Spain at the Ballot Box: How Will Austerity Shape the Result?

First, the economic crisis. In 2014, the Spanish economy finally began to grow. That growth figure (0.4%) was better than any of the last seven years, with the European Commission forecasting growth to reach 2.8 % in 2015. Yet despite the positive economic outlook, the Spanish are skeptical of the recovery narrative. According to the latest opinion poll published by the Centre for Sociological Research (CIS 3104/2014), 77% of Spaniards still consider the economic situation “bad” or “very bad,“ against just 32% who consider it “good” (3.5%) or “regular” (28.8 %).

Much of this pessimism stems from high unemployment rate, which, still at 22.37%, is highest in the European Union (second only to Greece). This is exacerbated by severe wage depreciation, Spain suffering the largest drop in average wage after Ireland between 2007 and 2013, according to the OECD. In addition to high unemployment and wage depreciation, there is job insecurity, meaning that the vast majority of new contracts are temporary or part time, especially for young people. It is not surprising, therefore, that a clear majority of Spaniards (58%) still consider employment the main issue in Spain, while 79% mention it as one of the three most serious issues confronting the country right now.

Not only does the current situation look bleak, but so does the outlook. When Spaniards vote in December, a majority will do so in the belief that the economic situation will remain unchanged in a year’s time (42.2%) or will worsen (14.5%), while only 27.6% expect it to improve. To a certain extent they are in accordance with analysts, who caution that the economic growth, albeit important, is far from consolidated. On the contrary, they warn it is based more on external economic factors whose continued existence is not guaranteed. Prominent among these factors are the European Central Bank’s quantitative easing policies, which maintain interest rates and the risk premium on Spanish debt at an artificial low. Also highlighted are low energy prices and the depreciation of the euro which have together boosted Spanish exports. Economic operators are concerned that the deteriorating global economic climate, including the deceleration of growth in China, Russia, and other emerging economies such as Latin America, with which Spain maintains important relations, will undermine the Spanish economy’s growth prospects by 2016. The discouraging forecast is worsened by poor demand for exports in the rest of Europe, especially in France and Germany, the main export destinations of Spain.

Spanish pessimism towards the future, despite the economic growth figures which suggest the end of the crisis, derives to a great extent from a perception of the political situation. Two out of three Spaniards (67%) consider the political situation “bad” or “very bad” and in another display of pessimism towards the future, only 23% think it will improve over the course of the next year, while 53% think it will be the same or worse.

This negative appraisal of the future political situation is closely related to the issue of corruption and fraud which concerns the Spanish most (after the unemployment). One must bear in mind that Spain is not a particularly corrupt country according to Transparency International indicators. In fact, in the 2014 Corruption Perceptions Index, Spain was ranked 37th of 175 countries, far less corrupt than Greece and Italy (both ranking 69), and on par with Portugal (31/175) and Poland (35/175). Therefore, the fact that Spanish citizens are particularly infuriated by corruption has less to do with its systemic nature (as this is not the case), but with the fact that the political parties who have governed the country for the past twenty years have been very visibly embroiled in corruption, particularly the current governing party.

In a context of austerity-inspired welfare cuts and the rising inequality these have spawned in conjunction with rising unemployment and insecurity, the scandals surrounding illegal funding and corruption have created disaffection with politics and traditional parties. This has led to the rise of new political forces highly critical of the established forces. Whether emerging on the left to challenge the hegemony of the Socialist party (in the form of Podemos), or from the center to oust the Popular Party (Ciudadanos), the public has begun to experiment with new political forces. Although the extent to which this changes the Spanish party system remains unseen, polls suggest a scenario in which the two major parties (Socialist and Conservative), who previously together enjoyed an average of 70% of the vote, will only be able to obtain 50%. This makes the 2015 general election the most uncertain in decades because not only will it determine which of the two major parties govern, but also with how much support and, if the polls are right, with whom. It is very likely that Spain, with no tradition of coalition governments, will start to experiment with a new system of governance from January 2016; open, flexible, and with new actors.

The third issue facing Spaniards when they go to the ballot box in 2015 is Catalan separatism which must also be understood in the context of the crisis. Since 2012, the Spanish Conservatives’ short-sightedness combined with the policies of austerity has turned scores of former moderate Catalan nationalists into supporters of secession. A coalition of nationalist parties and social movements in favor of independence has been demanding a referendum to leave Spain. As the Spanish Constitution envisages no such possibility, the situation has entered into deadlock. A fake referendum was organized by the Catalan government in November 2014 in order to measure the strength of the secessionist camp. Only 33% of the Catalans bothered to vote (the majority, including Spanish authorities, considered it illegal and did not bother), but those voting in favor of independence garnered 80% of the vote.

Since turnout did not allow secessionists to consider this as a valid vote, they convened a snap election which they described as a plebiscite on independence on 27 September 2015. The call was quite close with 48% voting for secessionist parties and 52% voting against. However, since the electoral system in Catalonia gives more weight to rural areas than to large cities such as Barcelona, secessionists won a majority of seats in the regional Parliament. The situation is once again deadlocked; the secessionists claim that they’ve won the election and the anti-secessionists also claim that they’ve won. Both parties, secessionists and the government, need to enter into dialogue but there is little incentive to do so ahead a national election in December in which the central government is at stake.

What next? The secessionist coalition is very weak: it includes the former right-wing moderates who are discredited by corruption and austerity measures; and the Republican Left, a form of local secessionist social-democrats. But in order to advance, they require the votes of the CUP; the staunch left-wing nationalists who want to remove Catalonia from the EU and NATO, nationalize banks and replace the market economy with what they describe as a “socialist and green economy.” Thus as it currently stands, secessionists have won the regional elections but not the plebiscite, and the only common ground they share is pro-independence, which they cannot achieve with the numbers they have. Nonetheless, they will have to govern in coalition, which will lead to tensions among them and a split is likely.

In any case, what is clear is that the sovereignty camp will not surrender easily because the positions have become much consolidated. The separatists have effectively crossed the Rubicon, refusing to settle for anything other than a binding referendum on secession and finding little incentive to retreat, even in exchange for a federal reform.

This all points towards a worrying and somewhat paradoxical situation. When Spaniards leave the ballot box in December 2015, they will be entering a slightly changed country; one that is leaving behind a crippling economic crisis and is glimpsing the resumption of job creation, however fragile and marked by uncertainty. Yet the policy tools at their disposal to manage this incipient recovery are likely damaged. With a political system undermined by public disaffection and by the weakness of the two major traditional parties, and a state that will have to devote a substantial amount of energy to solving the secessionist question, a crisis is likely. This crisis will most probably begin with a costly and lengthy process of constitutional reform with uncertain results, which will inevitably conclude on a referendum on Catalonian independence. As such, if the 2011–2015 legislature was marked by economic crisis, it is becoming increasingly evident that the 2015–2019 legislature will be marked by political reform. This represents both a challenge and an opportunity: if it is done well, Spain will become stronger, more stable, and more united. However, a bumpy ride awaits.