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Spain Elects New Government, but No Time for a Siesta

Posted By Sally McNamara On November 21, 2011 @ 2:00 pm In International | Comments Disabled

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Leader of the Spanish Popular Party (PP) Mariano Rajoy (C) waves to supporters from the balcony of the PP headquarters in Madrid on November 20, 2011, after the first results of the general elections were announced.

Spain will have a new government in time for Christmas, and unlike Greece and Italy, Madrid’s government will be a democratically elected one.

Mariano Rajoy’s center-right Partido Popular secured an absolute majority in yesterday’s elections and, on December 22, will take 186 out of 350 seats in the lower house of the Spanish parliament. What is less certain, however, is whether Spain can last that long without falling the way of its fellow southern neighbors—Greece and Portugal—and needing a bailout.

Spain’s economic position is perilous. Unemployment is at 21.5 percent, and youth unemployment is at 46 percent. In fact, Spain has the highest unemployment in Europe. Taxes are too high and small businesses are suffering from too much regulation. Banks are holding billions in toxic assets, and the economy has experienced zero growth in the past three months.

The incoming prime minister has at least been honest with the voters: He’s told Spaniards that there’s no miracle cure for their problems and to get ready for hard times. Although Rajoy has been vague about the specifics of his economic austerity plan, he has vowed to lower taxes on small businesses and make it easier for employers to hire and fire. But that’s just a start (even if it is a good one).

Although structural reforms are desperately needed, Madrid can’t control the fortunes of the Euro more generally, and this grand political experiment is unraveling at lightning speed. European leaders are desperately seeking new ways of keeping the eurozone together, but GDP growth remains stagnant throughout Europe, and a crisis of confidence is now sweeping the eurozone.

All of the heads of government of the PIIGS group (Portugal, Ireland, Italy, Greece and Spain) have been swept from power since the onset of the eurozone debt crisis—some democratically and some by Brussels diktat. Indeed, the only winner in this crisis seems to be EU elites who believe that national sovereignty should be a thing of the past. The revelation that the Irish budget was vetted by the German Bundestag before Irish parliamentarians were even showed a copy is a stunning illustration of how undermined national governments have been in Europe.

Rajoy has a difficult path ahead, but if he is to have any hope at sorting out Spain’s economic problems, he must take his democratic mandate seriously. The Socialists were humbled in this election, with their worst performance since democracy was restored in Spain in 1975. Across Europe, governments have tumbled, one after another, as voters run away from the tried-and-failed policies that Brussels has dished out during this crisis and that governments have meekly implemented with little protest.

The Obama Administration should support the principles of national sovereignty and democracy in Europe in framing its recommendations for European economic and fiscal policies. Washington should not be calling for deeper political and fiscal integration between eurozone member states but should instead respect electorates in Europe who are increasingly calling for a return to conservative economic policies and clamoring for greater national sovereignty.


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