monarchy, a widely discredited political class, and a pro-independence movement in the region of Catalonia. Like his father almost 40 years ago when he succeeded the dictator General Franco as head of state, Felipe VI faces enormous but very different challenges.

Juan Carlos’s grandfather, King Alfonso XIII, went into exile before Spain’s 1936-39 Civil War. General Franco, who won that war, sidestepped Juan Carlos’s liberal and exiled father, Don Juan, and appointed Juan Carlos instead, believing he would maintain his regime as he had been educated in Spain under Franco’s aegis since the age of 10.

Juan Carlos knew that the only way to secure the monarchy was by piloting the transition to democracy. In 1981, when Francoist diehards tried to turn back the clock and staged a military coup, Juan Carlos faced them down and won the day. As a result, he became a hugely popular figure and many people became juancarlistas as opposed to outright monarchists. Under him, Spain joined NATO in 1982, entered the European Community in 1986, and enjoyed the longest period of stability and prosperity in its modern history.

In recent years, however, Juan Carlos and the monarchy as an institution have lost support. The king’s son-in-law, Iñaki Urdangarin, is currently embroiled in an ongoing investigation into alleged financial irregularities and tax evasion involving the misuse of public funds, which has made him persona non grata in the royal family. Urdangarin, who denies any wrongdoing, is expected to stand trial. The king also did not endear himself to his subjects at a time of national crisis by going on an elephant-hunting trip to Botswana in 2012 (for which he later publicly apologised), after saying he was losing sleep thinking about Spain’s whopping youth unemployment rate (55%). And, as part of the establishment blamed for not anticipating the country’s deep crisis, the king was perceived as part of the problem. On a scale of 0 (no confidence) to 10 (a lot of confidence), the monarchy scored 3.72 in April, down from 7.48 in 1995, according to the CIS barometer. Meanwhile, support for the restoration of a republic (established in 1931 and ended in 1939) has been growing.

Juan Carlos had always implied that he would die as king. But in addition to the scandals, his health has deteriorated over the last few years and he has been in and out of hospital for various operations. At 76, he was visibly tired and finding it an increasing strain to keep up with his duties and travel abroad promoting Spanish business.

Felipe VI, the new King of Spain.

Juan Carlos’s decision to abdicate will also smooth the path for his son, Felipe. The two main parties, the ruling conservative Popular Party (PP) and the Socialists, hold more than 80% of the seats in parliament between them, and so they were able to ensure parliamentary passage of the legislation required for the handover to Felipe.

The abdication appeared to boost support for the monarchy: almost two-thirds of respondents in a poll said they had a good or very good opinion of Juan Carlos, up from his 41% favourability rating in January, and 77% approved of his son.

The next general election is not scheduled until November 2015, and the results could change the political map substantially. The PP and the Socialists, who have dominated the political scene since 1983, gained less than 50% of the votes between them in last month’s European elections, compared to 73% in the 2011 general election. The Socialists did so poorly that their leader, Alfredo Rubalcaba, resigned. The Socialists, who governed Spain during the key modernisation period of 1983-96 and into the recession in 2009, are in a mess and run the risk of veering into populism in order to win votes.

The Izquierda Plural (Plural Left) coalition and Podemos (We can), a new radical party born out of the 2011 grass roots protest movement of Los Indignados (The Indignant Ones), both did well in the European elections. Podemos came from nowhere to win five seats and 1.2 million votes (8% of the total cast), while L’Esquerra and Los Pueblos, in favour of independence for Catalonia and the Basque Country, won three seats between them. All of these parties want a republic, as do some in the more moderate Socialist party. The king’s abdication was greeted by those who support a republic, with demonstrations calling for a referendum on whether to keep the monarchy.

Spain’s choice is not between a monarchy or a republic, but between a poor democracy or higher quality one. Moreover, changing the form of the state will not resolve the burning issues of high unemployment, a defective education system, the lopsided economic model (excessively based on the real estate sector), the potential division of the nation (fuelled by Catalonia’s push for an illegal referendum on independence this November), a politicised judiciary which operates at a snail’s pace, and corruption. Spain was ranked 40th out of 177 countries in the latest corruption perceptions ranking by the Berlin-based Transparency International, down seven places from the year before on “a scale of 0 (highly corrupt) to 100 (very clean)”. More than 1,500 corruption cases are still under investigation, many of them involving politicians.

When I met Juan Carlos in 1977, he joked about himself. “Why was I crowned in a submarine? Because deep down, I am not so stupid.” Once again, he has shown how true this is by his wise decision to pass on the baton to his son, who has been well educated and is well prepared.

The challenge for Felipe VI is to revitalise the monarchy and show that it still has a role to play in modern Spain. In such a partisan country, the restoration of the republic would be a disaster. Juan Carlos took the first step toward regaining the public’s confidence; now, the entrenched political class needs to clean up its act.

William Chislett is the author of Spain: What Everyone Needs to Know®. He is a journalist who has lived in Madrid since 1986. He covered Spain’s transition to democracy (1975-78) for The Times of London and was later the Mexico correspondent for the Financial Times (1978-84). He writes about Spain for the Elcano Royal Institute, which has published three of his books on the country, and he has a weekly column in the online newspaper, El Imparcial.

Subscribe to the OUPblog via email or RSS.
Subscribe to only politics articles on the OUPblog via email or RSS.
Image credit: “Felipe, Prince of Asturias” by Michał Koziczyński, CC BY-SA 3.0 PL via Wikimedia Commons.

The post Felipe VI, Spain’s new king: viva el rey appeared first on OUPblog.

        

Related Stories

• Eight facts about the gun debate in the United States
• Five reasons why Spain has a stubbornly high unemployment rate of 26%
• World Cup plays to empty seats

 

By William Chislett

The Spanish economy roared along like a high-speed train for a decade until it slowed down dramatically in 2008. Only recently has it emerged from a five-year recession. But the jobless rate has tripled to 26% (four times the US level) and will not return to its pre-crisis level for up to a decade. Why is this?

(1)   The economic model was excessively based on the shaky foundations of bricks and mortar.

Between 2000 and 2009, Spain accounted for around 30% of all new homes built in the European Union (EU), although its economy only generated around 10% of the EU’s total GDP. In one year alone (2006), the number of housing starts (762,214) was more than Germany, France, and Italy combined. After Spain joined the euro in 1999, interest rates were low, property was seen as a good investment in a country with very high home ownership (85%), and there was a high foreign demand for holiday and retirement homes due to the 60 million tourists who visited Spain annually.

When the property bubble burst, jobs were destroyed as quickly as they had been created. As construction is a labor intensive sector, its collapse reverberated through other areas of the economy. Between 2002 and 2007, the total number of jobholders, many of them on temporary contracts, rose by a massive 4.1 million, a much steeper rise than in any other EU country and more than three times higher than the number created in the preceding 16 years. Since 2008, more than 3 million jobs have been lost, around half of them in the construction and related sectors.

(2)   Labor market laws were too rigid.

Spain has a dysfunctional labor market: even at the peak of the economic boom in 2007, the unemployment rate was 8%, a high rate by US standards. At the hiring end, Spain’s labor market laws were very flexible, largely as a result of widespread use and abuse of temporary contracts, but at the firing end, severance payments were higher than in comparable countries. This made employers reluctant to put workers on permanent contracts. The reforms approved in 2012 by the conservative government of the Popular Party, which returned to power at the end of 2011, lowered dismissal costs and gave companies the upper hand, depending on their financial health, in collective wage bargaining agreements between management and unions. The reforms have yet to have a discernible impact on job creation. They have, however, lowered the GDP growth threshold for net job creation from around 2% to 1.3%. The Spanish economy is expected to grow by more than 1% this year.

(3)   The property sector caused a banking crisis and corruption to flourish.

The 45 regionally-based and unlisted savings banks, which accounted for around half Spain’s financial system, were closely connected to politicians and businessmen. Many of them made reckless loans to developers and were massively exposed to the property sector when it crashed. The reclassification of land for building purposes and the granting of building permits, in the hands of local authorities, created a breeding ground for corruption. Bad loans soared from 0.7% of total credit in 2007 to more than 13%. The European Stability Mechanism came to the rescue of some banks in 2012 with a €41 billion bail-out package in return for sweeping reforms. The number of savings banks has been reduced to seven, with high job losses. Spain exited the bail out in January.

Spain was ranked 40th out of 177 countries in the latest corruption perceptions ranking by the Berlin-based Transparency International, down seven places from the year before. Its score of 59 was six points lower than its previous score in 2012, in a numerical index where the cleanest countries are those closest to a score of 100. Spain lost more points than almost every other country, topped only by war-torn Syria.

(4)   The education system is in crisis.

The education system is holding back the need to create a more sustainable economic model. One in every four people in Spain between the ages of 18 and 24 are early school leavers, double the EU average but down from a peak of one-third during the economic boom, when students dropped out of school at 16 and flocked in droves to work in the construction and related sectors. Almost one-quarter of 15-29 year-olds are not in education, training, or employment. Results in the OECD’s Pisa international tests in reading, mathematics, and scientific knowledge for 15-year-old students and for fourth-grade children in the TIMS and PIRLS tests are also poor. No Spanish university is among the world’s top 200 in the main academic rankings. Research, development and innovation spending, at 1.3% of GDP, is way below that of other developed economies. In these conditions, the creation of a more knowledge-based economy is something of a pipe dream, and the brightest young scientists and engineers are emigrating.

(5)   Spain received more immigrants in a decade than any other European country.

Immigrants were lured to Spain when the economy began to expand rapidly. Their number soared from more than 900,000 in 1995 to 5.7 million in 2012, the largest increase in a European country in the shortest time. They were particularly needed in the construction and agricultural sectors, as there were not enough Spaniards prepared to work in them. At the peak of the boom in 2007, more than half of the 3.3 million non-EU immigrants in Spain worked in the construction sector. When the economy went into recession, immigrants bore a large part of the surge in the unemployment, as many of them were on temporary contracts and were the first to lose their jobs. The jobless rate among immigrants (37%) is much higher than that for Spaniards (24%). Immigrants only began to return to their countries in significant numbers in 2012 and Spain’s population declined by 500,000 in 2013, an unprecedented fall in the country’s modern history.

William Chislett is the author of Spain: What Everyone Needs to Know. He is a journalist who has lived in Madrid since 1986. He covered Spain’s transition to democracy (1975-78) for The Times of London and was later the Mexico correspondent for the Financial Times (1978-84). He writes about Spain for the Elcano Royal Institute, which has published three books of his on the country, and he has a weekly column in the online newspaper, El Imparcial.

Subscribe to the OUPblog via email or RSS.
Subscribe to only politics articles on the OUPblog via email or RSS.
Image credit: “Palacio Real” by Bepo2. CC BY 2.0 via Flickr.

The post Five reasons why Spain has a stubbornly high unemployment rate of 26% appeared first on OUPblog.

        

Related Stories

• All (European) politics is national
• Restoring our innovation “vision”
• The politics of political science